RMB Exchange Rate "Two-Way Fluctuation" &Nbsp; What Impact Does The Domestic Textile Market Affect?

If we want to comment on the hot words in the market last week, we will be top of the list. The central bank has announced further progress. RMB The reform of exchange rate formation mechanism will enhance the elasticity of RMB exchange rate and the "two way fluctuation" of the RMB exchange rate. In 2005, after the RMB exchange rate reform started, A shares launched a vigorous bull market. Can the exchange reform renew its last "glory" as an opportunity to reverse the stock market downturn?

Only one day's "exchange market"

In June 21st, the first trading day after the announcement of the exchange reform news, the Shanghai and Shenzhen two cities rose sharply, and the index of the two cities rose more than 2%. However, the market has lost its enthusiasm in the second day, and has only risen by 0.1%. Then, 23, 24 and 25 consecutive days of three trading days, the market ended with a slight fall, again falling into a situation of weak shock. Compared with the remittance reform in 2005, this wave of "market reform" lasted only a day and fell to the curtain.

Can foreign exchange reform give investors a bull market? Cao Yanping, an investment manager of the non public offering portfolio of Haitong fund, believes that the background of the exchange reform is quite different from that of 2005. It is very difficult for the foreign exchange market to bring fundamental changes to the stock market situation just like 2005.

In fact, unlike the 2005 global and Chinese economic growth channels, the global economy is in the post financial crisis era in 2010. Some experts estimate that the appreciation of the renminbi in the future will not be like a one-off appreciation in 2005, but will be managed with a small float. In view of the current international and domestic financial and economic situation, the magnitude and speed of this appreciation will be relatively slow. In addition, by the two economic bottom of the economy, the gradual withdrawal of loose monetary policy and the increased supply pressure of financing and refinancing, the start-up of A shares "Daniu" seems to be far from being expected.

However, in the "singing empty" argument, some people have observed positive information. Tang Yonggang, chief strategist of Hongyuan securities, believes that the exchange rate reform will be an opportunity to resume the A share market. "Under the current market environment, foreign exchange reform is of course a good thing. For index, it is also a good factor to stimulate the rise. Rebound may become a short-term market mainstream. Follow up depends on macro policies, especially the regulation and control of new industrial policies. CITIC Securities also expressed optimism about the market in its investment strategy for investors: "although this week's lack of volume has restrained the upside of the stock index, we believe that the impact of the reform on the market is not over yet, and the stock index will continue to operate in a rebound trend."

In contrast, more points are of the view that the exchange rate reform has little impact on the market as a whole. "Foreign exchange reform is not a revaluation of capital market value, nor will it affect the development of the market." Cheng Wenwei, director of Bohai Securities Research Institute, said that foreign exchange reform is only one part of the country's adjustment of industrial structure, and it also tells investors that the investment structure of the market has changed. In fact, the stock market trend is the result of many factors. The only way to choose investment is to reform the RMB exchange rate mechanism.

Aviation and paper industry benefit most

Bao Minghua, director of the Institute of macroeconomics of Renmin University of China, believes that the impact of the reform of the RMB exchange rate regime on the stock market is mainly reflected in the impact on the performance of listed companies. The capital cost and income increase caused by the RMB exchange rate mechanism will also give the industry different growth rates in the long run. So, which industry will benefit from this exchange rate reform with the "two-way fluctuation" tone?

Experts believe that, taking into account the appreciation of the renminbi is still biased, aviation, aviation oil and other foreign debt accounted for a larger proportion of the industry. Short-term It will benefit. According to the report of state securities, although the impact of foreign exchange reform on airlines' main profits is not significant, it will prompt airlines to generate larger exchange earnings. China Southern Airlines, Air China and China Eastern Airlines all have huge foreign currency liabilities, most of which are dollar liabilities. If the exchange rate mechanism changes to increase the elasticity of RMB exchange rate, from the cash flow and shareholder value, it will reduce the actual amount of airline payment in the future and correspond to enhance the value of shareholders of the company. On the profit side, the airline will generate larger exchange earnings and reduce the company's financial cost.

At the same time, exchange rate reform is also expected to promote the development of international routes. The research shows that China is entering the accelerated stage of the consumption escalation of international routes. The exchange rate reform will reduce the air travel cost of passengers, and strengthen the affordability of residents' overseas consumption, and speed up the popularization of international tourism.

Besides, the listed companies of paper industry will also benefit significantly from the reform. According to the analysis report released by Hongyuan securities, from the perspective of cost, foreign exchange reform will reduce the relative import cost of paper, steel and other industries, thereby enhancing its revenue.

Data show that in 2010 1-5 months, China's total imports of pulp 4 million 740 thousand tons, the total amount of more than 2 billion 500 million U. S. dollars. According to the report, there are only more than 20 forestry enterprises in China. The total volume and variety structure are far from meeting the needs. Nearly half of the domestic raw materials, such as pulp and waste paper, rely on imports. In addition, most of China's large papermaking machinery relies on imports. With the increase of RMB exchange rate flexibility, it will undoubtedly bring substantial benefits to the paper industry.

Some analysts believe that the reform will benefit financial companies, and the banking sector will have opportunities to build strategic positions. Experts believe that as the main body of domestic listed banks is RMB business and RMB assets, the total assets and total market capitalization will increase with the increase of RMB flexibility. The analysis report of Japan Securities said that for the banking sector, the whole industry refinancing dust gradually settled, the long-term investment value appeared, and the RMB restarted exchange reformed will become a short-term rebound catalyst. Statistics show that in the second half of 2010, the interest bearing assets of China's banking industry will maintain a steady growth, and the net interest rate will rise slightly compared with 2009, and the year-on-year growth rate of net profit will remain at 20%-25%. {page_break}

Textile and home appliances face "shuffle"

As the saying goes, there are two sides to every coin. The appreciation of the renminbi is expected to be export oriented to textiles and household appliances. Listed company Cause impact.

Hongyuan Securities said that foreign exchange reform may have a negative impact on export oriented listed companies. Textile and garment industry is a typical export oriented industry in China, with low concentration, fierce competition, high dependence on foreign trade and lack of bargaining power. If the RMB exchange rate flexibility increases, it will have a negative impact on the export of the textile and garment industry. Insiders predict that if the appreciation of RMB reaches 3% by the end of this year, it will have a great impact on the domestic textile and garment industry. {page_break}

Guotai Junan's analysis report said that the RMB exchange rate, labor costs and raw material prices will have a negative impact on the textile and garment industry in the coming period. For the traditional manufacturing enterprises, the income in the second half of the year will continue to grow, but the profit rate will go down more obviously.

In addition, the household appliances industry such as air conditioners, refrigerators and washing machines also face greater pressure on exchange rate changes. Industry data show that domestic air conditioning production accounts for 70% of the world's total output, washing machine production accounts for 40% of the world, the global market share of refrigerators is 63%, and the global market share of small appliances such as microwave ovens and rice cookers is over 80%, and the share of overseas exports has accounted for 30%-50% of China's household electrical appliances sales. At present, China's export trade is in the recovery stage after the financial crisis. If the two-way fluctuation of RMB is strengthened, it will have an adverse effect on the recovery of these products. However, it is worth noting that since most of the key generation equipment needs to be imported from abroad, the import cost of key equipment will be reduced and the color TV industry will be profitable in the short term.