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China’s slowing growth rate and Debenhams’ profit warning

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China’s slowing growth rate

So everyone’s been going on about China’s economy slowing down, but we had this confirmed yesterday at the National People’s Congress with the Chinese Premier bringing his GDP growth forecast range down to between 6 and 6.5%, the lowest growth rate for nigh on 30 years.

The government is, however, keen to prevent an all-out slowdown and unveiled a massive £227bn stimulus package which includes higher spending, and lower taxes – including a cut in VAT for the manufacturing sector.

Although this package should do a lot to limit any damage that’s already been done by the trade war, some observers are saying that its size reflects some uncertainty about the outcome of current negotiations with the US.

As things stand, an accord is expected to be signed between the two superpowers around the end of this month which could involve Trump scrapping tariffs on $250bn-worth of Chinese goods.

Debenhams’ profit warning

The other thing I wanted to talk about today was Debenhams’ profit warning, which the company tried to dress up in fancy language by saying that its previous forecasts were “no longer valid”.

Given that they only made them about two months ago and that they only swerved a profit warning in January due to them suddenly finding £50m-worth of cost savings, this is very poor.

The company is talking about cutting 50 shops, but it seems to me that Debenhams is sinking.

I think that the company is an absolute disaster, that chief exec Sergio Bucher is rearranging the deckchairs on the Titanic and Sports Direct’s Mike Ashley is waiting for the fittest survivors in a souped-up lifeboat parked up alongside it.

If Ashley manages to make a move, he could end up paying peanuts for the company and not have the onerous pension liability to go with it.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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