China's industrial profits set to recover

Profit growth at China's industrial firms is flat, but the situation may improve soon, Standard Chartered said in a research note on Tuesday.

"The slowdown in China's economy has taken its toll on corporate profits, but we see some light at the end of the tunnel," said Stephen Green, an economist with the bank.

Profit growth at large industrial firms declined 3.1 percent year-on-year in the first eight months of 2012. However, in September, the contraction narrowed to 1.8 percent year-on-year, the bank said.

"We think industrial-sector profits have bottomed out, and see a recovery in profit growth in early 2013," said Green. "But the inventory cycle has not yet begun to turn."