RMB Exchange Rate Fell More Than 1000 Points, Textile And Apparel Benefited Enormously

In August 11th, the central parity of RMB against the US dollar was 6.2298, a record low since April 25, 2013, a 1136 decline from the previous trading day, the largest single day decline in history.

The active reduction of US dollar exchange rate will affect which enterprises, which enterprises will benefit and which enterprises will be damaged.

Reporters believe that the renminbi's decline in the US dollar exchange rate means that real estate and other heavy assets will be adjusted, and resources may be redistributed to SMEs and new industries, which will help optimize the economic structure.

Specific to the impact of related industries, the depreciation of the RMB has a positive impact on export oriented industries such as textiles, instrumentation, communication computers, and so on, and will have a negative impact on the relatively large import assets, such as real estate, energy, aviation and other heavy assets industries.

When the renminbi fluctuates downward against the US dollar, the price of textile and apparel companies often performs well.

In August 11th, textile and apparel stocks were eye-catching all day, and the plate rose more than 5%, of which ten stocks were trading.

Analysts believe that the spot exchange rate of the RMB against the US dollar has dropped sharply, mainly in US dollar settlement, and the export business accounts for a relatively good stage in the larger textile and apparel listed companies.

The listed companies also indicated that the devaluation of RMB would help the company's competitiveness in the international market, help develop the export market and increase revenue.

In recent years, the competitiveness of China's textile and garment industry in the world's main markets has been weakened, and the main market share in Europe and the United States has been declining, thanks to the appreciation of the renminbi, the rising cost of labor and raw materials.

According to data from the China Textile Import and Export Chamber of Commerce, the export volume of China's textile and clothing decreased by 2.9% in the first half of this year, the first negative year-on-year growth in recent years.

Customs General data also showed that in July 2015, China's textile and apparel exports were 27 billion 250 million US dollars, down 10.2% from the same period last year.

Among them, textile exports amounted to 9 billion 510 million US dollars, down 5.9%, and clothing exports 17 billion 740 million US dollars, down 12.4%.

Although overseas developed markets, especially the European market demand, are hard to improve in the short term, industry experience shows that the depreciation rate of RMB against the US dollar is 1%, and the sales profit margin of the textile and garment industry will increase by 2% to 6%.

Moreover, the scale of China's textile and garment industry ranks first in the world, and the impact of exchange rate changes on the industry is huge.

The sudden sharp depreciation of the RMB, for the average profit margin of less than 10% of the textile and garment industry companies, the role of self-evident performance boost.

Specifically, to the A share related listed companies, the depreciation of the RMB will benefit the export business, especially the textile and clothing leading companies which account for a relatively high dollar settlement. On the one hand, it will help to increase the company's orders. On the other hand, most of the companies will settle in the US dollar, and the exchange rate can also be obtained under the depreciation of the RMB.

Among them, the export business of Huafang, URI, Lutai A, Luen Fat shares and other companies accounted for close to or more than 70%, and the exchange gains and losses had a great impact on the profits of enterprises, such as Huafu color spinning last year's exchange earnings reached 8 million 210 thousand yuan, accounting for 4.9% of profits.

However, some listed companies say that although the exchange rate downward changes are clear about the industry, most companies have already adopted a series of measures to hedge exchange rate risks, such as import hedging, US dollar financing and forward foreign exchange pactions, and so on. The positive impact on the performance of enterprises should be analyzed in specific situations.

Compared to some cotton spinning enterprises from foreign imports of raw materials hedging part of the positive comparison, clothing, toys and other raw materials imports accounted for a relatively small company by the exchange rate advantage to boost the role of more direct.

Such as Jin Fei Da, is one of the largest high-end clothing (Ladies) ODM and OBM manufacturers in the country. At present, 90% of the main business products are sold to the US market; and, like Rebecca, the US market accounts for about 40%.

Export enterprises will be promoted

Compared with China's textile industry

In the leading position of the international market, foreign trade oriented industries, such as instrumentation, household appliances, shipping, chemical industry and other industries, will be benefited from the depreciation of the RMB.

Huatai Securities believes that if the depreciation of RMB becomes a trend process in the second half of the year, the upgrading from traditional to emerging, from product exports to service exports will definitely benefit.

Appliance industry, with the depreciation of the renminbi, many home appliances listed companies in the A share market are expected to usher in an increase in export volume. Fanta technology, Xinbao shares and other higher export companies deserve attention.

In the field of chemical industry, the depreciation of RMB will enhance the competitiveness of nitrogenous fertilizer, phosphate fertilizer, titanium dioxide, viscose staple fiber and other products in the international market, and it will be good for export oriented chemical enterprises. The relevant topics worthy of attention are Hua Lu Heng Sheng, Yun Tian Hua, Hubei Yihua, Bai Li Lian, Sanyou chemical and Australia ocean technology.

In fact, the export of diammonium increased by 131.1% in June from the new tariff policy. The good situation of the export of diammonium directly promoted the price of ammonium monoxide, and the beneficiaries were Yun Tian Hua, Xin Yang Feng, Swart and Liu Guo chemical industry.

The automobile industry, the Jianghuai Automobile and Yutong buses which are relatively high in vehicle exports, and Fuyao Glass, Sai Lun Jinyu and Fengshen share, which are relatively high export of parts and components, are expected to gain favorable results.

At the same time, export promotion will bring container demand to rise, and dry bulk shipping market will have a turning point. The relevant targets can be focused on CSCL, long voyage Phoenix, China Ocean and so on.

Analysts also believe that under the background of RMB devaluation, the export of machinery and household appliances will increase, which will enhance the domestic upstream steel market demand.

In the "one belt and one way" and "going out" related targets, the depreciation of RMB will help to enhance the competitiveness of related companies in overseas markets, or will benefit nuclear power, steel, high-speed rail and other stocks.

Sinoma International currently accounts for about 60% of overseas business, which is relatively large and gradually improving. It will benefit from the "going global" and "one belt and one way" strategy in the long run, and will benefit from the depreciation of the renminbi.

In addition, despite the sharp decline in international gold prices, but affected by the decline in the exchange rate, domestic gold futures rose sharply, reaching a maximum of 227.3 yuan / gram, Hunan gold, gold, Chifeng gold, western gold and Shandong gold sealed up trading.

Some analysts pointed out that at present, domestic gold import and export control is stricter, and domestic gold is mainly used for domestic sales.

The devaluation of the renminbi is expected to trigger domestic gold hedging demand, thus supporting domestic gold consumption in real terms.