The devaluation of the renminbi is good or bad for the stock market.

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the devaluation of the renminbi is good or bad for the stock market.

In the early August 11, the central bank reformed the renminbi price-quote mechanism, and the median price of the renminbi depreciated more than 1000 points.

So the question came, a one-time plunge of 1136 basis points, the devaluation of 1.86% after the impact of the stock market?

This problem should be seen in the short and long term.

The short-term effect is the double-kill of the stock debt

The logic of this argument is that the devaluation of the renminbi will impact asset prices, leading to financial, real estate and other related sectors weaken, drag the overall market.

In addition, in the context of the Fed's interest rate hike, the expected devaluation of the renminbi will lead to the outflow of hot money, which is not conducive to the strength of a shares.

Huangtendong, an analyst at the Wealth Management Center at 18.07-1.58%, said the short-term psychological impact would be affected. Because the market suddenly see a devaluation of 1000 points, will trigger the capital flight and so on worries.

"But in fact, from the perspective of foreign exchange, the funds have flowed out for one months." "

Huangtendong that the key is to look at the late depreciation expectations.

In the first case, if it is expected to continue to depreciate in the future, there will certainly be a negative impact on the stock market, resulting in a fall in share prices. The larger impact of the plate may be the dollar debt more paper, aviation, etc., in addition to the asset revaluation of the plate has an impact, such as real estate, banks and so on.

In the second case, there is no negative impact on the stock market if there is no expectation that the renminbi will continue to depreciate in the future.

Long-term steady growth and economic bottom

Over the past year, the renminbi has not been flexible enough to allow the real effective exchange rate to follow the dollar, while the euro-yen BRICS currencies have sharply depreciated by more than 10%, the export pressure to increase the pressure of steady growth.

This makes the decision-making face a dilemma: The broad currency, reduce interest rates, reduce exchange rates, protect growth, but also stabilize the currency, stable exchange rate, anti-risk, in the past inclined to the former, at present, gradually inclined to the former, the next step may expand the exchange rate fluctuations, increase the flexibility of the renminbi, and actively release the devaluation pressure

Minsheng Securities believes that the change of the steady growth mentality is obvious: from money to finance, from finance to entity, from lowering interest rate to lowering exchange rate, from comprehensive to directional. This is beneficial to growth.

Everbright Macro Team also said that the devaluation of the renminbi exchange rate will help reduce export pressure, but also conducive to economic recovery. Therefore, the real economy will gradually be better in the three quarter.

Textile Toys Benefit Most

China is a big exporter, the simplest one is that the devaluation of RMB is favorable for foreign trade export. Textile clothing, toy shoes and hats are the biggest beneficiaries.

Estimates show that the value of RMB per depreciation of 1%, the textile and apparel industry sales margin increased by 2% to 6%. With the devaluation of the renminbi, the purchasing power of foreign currencies is correspondingly enhanced, which is also beneficial to Chinese toy and clothing exports. In addition, because the household appliances enterprises in the sale of goods in the settlement of the dollar is mostly used in foreign exchange, so the devaluation of the renminbi also relatively clear increase in the relevant enterprises of the remittance gains.

Bearish Aviation paper

Analysts believe that airlines have a large amount of dollar debt due to the purchase of aircraft, and the devaluation of the renminbi will inevitably generate exchange losses.

Huangtendong, an analyst at Guo Jin Securities, said the depreciation of the renminbi would have a negative impact on sectors with a larger dollar debt, such as aviation and paper, and that a rebound in oil prices would also put air shares under pressure;

Property Stock Pressure

The devaluation of the renminbi will lead to a contraction in renminbi assets. At the same time, the devaluation of the renminbi has slowed the pace of capital inflows, which puts pressure on property prices.

But since China's capital account is not yet fully open, the impact of currency devaluation on capital markets and the real estate market remains manageable. But the market is expected to change, which cannot be ignored, as the renminbi continues to have strong depreciation expectations, capital markets and

The devaluation of the renminbi is good or bad for the stock market.