Rapid Appreciation Of Local Currencies Affects The Industry

Analysts expect that RMB appreciation will reach or exceed 10% this year, which will speed up the adjustment of China's economic structure and will continue to deepen its impact on all walks of life.

On the whole, the appreciation of RMB will depend on foreign materials or equipment, and the industry with high liquidity RMB assets will be good for a long time. The exchange earnings will be generated for industries with large US dollar foreign debts, while the export industry and the international pricing of products will have a larger impact.

The appreciation of the renminbi is favorable to the real estate and financial stocks holding large amounts of RMB assets.

In the real estate sector, the appreciation of the renminbi will increase the demand for housing and increase house prices, while the holdings of property and land reserves will increase.

Such as Vanke, investment real estate and Financial Street, overseas Chinese town and so on will benefit.

In particular, commercial real estate companies benefit more obviously, such as Financial Street, small commodity city and so on.

Similarly, banks, insurance and other listed companies with more local currency assets will also benefit.

In addition, the appreciation of the renminbi will reduce the pressure on foreign trade debt which is higher in dollar terms.

Typically, the aviation industry, as the purchase cost of imported items such as aircraft and aviation fuel has dropped sharply, and a large amount of foreign debt denominated in US dollars will be reduced and foreign exchange earnings will be generated.

For example, the main reason for the loss of the 2007 performance of China Eastern Airlines is the sharp rise in exchange earnings.

According to the 2007 annual report, the exchange earnings of Air China, Baoshan Iron and Hainan Airlines were over 100 million yuan last year.

In addition, pulp, iron ore and other imported raw materials more companies will also reduce operating costs, thereby enhancing performance.

At the same time, resource industries, monopolistic or long construction airports, ports, railways, highways and other infrastructure industries will benefit from it; and the upgrading of industrial structure will bring benefits to high-end consumer goods and new energy industries.

The appreciation of the local currency has a great impact on the export of labor intensive China's textile and garment industry.

Most of the export products of textile industry are settled in US dollars. With the appreciation of RMB, the RMB income of export products will decrease.

At the same time, due to the low concentration of domestic textile and garment industry and fierce competition, it is generally difficult to pfer the negative effect of RMB appreciation.

According to analysis, the appreciation of the textile industry and the clothing industry will drop by 3% to 6% after each appreciation of 1% yuan.

The profits of these industries have been very low, and the appreciation of the renminbi and the export tax rebate rate have lowered the pressure on China's textile industry to further increase.

Similarly, industries with larger export proportion, such as electronic components and household appliances, are also subject to greater impact.

Second, the appreciation of the local currency also has a negative impact on mining, non-ferrous metals, chemical industries and other companies which are mainly export oriented and internationally priced products, and weaken their competitiveness in the international market.

But with the advantage of technology and productivity, the company has the pricing power of products, and the price hikes of products exceed the company's appreciation rate of the same period, such as Yantai Wanhua and so on.

In addition, the foreign trade service industry is indirectly damaged. For example, the northern international company, which is mainly engaged in international projects, is expected to lose 10 million yuan in the first quarter of this year. Besides the effective implementation of the project, the appreciation of the renminbi has also affected the company's operating results.