(11-08-2015, 10:02 AM)Behappyalways Wrote: [ -> ]Aggregate financing slumped to 718.8 billion yuan ($116 billion) in July, from 1.86 trillion originally reported for June, according to the People’s Bank of China, missing the estimate for 1 trillion yuan in a survey of economists. New yuan loans jumped to 1.48 trillion yuan, almost double economists’ estimate, with 891 billion yuan going to financial institutions as the central bank backed stock rescue efforts.
China’s Credit Slumps as Funds Used to Prop Up Stock Market
http://www.bloomberg.com/news/articles/2...es-in-july
sounds like a substantial slowdown in new investment.
Dun think YZJ stock price will be spared this downturn.
China’s central bank decides to devalue the yuan
LINGLING WEI, DAVID ROGERS DOW JONES AUGUST 11, 2015 1:18PM
David Rogers
Markets Editor
Sydney
Chinese 100 yuan bank notes being counted at a bank.
Beijing’s devaluation stands to make Australian exports to China more expensive. Source: AFP
China’s central bank has moved to devalue its tightly-controlled currency, as the world’s second-largest economy continues to sputter.
In an apparent effort to blunt criticism over China’s exchange-rate policy, the People’s Bank of China took the surprise step with an eye toward making the yuan’s value more market-based.
Analysts said data showing a slump in exports over the weekend could also have prompted the move, which should make Chinese goods cheaper overseas.
China sets a midpoint for the value of the yuan. In daily trading, the yuan is allowed to move 2 per cent above or below that midpoint, which is called the daily fixing. But Chinese officials sometimes ignore the daily moves, at times setting the fixing so that the yuan is stronger against the dollar a day after the market has indicated it should be weaker.
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MOREDollar plunges after China move
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With today's move the fixing will now be based on how the yuan closes in the previous trading session. As a result, the yuan’s fixing was lowered 1.9 per cent today from the previous day, leaving the fixing at 6.2298 to the US dollar, compared with 6.1162 yesterday.
The central bank said its goal was to closely align onshore and offshore rates, and it was a one-time fix.
The Australian dollar fell one US cent on the news. At noon (AEST), the Aussie was trading at US73.47 cents, down from US73.90 cents yesterday. The dollar had peaked during the morning at US74.41 cents, and fell as low as US73.36 cents after China’s move was announced.
Currencies tumbled elsewhere across Asia, while the US dollar rose to as high as 6.3299 Chinese yuan from its close of 6.2136 yesterday.
“Given this development, we can look for US dollar strength regionally against other currencies on this confirmed PBoC two per cent devaluation,” said OANDA Australia and Asia Pacific senior trader Stephen Innes.
“We may see a lot of pressure on all local currencies, but the market is extremely volatile at moment.”
While a weaker yuan may be the stimulus China’s economy needs, it will make iron ore and coal imports more expensive, which will weigh on Australia’s already hurting trade balance, as well as struggling resources companies.
A weaker yuan could also encourage other central banks in the region to devalue their currencies to stay competitive.
The People’s Bank of China said the move was a “one-time adjustment that will strengthen the market’s role in the fixing and promote the convergence of the onshore and offshore rates”.
It added that the move it will keep the yuan stable at a reasonable level, as the effective exchange rate was stronger than that of other currencies.
But strategists said markets appeared sceptical that it was merely a one-off adjustment.
“We all remember the February-March 2014 ‘adjustment’ when the market was positioned one-way for CNY appreciation towards CNY6.00,” said TD Securities Chief Asia-Pacific Macro Strategist Annette Beacher.
“By surprising the market today, at least the PBoC has mitigated the potential for capital flight.”
Ms Beacher said the yuan depreciation boosted the US dollar against all other currencies, including Asian currencies and the Australian and New Zealand dollars.
“As this event has boosted the USD and dampened local currencies, it is likely to be welcomed by regional central banks, as well as any policies that boost the outlook for Chinese growth are positive for the growth outlook more broadly,” she said.
China’s central bank said in a statement posted on its website that the yuan’s midpoint has diverged quite a bit from the market rate for a relatively long time and that it was time to make the midpoint more market-based.
China’s leadership has been urging the International Monetary Fund to declare the yuan an official reserve currency on par with the dollar, euro, the Japanese yen and the British pound — a move that could raise China’s influence on the world stage just as Beijing increasingly challenges Washington in global affairs.
To that end, the leadership has been resisting an outright devaluation of the currency despite the country’s plunging exports, for fears that a move like that could jeopardise the yuan’s chance of joining the elite group of currencies.
Rather, it chose to do so by giving what the longtime critics of China’s currency policy have long been clamouring for: Let the market play a bigger role in deciding the yuan’s value.
The engineered fall in the yuan is likely to cause political ripples around the world. In particular it may reignite criticism of China’s tight control over the yuan’s exchange rate within the US Congress and some American businesses, which have long said the currency was already too weak and set at a rate that allowed Chinese exporters to sell their goods artificially cheap on world markets.
As recently as April other central bankers were speaking confidently that China wouldn’t devalue. This puts pressure on them to follow suit.
In a semiannual report about world currency exchange rates published in April, the Treasury Department credited China for allowing the yuan to rise in recent years but also said the currency remained “significantly undervalued” and “that fundamental factors for (yuan) appreciation remain intact, highlighting the need for further strengthening over the medium-term.”
But in May, the IMF said China’s yuan was no longer undervalued for the first time in more than a decade, a milestone in the country’s efforts to open its economy.
The news comes weeks before China’s President Xi Jinping is due to visit Washington for a summit with US President Barack Obama, who has resisted calls to describe Beijing as a currency manipulator during his time in office but is now likely to face new pressure on the currency question.
The move could give a shot in the arm to China’s weakened exports sector, which remains an important part of the economy despite Beijing’s effort to seek growth beyond its traditional sources. On Saturday, Chinese officials said July exports fell a surprising 8.3 per cent from a year earlier. Exports for the first seven months of the year were down 0.8 per cent in dollar terms compared with a year earlier.
The strong exchange rate against the euro has been a drag on China’s exports. The PBoC has kept the yuan steady against the dollar but doesn’t as regularly influence its exchange rate against other currencies, allowing the yuan to follow the dollar’s rise against other currencies like the euro. The latest data showed exports to the European Union fell 12 per cent in July from a year ago.
China’s economic growth in the second quarter came in at 7 per cent year-over-year, the slowest pace in six years, due to a weak property market and soft domestic demand in addition to exports. China’s cabinet, the State Council, said last month it would offer tax breaks and other incentives to help the trade sector. Other measures Beijing has taken include four rate interest-rate cuts since November to provide funds for domestic companies.
China shares wavered between positive and negative territory after the announcement, a day after Shanghai posted its largest daily percentage gain in a month. The Shanghai Composite Index was flat at 3929.26 while the smaller Shenzhen market was up 0.7 per cent at 2290.
With Dow Jones
(11-08-2015, 11:55 AM)greengiraffe Wrote: [ -> ]China’s central bank decides to devalue the yuan
LINGLING WEI, DAVID ROGERS DOW JONES AUGUST 11, 2015 1:18PM
David Rogers
Markets Editor
Sydney
Chinese 100 yuan bank notes being counted at a bank.
Beijing’s devaluation stands to make Australian exports to China more expensive. Source: AFP
China’s central bank has moved to devalue its tightly-controlled currency, as the world’s second-largest economy continues to sputter.
In an apparent effort to blunt criticism over China’s exchange-rate policy, the People’s Bank of China took the surprise step with an eye toward making the yuan’s value more market-based.
Analysts said data showing a slump in exports over the weekend could also have prompted the move, which should make Chinese goods cheaper overseas.
...
When most others are devaluing their monies, China Yuan is under-pressured to keep its value.
China joins currency devaluation race
PETER CAI THE AUSTRALIAN AUGUST 12, 2015 12:00AM
Beijing must be mindful of a backlash in the US if it lets the yuan fall too fast or too low. Source: Supplied
China has finally entered the game of competitive currency devaluation and it has made a huge splash, sending shockwaves around the region, including Australia.
Many central banks around the world, including those in emerging markets, have been forcing down their currencies to boost their export industries.
China, until now, had been reluctant to join the “race to the bottom” game of competitive devaluation. Then it dropped an A-bomb on the market yesterday by allowing the Chinese yuan to drop as much as 1.9 per cent.
Given the political sensitivity of the decision by the People’s Bank of China, it had to dress up the move as one that would allow market forces to play a greater role in determining the country’s exchange rate.
The Chinese central bank’s decision could certainly be viewed that way. Beijing sets the central parity of the yuan against the US dollar, which serves as the benchmark for China’s exchange rate system.
Yesterday’s change means from August 11 onwards, the daily fixing will need to take into consideration the previous day’s market closing rate as well as daily forex demand and supply.
After the PBoC’s announcement, the yuan suffered its biggest crash in more than two decades, largely reflecting market expectations that the Chinese yuan needed to be devalued against the backdrop of weak growth, an expected US interest rate increase and the depreciation of major emerging market currencies against the US dollar.
So the Chinese central bank’s move is largely consistent with expectations as well as its own well-publicised program to gradually liberalise China’s managed forex regime and the push to internationalise its currency.
But while the move is dressed up as part of the currency reform program, the economic imperative is obvious. The yuan has appreciated between 20 and 30 per cent lately, one of the strongest performing currencies. This is against the backdrop of the sharp fall of the euro, yen and other emerging market currencies.
This is putting China’s export industry, one of the key engines of growth, under great pressure. Alicia Garcia Herrero from Natixis Asia Research said the extremely weak July export data published last weekend must have pushed the PBoC to use one of its most powerful instruments, the exchange rate, to reboot the Chinese economy. The central bank explicitly acknowledged it and said “The RMB’s real effective exchange rate is relatively strong, which is not entirely consistent with market expectations.” In polite central banking language, it means it is way overvalued.
But don’t bet on the Chinese yuan to depreciate rapidly. Beijing will not let the exchange rate fall uncontrolled because it could be quite destabilising. Given the recent crash in the Chinese stockmarket, the central bank’s ability to manage the economy is under heavy scrutiny.
Wang Tao, UBS’s chief China economist, believes the government still wants to take a relatively cautious approach on the exchange rate in order to avoid destabilising depreciation expectations and capital outflows.
There is also a key political consideration. The US and China have been at loggerheads over the country’s pegged exchange rate for years, which has faded lately due to the yuan’s strong and consistent real appreciation against the US dollar. But don’t forget we are at the beginning of a US presidential campaign: slamming China and its currency regime are popular electioneering tricks.
Beijing must be mindful of a potential strong political and popular backlash in the US if it lets the yuan fall too fast or too low.
Nevertheless, we are seeing an important shift in Beijing’s foreign exchange rate policy that allows the market to play a bigger role in determining the yuan’s value — read: depreciation — in the short to medium term.
China’s new normal: economy grows slower but bumpier
THE AUSTRALIAN AUGUST 12, 2015 12:00AM
Glenda Korporaal
Senior Journalist
Sydney
A man poses as the God of Fortune at an auto show in Changsha, Hunan. Car sales in China has slumped this year. Source: AP
We were at an appointment in central Beijing last week when our Chinese government guides cut things short.
We needed to get to an interview with a senior Chinese official near Tiananmen Square and had to allow for the city’s horrendous traffic. As it was, the traffic was far worse than expected due to a car accident — one driver had brushed past another, leaving a scrape along the bumper. The two drivers stood by their new cars in a busy intersection, not willing to move them until police came.
In the end we were about half an hour late for the appointment — a sin easily forgiven “because of the traffic”. Anyone observing the traffic in any major Chinese city these days (even in far western Xining, the capital of Qinghai, where we had just been) would see the lanes are regularly choked with vehicles.
Beijing, which next week hosts the World Track and Field Championships, is preparing to limit cars on the roads by banning vehicles on a day-by-day basis based on their number plates.
Cities like Beijing have excellent new subway systems and fast trains so it was inevitable that despite new ring roads and freeways, demand for new cars in China would not keep rising at the breakneck speed it had done in the past decade. Some of the world’s biggest carmakers are now coping with slowing car sales in China, the world’s biggest car market.
Companies such as Ford, General Motors, BMW and Jaguar Land Rover are all re-evaluating their earnings from the once booming market. Ford has already warned that total car sales in China, which last year came in at 23.5 million (passenger and commercial vehicles) may stall this year.
GM, which last year recorded $US2.1 billion in “equity income” from its sales in China out of a total net income of $US2.8bn, is also watching the situation.
VW had to cut prices in China recently while there are reports that car dealers around the country are coming under increasing pressure. BMW warned last week that it could be forced to revise its profit figures this year due to the slowdown in sales in China, where it has already cut production.
A combination of restrictions on car usage, the Chinese economic slowdown and concerns about the fallout from the stockmarket fall are affecting car sales.
Like Australia, which hooked itself on the belief that the $US100 a tonne-plus iron ore prices would continue indefinitely because of the Chinese economy, global carmakers and a host of other industry sectors are coming to terms with a China where growth is taking an inevitable, and some would say much needed, breather.
The questions for everyone doing business with China, and countries like Australia whose welfare is tied with its economy, are: what is the “new normal” for China? And what does it mean for a world that has been pumped on high-octane China growth?
The path to the “new normal” is paved with potential hazards, as the recent market crash showed.
The two Chinese stockmarkets (Shanghai and Shenzhen) don’t play the same role as the markets do in OECD countries. But with a turnover of almost $US400bn ($544bn) a day, they are playing an increasing role in financing China and have an important impact on confidence as the economy slows. Now entering into uncharted waters, Chinese policymakers are looking for ways to prop up the market. Or at least prevent it from falling further and hurting confidence.
Yesterday’s news that the People’s Bank of China has devalued the Chinese yuan by 1.9 per cent, a move that sent the Australian dollar down as the US dollar rose, came as some of China’s top leaders were having their annual summer gathering at Beidaihe, 300km northeast of Beijing.
In a tradition set by Mao Zedong, the Communist Party leaders gather to deliberate the country’s future. This year leaders are deliberating on China’s 13th five-year plan, for the period from 2016 to 2020. (In a tradition completely foreign to Western nations like Australia, Chinese leaders agree on five-year plans, announce them and then proceed to carry them out.)
The future path of the economy, which has slowed from levels of 10 per cent plus to the official rate of 7 per cent for the first half of this year, is high on the agenda.
The meeting comes on the heels of a meeting of the Political Bureau of the Communist Party’s Central Committee on July 30, which pledged to introduce targeted policies to “combat the downward pressure on the economy”.
Cutting the value of the yuan, which will help with its international trade (China’s exports in July were down 8.3 per cent year-on-year), is one of the measures to stimulate the economy. Others include expected further cuts to interest rates and bank reserve ratios and more government-backed infrastructure projects.
President Xi Jinping’s own “new normal” has included a crackdown on graft that sounds good in theory but it encourages capital to leave the country and move into property markets in Australia and North America.
The goalposts keep shifting in China and the stakes for the West keep rising as its economy integrates with the rest of the world.
Assessing the “new normal” means paying close attention to the official comments of Chinese leaders and policymakers.
Beijing’s traffic jams are not going away fast, nor is its economy going to fall into a heap, but how its leaders manage the challenges of growth, will affect us all.
Glenda Korporaal visited China as a guest of the Chinese government.
IMF said good, but US condemned on similar issue of yuan devaluation.
IMF welcomes China currency devaluation
12 Aug 2015 16:09
[WASHINGTON] The International Monetary Fund welcomed Beijing's surprise devaluation of the country's currency, saying it will allow market forces to play a greater role in the nation.
China cut the yuan's value against the dollar for a second day Wednesday, sending ripples through financial markets and raising fears that the currency could fall further.
The IMF said the step could be a boon in the long run.
...
Source: Business Times Breaking News
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China devaluation sparks fear of currency war, angers U.S. lawmakers
China shocked global markets on Tuesday by devaluing its currency after a run of poor economic data, a move it billed as a free-market reform but which some experts suspect could be the beginning of a longer-term slide in the exchange rate.
The devaluation was condemned by U.S. lawmakers from both parties as a grab for an unfair export advantage and could set the stage for testy talks when Chinese President Xi Jinping visits Washington next month given acrimony over issues ranging from cybersecurity to Beijing's territorial ambitions.
...
http://www.reuters.com/article/2015/08/1...4U20150811
China’s currency U-turn: People’s Bank of China devalues the yuan
LINGLING WEI THE WALL STREET JOURNAL AUGUST 13, 2015 12:00AM
Less than three months before China shocked markets with a surprise devaluation of its currency, a top Chinese exchange-rate official told a closed-door gathering that Beijing had no need for such a dramatic move.
“Does a deteriorating economy mean there must be a devaluation of the renminbi?” asked Yi Gang, the No 2 official at the People’s Bank of China, using an alternative name for the currency. “Not necessarily.”
According to a transcript reviewed by The Wall Street Journal, Yi told government officials, academics, businesspeople and investors at the May 22 event in Shanghai that China still had a “very large” trade surplus that should support the currency.
Now, China has done a U-turn.
On Tuesday it pushed the yuan into the largest devaluation in its history, cutting its value against the dollar by 1.9 per cent and ending a decade-long rise for the currency that had pushed it up about 33 per cent since 2005.
Yesterday it fell again, the central bank setting its dollar price at 6.3306, a further drop of 1.62 per cent.
The moves rocked financial markets and set off worries that other central banks would follow suit. At home, they signal that Beijing is growing increasingly worried about its slowdown in economic growth. Abroad, the decision risks further chilling relations between Beijing and Washington ahead of Chinese President Xi Jinping’s meeting with President Barack Obama in the US next month.
The currency moves came as officials in China’s Commerce Ministry, which oversees exports, and others expressed concern that the economy was slumping faster than China’s leadership had anticipated, according to Chinese officials and government advisers.
Chinese officials also worried about the recent confidence-shaking stockmarket rout. Overall, it suggests China’s leaders are looking for new ways to rev up growth as other methods look increasingly ineffective, raising the possibility of further and more dramatic efforts to come.
The week’s moves show Beijing is struggling to balance propping up the economy with economic reform. The Chinese leadership is shifting towards stabilising growth rather than accelerating reforms such as opening up the country for freer cross-border capital flows, according to Chinese officials and advisers to the government.
Behind the push is Xi, who they say has repeatedly told local officials during the past two months that “maintaining economic growth” is the government’s top priority for the near term and the next five years.
“Xi has more than once brought up stabilising the economy as ‘the centre’ of everything,” says one official who is based in eastern China’s Zhejiang province. “Reform will still be carried out, but it’s taking a back seat to stability.”
At the same time, China’s central bank moved in a way that could bolster its efforts to loosen its controls over the currency — a step towards reform. While it didn’t tell the International Monetary Fund or other outside groups about its plans, it made the devaluation using a new mechanism the PBOC believes will make the yuan more closely aligned with market forces, say people close to the central bank.
They add that the bank also took pains to incorporate some previous IMF suggestions in the new mechanism.
Spokespeople at the PBOC, China’s Commerce Ministry and China’s cabinet, the State Council, didn’t respond to requests to comment.
The moves to devalue the yuan come as China’s leaders are fighting a host of economic ills that could endanger their goal of achieving a 7 per cent annual growth target for this year, which would be the lowest in a quarter century.
Those ills include weak factory output, slumping demand from home and abroad, and persistent risks of falling prices that could make it harder for Chinese companies to pay off debt.
The currency steps also follow unprecedented government efforts to prop up China’s faltering stockmarket, which is jeopardising Beijing’s plan to restructure China’s heavily indebted state-owned companies.
To shore up growth, China has cut interest rates four times and taken other measures to beef up bank lending since November. Beijing also has freed up local government to issue bonds and the central bank has provided financing to commercial banks to purchase those bonds. Since early last month, the PBOC has been offering credit to a government agency tasked with propping up falling Chinese shares.
Increasingly they are also turning to their old playbook of ramping up fiscal spending on infrastructure and other government-backed projects — an approach that spurred growth after the 2008 global financial crisis, but larded the world’s No 2 economy with enormous debt.
The central bank also is pumping billions of dollars of funds into China’s policy banks to finance shantytown renovations and other big-ticket projects.
The State Council made the decision to devalue the yuan in recent days amid gathering gloom over China’s export sector, according to the officials and advisers. The latest official data shows Chinese exports last month fell a surprising 8.3 per cent from a year earlier. Exports for the first seven months of the year were down 0.8 per cent compared with a year earlier.
At home, China sought to make sure the devaluation wasn’t perceived as a desperate act by the government.
Ma Jun, chief economist at the central bank, said on Tuesday the devaluation was a “one-off adjustment” and shouldn’t be seen as the beginning of a weaker currency.
Yesterday the bank sought to stem concerns of any further slide, saying there was “no basis for continued depreciation of the yuan at this point” and the exchange rate for the currency would stabilise.
Until now, China’s central bank had been bolstering the yuan’s value by selling large amounts of its dollar holdings to prevent the yuan from sliding against the dollar. It repeatedly has named maintaining the stability of the yuan’s exchange rate as one of its top priorities.
For years long-time PBOC governor Zhou Xiaochuan has pushed to liberalise the yuan and promote its global use.
By implementing devaluation through a market-based mechanism, the PBOC hopes the new system may convince the IMF to get the yuan included in the fund’s elite basket of reserve currencies, which include the US dollar, the euro, the Japanese yen and the British pound.
The central bank sets the reference rate for the value of the yuan against the US dollar. In daily trading, the yuan is allowed to move 2 per cent above or below that level, which is also known as midpoint, or fixing.
But the central bank sometimes ignores the daily market moves, at times setting the fixing so that the yuan is stronger against the dollar a day after the market has indicated it should be weaker.
The fixing now will be based more on how the yuan closes in the previous trading session, as opposed to being at the complete mercy of the central bank.
It’s a change also called for by the IMF, which is expected to make a decision on whether to declare the yuan a reserve currency late this year.
The IMF called China’s move to allow a greater role for market forces in the yuan “a welcome step”, but signalled Beijing had much further to go in letting its currency float freely.
“The exact impact will depend on how the new mechanism is implemented in practice,” an IMF spokesman said yesterday. “Greater exchange rate flexibility is important for China as it strives to give market forces a decisive role in the economy and is rapidly integrating into global financial markets.”
“The PBOC hit two birds with one stone,” says Larry Hu, China economist at Macquarie Group Ltd, a Sydney-based investment bank. “It caused the yuan to weaken, ending support to exports, and it’s making the exchange rate more market-determined, which could help China win the reserve currency status.”
Still, “devaluation reflects a change of attitude at the central bank”, says Zhang Ming, a senior economist at the government think tank Chinese Academy of Social Sciences.
Zhang has been publicly making a case for devaluing the yuan to help bolster China’s growth since late May. “The central bank’s preference for maintaining growth is increasing while its desire to win the IMF reserve-currency status is declining.”
How the yuan trades in the next few days will test how far China will let market forces go in terms of determining the yuan’s value.
“If the PBOC was to closely follow the previous day’s closing in setting the daily fixing rate, renminbi depreciation expectations could quickly become entrenched and the yuan could depreciate quite quickly and significantly in the coming days,” says Wang Tao, China economist at UBS AG.
“If so,” she says, “that would be a sea change in China’s exchange-rate policy, as letting the market drive down the yuan can help support growth.”
More losers than winners in China's yuan devaluation
While it is unclear if the yuan will keep dropping, investors are starting to assess the potential winners and losers.
Aug 12, 2015, 8:07 am SGT
Chinese airlines and European luxury carmakers are emerging as the early losers after the People's Bank of China let the yuan fall the most in two decades.
China's surprising move to cut its daily reference rate by 1.9 per cent on Tuesday (Aug 11) rippled through global markets. Policymakers called the change a one-time adjustment and said its fixing will become more aligned with supply and demand.
While it is unclear if the yuan will keep dropping, investors are starting to assess the potential winners and losers.
LOSERS
1. Chinese airlines
Chinese carriers have most of their debt in US dollars. A weaker yuan will increase their costs to pay it off and hurt their earnings.
China Southern Airlines Ltd. declined 18 per cent in Hong Kong trading, the most since 2001. China Eastern Airlines Ltd. slumped 16 per cent, the steepest drop in seven years. Each 1 per cent drop in the yuan erodes 767 million yuan (S$170 million) from China Southern's annual profit, according to the carrier's 2014 financial report.
2. European luxury-goods sellers
As the European Union's major trading partner, China and its growing middle class has been a boon for the region's luxury-goods makers. A weaker yuan makes it more expensive for Chinese consumers to buy German cars, Swiss watches and French handbags.
Shares of BMW AG, which received about 19 per cent of its revenue from China in 2014, sank 4 per cent in Germany. China also accounted for about 10 per cent of Daimler AG's sales.
LVMH Moet Hennessy Louis Vuitton SE slid 5.4 per cent. Sales from Asian nations excluding Japan accounted for about 29 per cent of the luxury-goods maker's sales last year.
3. Consumer-product makers with China as the biggest overseas market
Apple Inc. slid 5.2 per cent in the biggest decline since January 2014. China was Apple's second-largest market for the iPhone in the first half of this year. The yuan's devaluation may prompt the company to raise prices or contend with contracting margins and unit growth, according to Bloomberg Intelligence.
Swatch Group slumped 3.6 per cent. The Swiss watch maker derived 37 per cent of its 2014 revenue from the greater China region.
4. Commodity producers
The yuan's decline increases the cost of imports, including commodities. Vale SA, the world's biggest iron-ore producer, dropped 5.1 per cent in Sao Paulo. China accounted for 37 per cent of the Vale's revenue in the second quarter.
China's imports contributed to 35 per cent of the Australian mining company BHP Billiton's sales last year and accounted for 38 per cent of the sales of Rio Tinto Plc.
5. Asian Currencies
All major Asian currencies fell on concern a weaker yuan will force other policymakers in the region to devalue their foreign-exchange rates as cheaper Chinese exports edge out competitors.
The Singapore dollar led the decline, falling 1.4 per cent in the biggest sell-off since 2011, while the South Korean won dropped the most since May 2013.
WINNERS
1. Chinese exporters
Local exporters in general benefit from a cheaper yuan. China Machinery Engineering Corp. rose as much as 5.9 per cent in Hong Kong, while Lenovo Group Ltd. closed 2.9 per cent higher. Each gets more than 65 per cent of revenue from overseas. China car exports have slowed in the past years as the weakening of the yen and won increased the pricing advantage of Japanese and South Korean competitors.
Textile and clothing makers that sell to overseas markets are among companies that will benefit from the yuan's depreciation, according to Delong Yang, an investment manager at China Southern Fund Management. Huafang Ltd., a Chinese textile manufacturer, surged 10 per cent in Shanghai.
Li & Fung Ltd., a Hong Kong-based trading company which sells China-made goods from clothes and toys to U.S. and Europe, rose 5 per cent in Hong Kong.
Source: Bloomberg
S&P praises the China center bank move...
S&P praises Chinese yuan devaluation
13 Aug 2015 00:21
[NEW YORK] Credit rating agency Standard & Poor's praised China's devaluation of its currency on Wednesday and said the move did not threaten a currency war.
"China's surprise move to allow for more exchange rate flexibility makes good economic sense and is not the start of a currency war or an attempt to jump-start growth," S&P said.
...
AFP
Source: Business Times Breaking News
The intervention started, and let's see the result...
China central bank steps up intervention in yuan trading: sources
BEIJING (Aug 13): China's central bank has stepped up intervention in yuan trading, ordering state banks to buy yuan at designated rates on behalf of the monetary authorities, among other emergency measures, banking sources with direct knowledge of the matter told Reuters on Thursday.
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http://www.theedgemarkets.com/sg/article...ng-sources