Winners and losers of rise in renminbi

Winners and losers of rise in renminbi

The correlation between China’s benchmark CSI 300 Index and the onshore renminbi’s strength is near the highest in seven months.

(BLOOMBERG) – China’s rising renminbi has given equity investors a touchstone in their search for potential winners and losers.

Benchmark stock indexes in Hong Kong and the mainland have been buoyed by the renminbi’s recent strength, as capital chases assets denominated in a strengthening currency.

The correlation between China’s benchmark CSI 300 Index and the onshore renminbi’s strength is near the highest in seven months, while the Hang Seng Index is also most linked to the currency’s movements since February, data compiled by Bloomberg shows. But not every share is a beneficiary.

Likely winners include firms that can take advantage of currency dichotomies, including Chinese property developers with sizeable dollar debt and firms that generate most revenue in the mainland but are Hong Kong-listed, according to analysts.

On the flip side of the currency equation are exporters, whose products will be less price-competitive when sold in foreign markets.

The renminbi has surged 12 per cent against the dollar since May last year, with the rally accelerating recently amid inflation concerns and the greenback’s weakness. Some investors expect the renminbi rally to continue, despite the central bank taking a visible measure to stem gains.

“The central bank’s intervention will slow down only the pace of appreciation, not the direction of the appreciation,” said an asset management director Jackson Wong of Amber Hill Capital. “A rising Chinese currency historically has a positive correlation with both mainland and Hong Kong benchmark indexes, though some sectors will suffer.”

Who wins

Dollar-debt borrowers: Companies to benefit most directly will be those that generate revenue in renminbi while borrowing in foreign currencies, as debt is reduced.

According to Bloomberg data, about 24 per cent of the total outstanding dollar-denominated bonds issued by all Chinese companies are from developers. China Evergrande Group and Country Garden Holdings are among the firms that have most outstanding dollar debt in China.

Hong Kong-listed Chinese firms, or H shares: A stronger renminbi bodes well for H shares, as well as valuations and foreign inflows, said CICC analysts, including Mr Wang Hanfeng. While some investors may worry that a strong renminbi could discourage southbound inflows because of potential foreign-exchange losses, historical experience suggests those inflows are positively correlated with the currency, as a stronger renminbi usually suggests better growth prospect for Chinese assets, Mr Wang said.

The Hang Seng China Enterprises Index has lost over 10 per cent since its February high.

Consumer companies: A rising currency enhances purchasing power and consumer confidence, which benefits the consumer sector, said Mr Yang Delong, chief economist at First Seafront Fund Management.

Consumer discretionary and staples firms are the worst-performing sector on the CSI 300 Index since the February high, Bloomberg data shows.

Who loses

Labour-intensive exporters: Manufacturers such as toy makers, which rely on cheap prices to attract customers and generate most revenue overseas, may take a blow from a stronger renminbi, analyst Zheng Jiawei of East Asia Qianhai Securities wrote in a research report.

Foreign-asset owners: Textile manufacturers and machinery firms will suffer, as they tend to have large proportions of assets denominated in foreign currencies, said CCB International head of research Cliff Zhao.

Internet Explorer Channel Network
News Related

OTHER NEWS

Costly electric cars deter drivers from switching

(NYTIMES) – Mr Robert Teglia bought a Tesla Model 3 sedan even though he knew it cost more than many luxury cars. The commercial real estate appraiser tallied the costs ... Read more »

When virtual clothes are pricier than real ones

From left: Renderings of the “Atokirina” look and the “Fibonacci” look made by digital fashion company Auroboros; and a virtual sneaker from RTFKT and digital artist FEWOCiOUS, sold as a ... Read more »

Is YouTube a success?

Because of YouTube’s revenue sharing and other ways for content creators to make money from videos, it most likely has delivered more income to people online than any Internet site ... Read more »

Tech industry will still grow post-pandemic

Amazon’s margins, which measure the profit on every dollar of sales, are now the highest in the history of the company. (NYTIMES) – In April last year, Mr Jeff Bezos, ... Read more »

When the property market turns 'crazy'

(BLOOMBERG) – Soaring prices. Competition. Desperation. The dramatic conditions for US home buyers during the past year are now spilling into the market for rentals. Landlords from Tampa, Florida, to ... Read more »

China Telecom surges in 2021's biggest listing

The rise cemented its status as the world’s biggest listing so far in 2021. HONG KONG (BLOOMBERG) – China Telecom, the country’s second largest mobile operator, surged as much as ... Read more »

Parents must plan early for retirement: Panel

(From left) The Straits Times Invest editor Tan Ooi Boon with panellists Melita Teo, Tan Huey Min and Tommy Lim at the Roundtable On Retirement. SINGAPORE – Singaporeans, especially parents ... Read more »

Young staff reluctant to return to the office

Younger workers have grown especially attached to the new way of doing business. (NYTIMES) – Mr David Gross, a New York-based advertising agency executive, convened the troops over Zoom this ... Read more »

Money pours in for anti-hacking firms

Breaches have fuelled concerns among companies and governments. (NYTIMES) – As cyber attacks proliferated this year, Mr Sanjay Beri, chief executive of Netskope, received a phone call. Then an e-mail. ... Read more »

Should the Fed tackle the US property bubble?

Industry experts say the US home price boom emerged from a cocktail of low interest rates, booming demand and supply bottlenecks. (NYTIMES) – Mr Robert Kaplan, president of the Federal ... Read more »

The billionaires' banker joins elite club of mega-rich

Mr Byron Trott (pictured) made a name for himself orchestrating a series of deals for Mr Warren Buffett’s Berkshire Hathaway. (BLOOMBERG) – Mr Byron Trott, consigliere to some of the ... Read more »

Financial planning is key to facing everyday challenges

Parents can expect to pay at least $16,000 in fees per year if they send their child to a university in Australia, the UK or the US. Getting a divorce ... Read more »

This former banker is on a mission to make investing more accessible for S'poreans in volatile times

“Better investing means people can live easier today and be better prepared for the future and retirement. It is more than just money. The societal impact and happiness this can ... Read more »

New-age condos with 'spiritual' services

Ms Leah Forester leading a spiritual concierge event at Jardine, a new apartment complex in Los Angeles. Some developers and estate agents say that in the wake of the coronavirus ... Read more »

US economy recovers, but faces fresh challenges

(NYTIMES) – The US economy climbed out of its coronavirus-induced hole in the spring as vaccinations and federal aid fuelled a surge in consumer spending at restaurants, resorts and retail ... Read more »

Smaller activewear brands a hit among female athletes

Steeplechaser Colleen Quigley is among athletes who has opted to strike new types of deals with smaller activewear brands. (NYTIMES) – Athleta, the activewear brand for women and girls owned ... Read more »

Offering financial know-how to graduates

(NYTIMES) – With financial adulthood comes a series of firsts – apartments, loan payments and other complex decisions, all made while rent is high and starting pay cheques are low. ... Read more »

LV handbags still the rage in pandemic

A bag designed by Virgil Abloh for fashion house LVMH in 2019. (BLOOMBERG) – The demand for popular designer handbags is very strong even though people are staying home more ... Read more »

Young adults here continue to invest despite Covid-19 pandemic

A survey on around 500 youngsters found that 80 per cent of them are already investors. SINGAPORE – Young adults here are continuing to invest despite the pandemic, according to ... Read more »

How to take advantage of market volatility when trading CFDs

IG’s knock-outs act as a powerful risk management tool that enables traders to limit risk while trading on higher leverage with an in-built guaranteed stop. PHOTO: SHUTTERSTOCK The past year ... Read more »

Work from home is spurring some to retire early

(NYTIMES) – For Ms Mona Janochoski, a chemist who ran a laboratory, working from home during the coronavirus pandemic was the deciding factor. It was the first time in her ... Read more »

Oh yes, young people may be easier targets for scams

(NYTIMES) – If you’re a digital native and consider yourself immune to all scams, the thieves have you right where they want you. For years now, the Better Business Bureau’s ... Read more »

5 things to know about Chinese stocks

(NYTIMES) – Americans have good reasons to be wary of investing in China. It’s easy to get caught up in the headlines and go no further. It’s easy to be ... Read more »

New York facing rental slump

(BLOOMBERG) – Condo sales are surging in New York City. But fewer of those buyers are tapping a once-popular investment strategy: leasing out units for income. The idea fell out ... Read more »

How to invest in real estate without breaking the bank

Navigate the daunting world of real estate investment with the help of digital wealth manager, Syfe. PHOTO: GETTY IMAGES If you grew up with traditional Asian parents, there’s a good ... Read more »

Will making salary public boost fairness?

NASCAR has penalized the Hendrick Motorsports teams of reigning Cup champion Chase Elliott and Alex Bowman for engine allocation infractions at New Hampshire Motor Speedway. Elliott’s No. 9 team and ... Read more »

Losing money is bad for the heart, says study

TikTok comedian Jon-Bernard Kairouz has accurately predicted NSW Covid case numbers for five days.Source:Supplied TikTok comedian Jon-Bernard Kairouz has fallen from grace after his five-day streak of correctly reporting NSW’s ... Read more »

Pay $272k to return to life decades after death?

(BLOOMBERG) – You probably know this already – high-risk investments are not for the faint-hearted. But what you may not know is that the ups and downs of your investment ... Read more »

How a green future could look like

Last week marked a watershed for technology start-ups in India, as a record bout of fundraising shifted attention to the world’s second-most populous market, just as investors were becoming spooked ... Read more »

Building a financial plan? You may already be on your way

Despite playing a shredded god on screen, Chris Hemsworth is not above the lure of the Colonel. The Australian actor, known for playing muscular Thor in the Avengers franchise, surprised ... Read more »

Women lose out amid fall in bank teller jobs

Technological advances are eliminating the need for bank tellers, threatening an entry point for women. (BLOOMBERG) – For years, women have had a foot in the door to the finance ... Read more »

When machines decide the fate of employees

At Amazon, machines are often the boss. (BLOOMBERG) – It is not exactly the Terminator from the sci-fi movie but in today’s digital age, you can get terminated by machines, ... Read more »

Pandemic hobbies that make money

Ms Jenny Eisler, who works for an online fashion retailer, began embroidering as a hobby at the start of the coronavirus pandemic. (NYTIMES) – Ms Jenny Eisler learnt to knit ... Read more »

Battery tycoon charges ahead in wealth rankings

Dr Zeng Yuqun’s net worth has jumped to $67 billionas shares of Contemporary Amperex Technology surged this year. (BLOOMBERG) – Looks like selling car batteries is a better business than ... Read more »

Invest for today, tomorrow and beyond

Rising life expectancy, inflation and market volatility are some of the factors investors should consider in planning for their retirement. Retirement is often associated with investments bearing lower risk and ... Read more »

Are you really in control of your finances? Why you should take stock to avoid a rude shock

In addition to financial security, having a proper plan in place is good for one’s mental health. As Ms A headed towards retirement earlier this year — in the midst ... Read more »

2021 Asia mid-year investment outlook: Positioning for the next phase of the cycle

Key takeaways ​Exports have led the recovery in Asia and will drive growth while consumption lags. Globally, we believe we’re entering a phase of sustained growth, improving fundamentals, and rising ... Read more »

Fancy an Apple or Google car?

A 2018 photo of a Waymo Chrysler Pacifica Hybrid self-driving vehicle in Arizona. Waymo became an independent company in 2017 under Google parent Alphabet, launched an autonomous ride-hailing service in ... Read more »

Cut chatter to make sound investments

Investors who still struggle to pick out a single stock can consider starting with an exchange traded fund, which covers the market or a specific sector. Imagine trying to pick ... Read more »

How shipping woes can hit your Christmas shopping

Yantian port in Shenzhen, China’s Guangdong province. Dozens of ships are queued up around Yantian and, by one estimate, more than 400,000 20-foot containers were at a standstill. (BLOOMBERG) – ... Read more »