The hottest RMB appreciation brings investment opp

2022-08-26
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RMB appreciation brings investment opportunities five industries benefit

RMB appreciation brings investment opportunities five industries benefit

China Construction machinery information

Guide: Recently, an upsurge of forcing RMB appreciation broke out in the United States, and 130 U.S. congressmen jointly requested that China be listed as a currency manipulator. Although China has repeatedly stressed that it is appropriate that China's exchange rate is not undervalued, although China's exchange rate has actually risen by about 4% in addition to the US dollar since this year

recently, an upsurge of forcing the appreciation of the RMB broke out in the United States, and 130 members of Congress jointly requested that China be listed as a "currency manipulator". Although China has repeatedly stressed that it is appropriate that China's exchange rate is not undervalued, and although China's exchange rate has actually increased by about 4% in addition to the US dollar since this year, in order to reduce the pressure of world public opinion and achieve the inflation target of 3% this year, the appreciation of the RMB against the

US dollar has become a concession strategy choice for negotiations on the way forward in Sino US relations. We expect that the RMB will gradually appreciate by about 4% against a package of foreign currencies such as the US dollar in the next 12 months

if the RMB appreciates, RMB assets will have a wealth effect, foreign exchange holders will generate exchange gains, and the cost of imported raw materials and equipment will be reduced. Some industries and companies with these three advantages will benefit from it, mainly real estate, banking, aviation, paper, copper and steel. This paper analyzes these industries and recommends companies that benefit greatly. This year, China's economy may reach double-digit growth rate, the growth rate of net profits of enterprises is accelerating, and the profit growth of cyclical industries is particularly prominent. Some time ago, the trend of the above three types of RMB beneficiary stocks was weak, and the valuation tended to be reasonable. Taking advantage of the inflow of hot money from the appreciation of the RMB and the sharp growth of quarterly results, these three types of stocks may rise, comprehensively pushing the plastic processing industry towards the middle and high end of the industry, thereby driving a round of rising prices in China's A-share market led by real estate, banking, aviation, paper industry and steel cycle industry

the appreciation of RMB benefits from three aspects: first, the import cost has decreased, and the cost has been reduced for enterprises that need to import equipment and raw materials, such as imported iron ore, crude oil, pulp, various equipment, etc; Second, foreign exchange gains, enterprises holding foreign debt will benefit from reducing the actual repayment, such as aviation enterprises holding foreign debt are larger; Third, with the appreciation of RMB assets, the wealth effect of enterprises operating with RMB assets is obvious, such as real estate and banking, which will also be pursued by foreign capital. Of course, with the appreciation of the RMB, some export industries will also suffer losses, such as textiles and clothing, automobiles, machinery, household appliances, etc

analysis of five industries and companies benefiting from RMB appreciation

1. The impact of RMB appreciation on the real estate industry

(1) the appreciation of local currency brings about the rise of real estate prices

from international experience, asset prices, especially real estate prices, continue to rise during the appreciation of a country's local currency. Take Japan for example. During the appreciation of the yen in the 1970s and 1980s, the real estate price in Japan continued to rise by more than six times. After the Plaza Accord in 1985, the exchange rate of the yen against the US dollar rose from about 250:1 to about 130:1 in 1991, with an appreciation of 100%, while Japan's real land price index rose from around 90 points to about 150 points. The same is true in South Korea. In, with the appreciation of the Korean won against the US dollar, the Korean real estate price index rose by about 80% from

(2) two major factors lead to the rise of real estate prices during the appreciation of the local currency

we believe that there are two main reasons for the rise of real estate prices during the appreciation of the local currency: the first is the revaluation of factor prices in the appreciation cycle, and the second is the growth of investment demand for real estate. The pressure of exchange rate appreciation essentially comes from the undervaluation of production factors. The process of local currency appreciation is the revaluation of the price of domestic production factors. As an essential factor of production in economic activities, the price revaluation of real estate is inevitable. In addition, in the process of appreciation, for foreign capital, assets priced in local currency are tools to obtain appreciation income, so it will bring demand for the country's assets, including real estate. For the purpose of maintaining and increasing the value of real estate, domestic residents will also increase their demand for real estate, which together promote the rise of real estate prices

(3) the valuation of real estate stocks is still low, which is worth optimistic

under the background of RMB appreciation, real estate stocks are worth optimistic. On the one hand, the overall recovery of the real estate market in 2009 and the excellent sales situation of developers laid the foundation for the performance growth in 2010. In the appreciation cycle, the house price remained high or even continued to rise, which enabled the gross profit margin of developers to remain at a high level, and the performance growth was relatively deterministic. On the other hand, the current valuation level of mainstream real estate stocks is generally not high. According to the 2009 performance, the P/E ratio is only about 20 times. Once the uncertainty of policy is eliminated, the valuation will have some room for recovery. We focus on four types of stocks, including industry leaders, regional real estate stocks, second and third tier urban developers and commercial real estate developers, represented by Jindi group, Binjiang group, Rongsheng development and Shimao shares

2. The impact of RMB appreciation on the banking industry

(1) the impact of RMB appreciation on the banking industry

first, the impact of RMB appreciation on various industries is different, which indirectly affects the loan quality of commercial banks

for commercial banks, on the one hand, commercial banks will benefit indirectly from industrial loans benefiting from RMB appreciation; On the other hand, the negative impact of commercial banks in export damaged industries is limited. Because China has long paid attention to the development of export-oriented economy, it mainly relies on foreign trade exports to drive economic growth, especially the coastal areas rely more on export-intensive industries to develop local economy. In the process of loan granting, some of the general manufacturing loans granted by commercial banks are related to textile and other export industries. As commercial banks mainly issue loans to enterprises with strong competitiveness in the export manufacturing industry, although these enterprises have been impacted by the appreciation of the RMB, the overall negative impact is limited. During the appreciation of the renminbi since 2005, the overall loan quality of commercial banks has remained stable, and there has been no fluctuation in loan quality. At the same time, with the continuous progress of RMB appreciation, it is expected that commercial banks will gradually adapt to this change, and will pay more attention to industries benefiting from RMB appreciation or industries with little impact in the distribution of loan

secondly, the appreciation of RMB will increase the asset wealth effect of commercial banks

according to authoritative statistics, the domestic and foreign currency deposits of China's financial institutions in 2009 were 612006.035 billion yuan, of which RMB deposits reached 59774.110 billion yuan and foreign exchange deposits reached 208917 billion yuan. The domestic and foreign currency loans of financial institutions in China are 3D printer technology, which is an innovative molding manufacturing technology of 42559.66 billion yuan, of which RMB loans reach 39968.482 billion yuan and foreign exchange loans reach 379.482 billion yuan. The proportion of RMB deposits in domestic and foreign currency deposits is 97.67%, and the proportion of RMB loans in domestic and foreign currency loans is 93.91%. It can be seen that the proportion of RMB deposits and loans of China's banking financial institutions is very large, while the proportion of foreign exchange deposits and loans is very small. This large proportion of RMB assets and liabilities, in the process of RMB appreciation, the wealth effect of RMB assets of commercial banks continues to improve

third, in the process of RMB appreciation, the exchange earnings and international settlement needs of commercial banks have changed, but the proportion of this business income is very small, which can almost be ignored without relying on major users

international settlement business is an important source of income for China's commercial banks. The appreciation of RMB has a certain impact on China's commercial banks' international settlement and exchange gains and losses, but the impact is not great. Because the appreciation of RMB is equivalent to raising the export price and reducing the competitiveness of exports; It reduces the cost pressure of the price rise of imported raw materials and enhances imports. The appreciation of RMB will encourage imports and inhibit exports. If the RMB continues to appreciate, China's export activities will shrink, affecting the international settlement volume and exchange gains and losses of commercial banks. In the long run, as China's total import and export value will not decrease, the international settlement business of commercial banks may not be much impacted. The difference is that the business volume of export settlement business and import settlement business will change from one to the other. For example, the export settlement volume may decrease and the import settlement volume may increase, which will have a slight impact on the relevant earnings of commercial banks

fourth, the appreciation of RMB promotes the inflow of hot money, which is conducive to the improvement of the valuation of commercial banks

after the appreciation of RMB, in order to pursue a higher rate of return, international hot money may try its best to convert foreign exchange into RMB and enter China to look for investment opportunities. The domestic stock market and housing market are its priority, so the current best-selling fixture industry is the target market for manual fixtures. The influx of hot money will promote the further improvement of China's real estate prices and securities market valuations, and bank stocks, as one of the heavyweights, will share the rise

(2) the current valuation of bank stocks is reasonable, and there are good investment opportunities

the appreciation of RMB has a certain impact on the operation of domestic commercial banks and further promotes the valuation of bank stocks, but the investment opportunities of bank stocks in the future may come from their fundamentals. We believe that since the 2008 financial crisis, benefiting from the domestic macroeconomic recovery, the fundamentals of China's commercial banks have been continuously improved, the credit scale has maintained rapid growth, the net interest margin still has room to improve, the asset quality is stable, and the valuation of bank stocks is also in a reasonable range, but not overestimated. At present, the large-scale refinancing of commercial banks has made more than half progress, and the substantial replenishment of core capital is conducive to the future business development of commercial banks. The above factors indicate that there are still good investment opportunities in bank stocks

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