Shares of PPG/Xuanwei/Aksu fell after BASF issued earnings warning.

However, the global distribution of products and businesses means that when global trade is under pressure, so is Basf. It can be said that Basf is a rough epitome of the global economy, making its earnings warning a warning signal of the global economy to a certain extent, at least for those who bet that loose monetary policy can offset the deterioration of the trade environment.

On July 8, BASF issued a profit warning, which caused its share price to fall by 6%. The company said pre-interest and pre-tax profits in the second quarter of 2019 would fall by 70% compared with the same period last year, compared with an expected increase of 10%. "Industrial production is significantly lower than expected, which has a negative impact on Basf's sales and profits," the company said. Basf's lower profits are largely attributed to two key markets. Second, Basf also sells crop seeds, pesticides and fertilizers. This year, agriculture in the Midwest was hit not only by extreme weather, but also by the deterioration of the trade environment. "Prospects for profitability in the agricultural sector have weakened, and trade problems have led to reduced demand for crop protection products," Basf said.

The most worrying thing is Basf's outlook for the future: "So far, the deterioration of the economic outlook has not eased." This is the opposite of Basf's 2018 report. The company added: "So far, the conflict between the United States and its trading partners, especially China, has not been eased. In fact, the G-20 summit at the end of June has shown that no rapid easing is expected in the second half of 2019. Overall, uncertainty remains high." This warning has had a ripple effect on the global market.

Considering the wide representativeness of BASF business, its earnings early warning predicts that there may be more such bad news in the second earnings season. As of 17:56 Beijing time, shares fell 5.68%, dragging other chemical companies such as Dow down 1.5%, DuPont down 2.8%, Akzo Nobel down 1.40%, industry down 0.7%, Hunstman down 0.3%, Eastman down 1.3%, Covestro down 1.3%. Shares fell 5.13%; Chemours rebounded after a 7% plunge yesterday; and paint chemicals companies such as Wacker Chemie, Bayer, Clariant and Henkel all fell. The earnings warning indicates that large export-oriented German enterprises are beginning to feel the pain brought about by the trade war between the United States and China. "In the past 12 months, you can say that this is a good bubble. Because of the continuing uncertainty, the bubble is shrinking, but further layoffs will cost employment and capital," said Carsten Brzeski, chief economist of ING Germany in Holland.

It indicates that the company is in the process of orderly advancing a number of published enterprise strategy-related measures, especially product portfolio management and cost optimization. With the further implementation of "Excellence Project", it is expected to contribute 2 billion Euros of interest, tax depreciation and pre-amortization income to the company every year from the end of 2021.