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Chinese Companies Hit by Yuan
Devaluation
By www.ProfitableInvestingTips.com
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
If you were thinking of investing in
Chinese stocks, think again.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
China troubles are not over as
Chinese companies are hit by the
Yuan devaluation.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Click the links below to get your
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Before We Continue…
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Bloomberg Business reports that
China Forex losses jump 13-
fold and there is more to come.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
The impact of August’s yuan
devaluation has shown up in Chinese
publicly traded companies’ annual
results – and investors are bracing for
more pain.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Some 980 listed Chinese companies
reported combined foreign-exchange
losses of 48.7 billion yuan ($7.5
billion) for last year, almost 13 times
the amount in 2014, Bloomberg-
compiled data show.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Profits at those firms slumped 11
percent last year to 789.2 billion yuan.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
State-owned oil refiner China
Petroleum & Chemical Corp., or
Sinopec, reported 3.9 billion yuan in
net FX losses, increasing from 179
million yuan in 2014.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Back when the dollar always seemed
to be falling versus the Yuan and
China repeatedly needed to buy
dollars to keep its currency in check,
Chinese companies took out loans
denominated in dollars.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
After all if the dollar was going to be
weaker next year why not pay back
your debt in the weaker currency.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Unfortunately for many Chinese
companies the dollar has been on a
tear and the financing costs have
gone up in the land of managed
capitalism.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
The worst hit among Chinese
companies was China Southern
Airlines.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
This company is traded as an ADR in
the USA.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Last June shares sold for more than
$60 a share and today the ADR trades
for $33 a share. Real estate
companies are the next worst.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Agile Property Holdings sold for $7 a
share in Hong Kong as recently as
last May and sells for $4 a share
today. Where is this going next?
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Chinese Economic
Slowdown
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
China was the economic miracle of
the world for decades as it rose from
an isolated Communist country to be
the workshop of the world.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
But, the factors that drove that
expansion such as low wages and a
seemingly unlimited pool of cheap
young labor are wearing thin.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
And China has based its expansion on
borrowing to build its industrial base
and then paying off the debt with ever
increasing profits.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Now as the expansion slows this
becomes a less viable strategy.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
The Financial Times reports that in
March the Chinese
economy was riding choppy waves.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
China appears to have had a good
March, with a closely-watched
monthly survey indicating that both the
services and manufacturing sectors
were doing better than a few weeks
before even if overall growth remains
tepid.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
The Caixin composite manufacturing
purchasing managers index came in
at 51.3 in March, the highest reading
in 11 months.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
It had been in 49.4 February.
The services PMI was 52.2, up from
51.2.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
Last week the Caixin manufacturing
purchasing managers index came in
at 49.7 in March, ahead of the 48.3
economists were expecting. It had
been 48 in February.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
The Caixin-sponsored series is based
on a much smaller sample of private
companies and tends to be more
volatile than the official reading.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
The official survey focuses on larger
state enterprises.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
A manufacturing purchasing
managers index of less than 50
predicts a contraction in that sector.
This is the crux of the Chinese
problem.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
They need to convert to more
consumer spending and a more
service driven economy.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
In the meantime a heavy debt burden
is exacerbated by the falling value of
China’s currency.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
If you are thinking that it may be safe
to invest in China again, you might
want to reconsider.
http://profitableinvestingtips.com/stock-investing-tips/chinese-companies-hit-by-yuan-devaluation
We wrote about a weak Chinese
manufacturing report 4 years ago
and it may well be another 4 years
before things stabilize in the land of
managed capitalism.

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Chinese Companies Hit by Yuan Devaluation