The increase of capital cost and income caused by RMB appreciation will change China's economic structure in the long run, endow industries with different growth rates, and differentiate the performance of enterprises in different industries.
The appreciation of RMB changes the book value of assets, liabilities, income, costs and other enterprises in the industry in a short time, and affects their operating performance through changes in exchange gains and losses.
The appreciation of RMB will be a long-term benefit for industries with high import ratio, large foreign debt scale, high liquidity or huge RMB assets.
The appreciation of RMB will have a great impact on the international pricing of export industries, industries with high foreign currency assets or products.
Shen Tong, Chief Macro Analyst of Guohai Securities
The appreciation of RMB will affect different industries in two ways. First, the increase of capital cost and income caused by the appreciation of RMB will change the economic structure of China in the long run, give different growth rates to industries again, and differentiate the performance of enterprises in different industries. Second, the appreciation of RMB changes the book value of assets, liabilities, income, costs and other enterprises in the industry in a short time, and affects their operating performance through the difference in foreign exchange conversion. Generally speaking, the appreciation of RMB will be a long-term benefit for industries with high import ratio, large foreign debt scale, high liquidity or huge RMB assets; However, it has a great impact on the export industry, high foreign currency assets industry or international pricing of products; Others have less influence.
The main beneficiary industries include: real estate and infrastructure industries are non-trading real estate industries, and appreciation will comprehensively enhance the value of domestic real estate assets, and at the same time enhance the investment value of infrastructure and basic industries such as airports, ports, railways and expressway with limited resources, monopoly or long construction period and less supply elasticity, and the above two industries will benefit obviously; Financial industry, especially banking and securities industry, is a capital-intensive industry engaged in currency and capital business. Because of its good liquidity and high RMB assets, it will attract a lot of international funds and benefit from it. Industries such as aviation, electric power, oil refining, paper making, construction machinery, etc. benefit from the cost reduction caused by the dependence on foreign procurement of raw materials or equipment, or the exchange gains and losses caused by a large number of foreign debts, especially for the aviation industry with monopoly advantages in the domestic market; High-tech industries that rely on technology imports do not have advantages in key scientific and technological intellectual property rights, and will maintain the momentum of a large number of imports for a certain period of time, and can maintain their own advantages in cost on the premise of exchange rate appreciation.
The main damaged industries include: export-oriented industries, such as textile industry (especially clothing industry with high export dependence, followed by cotton spinning and wool spinning), household appliances, building materials and so on. The appreciation of RMB will greatly weaken the competitive advantage of products; Foreign trade enterprises are at a disadvantage in the industrial chain, and it is difficult for import business to obtain excess profits from RMB appreciation, but export business will suffer heavy losses; The extractive industry, petrochemical industry and non-ferrous metal industry will be impacted by the internationalization of product pricing.
(A) the real estate industry
Expected effect: We believe that we should attach great importance to people's psychological factors when evaluating the impact of appreciation. People's profit-seeking psychology and conformity psychology are very common, which will be fully manifested with the warming of the market, which will obviously contribute to the rise of capital market and real estate prices.
Inflow effect of capital: RMB appreciation generally means that the domestic economy as a whole is improving, there are many investment opportunities, and the income level is relatively considerable (at least additional exchange gains can be obtained). Therefore, a large amount of foreign capital will enter the domestic market through various channels, and the stock market and real estate market become the places where these funds are concentrated because of their good liquidity, which eventually leads to the rise of stock market and real estate prices, which is more obvious in Japanese and Taiwan Province markets. Although China's foreign exchange control is relatively strict, this trend is also taking shape according to the inflow of foreign capital in 2003: the gap between the increase of foreign exchange reserves, trade surplus and foreign direct investment in China has been on the rise in the past 2-3 years, in which there may be a lot of speculative funds, and foreign direct investment does not rule out changing the investment direction. Considering the amplification effect of this part of funds, the impact on the whole real estate cannot be underestimated.
Wealth effect: Due to abundant funds, rising stock market and overall economic prosperity, the income level of residents will be greatly improved, which will stimulate people to form a strong wealth effect. Therefore, real estate will be sought after as the main focus of consumption upgrading, thus enhancing the effective demand for real estate. Japan's stock market and real estate market rose the most during 1985- 1990.
(2) Financial industry
1. Banking business
If the RMB exchange rate rises, it will increase its attraction to international and domestic funds, and a large amount of funds will flow into the domestic banking system, which will have a positive impact on the development of banking business. The foreign currency assets and liabilities of listed banks account for a relatively small proportion of the total assets of the banking industry, and the shrinkage of foreign currency assets caused by appreciation has limited practical impact on the banking industry.
Shrinking effect of foreign currency assets: the balance of foreign currency assets and liabilities of banks accounts for about 0.52% of total assets, and a 5% appreciation of RMB may reduce the average earnings per share of listed banks by 0.0 14 yuan. However, if the appreciation 10%, the earnings per share of the five listed banks will decrease by 0.03 yuan on average.
Currency structure adjustment effect of assets and liabilities: RMB appreciation is expected to reduce RMB loans and increase foreign currency loans; RMB deposits tend to increase and foreign currency deposits tend to decrease, thus adjusting the currency structure of bank assets and liabilities. However, because the main business of Chinese banks is limited to China, the adjustment of the currency structure of bank assets and liabilities is only fine-tuning.
The effect of income structure changes: the adjustment of exchange rate formation mechanism will inevitably lead to the expansion of exchange rate fluctuations, and the scale of foreign exchange transactions and exchanges tends to increase; Derivative products are further enriched; Risk hedging and speculation tend to be active. Bank's exchange earnings and foreign exchange financing fees tend to increase; However, the risk of informal foreign exchange financing will also rise.
To sum up, the balance of foreign currency assets and liabilities of the five listed banks is only 9.558 billion yuan, accounting for only 0.52% of the total assets. Therefore, the overall impact of RMB appreciation of 5% on listed banks is very limited, but among them, Shenzhen Development (information
Market forum) and people's livelihood exchange rate risk is relatively large. Other aspects brought about by RMB appreciation are relatively small.
2. Securities industry
Under the expectation of appreciation, increasing the capital injected into the securities market is conducive to gathering the popularity of the stock market and enhancing investor confidence. The strength of the market will provide positive support for the steady growth of brokerage business, asset management business, investment banking business and self-investment business of securities companies, directly increase the profitability of securities companies and improve the competitiveness of the securities industry. The rise of the stock market often has an amplification effect on the operation of securities companies. But in the long run, the stock market bubble and its joint effects with other asset markets will impact the entire financial system, which is a risk.
(3) Transportation industry
1. Aviation industry
The appreciation of RMB will make industrial companies with high foreign currency liabilities pay less RMB to complete the original matching.
Overall impact on the economy
Beneficial effects:
Improve the terms of trade; Curb inflation; Digest excess foreign exchange reserves; Promote the rational allocation of resources; Reduce the interference of foreign exchange holdings on the autonomy of monetary policy; Reduce trade friction
Adverse effects:
Reduce the international competitiveness of products and cause unemployment; Triggering the impact of "hot money" on the financial system; Ignore the internal pressure of hidden fiscal deficit on RMB depreciation; Catering to the expectation of speculative capital and creating asset bubbles.
Influence on the stock market
A share market:
Substantial benefits enhance confidence, but there are also certain risks and new divisions.
H share market:
The vane of RMB appreciation
B share market:
Shenzhen and Shanghai B shares parted ways.
Shen Tong, Chief Analyst of Guohai Securities
I overall impact on the economy
RMB appreciation is a double-edged sword for China's economy, which has both advantages and disadvantages. The overall effect has both advantages and disadvantages, depending on the "timing", "range" and "frequency" of adjustment. The advantages and disadvantages are analyzed as follows:
(a) beneficial impact
1. Improve the terms of trade
China is entering the era of heavy chemical industry, and its dependence on energy and bulk raw materials is greatly strengthened. Under the background of the current world economic recovery and the depreciation of the US dollar, the prices of energy and raw materials are rising continuously, while the international prices of export finished products are greatly reduced due to the transfer of production bases of multinational companies. The deterioration of terms of trade leads to the loss of domestic resources, and export commodities are often subject to foreign anti-dumping. In the long run, China will become a poor trading country. The appreciation of RMB will fundamentally change this face.
2. Curb inflation
Under the condition of appreciation, the price of domestic products has not been affected, while the price of imported products has fallen because of the decline of exchange rate, which will eventually drive the price of the whole society to fall, thus achieving the purpose of deflation. In the period of inflation, the appreciation of local currency is undoubtedly a powerful weapon to avoid hyperinflation.
3. Digest excess foreign exchange reserves
For developing countries like us, it is necessary to have appropriate foreign exchange reserves. A large increase in foreign exchange reserves is an idle resource, which is undoubtedly a great waste. Increasing the purchasing power of RMB in the international market through appreciation is undoubtedly an important way to digest excess foreign exchange reserves, which is conducive to absorbing overseas resources and alleviating the bottleneck of domestic resources.
4. Promote the rational allocation of resources
From the perspective of resource allocation,
The undervalued RMB exchange rate encourages the export sector, but at the expense of suppressing the domestic service industry and manufacturing industry. The appreciation of RMB is beneficial to the balanced allocation of resources between tradable and non-tradable sectors.
5. Reduce the interference of foreign exchange on the autonomy of monetary policy.
Since 200 1, the rapid growth of foreign exchange accounts has made the central bank passively put the base currency into the inter-bank foreign exchange market larger and larger. In order to ensure a stable money supply and price stability, the central bank has to "hedge" the influence of passive foreign currency open market operations by issuing central bank bills and other active RMB open market operations. This greatly reduces the initiative of RMB open market operation, and the cost of sterilization policy is rising, which will become more and more difficult.
6. Reduce trade frictions
The huge trade surplus accumulated by China is often attacked by domestic political and interest groups in the United States, Europe and Japan, and trade disputes are increasing. China's frequent anti-dumping lawsuits and other trade disputes in recent years and in the future are all related to this background, and more and more attention is paid to the undervaluation of RMB exchange rate, making RMB appreciation the key to reduce trade friction.
(2) Adverse effects
1. Reduce the international competitiveness of products and cause unemployment.
The appreciation of RMB will greatly increase the export price of China products, and China products will lose their price competitiveness. Not only can China not become a "world factory", but even the current good development trend of manufacturing industry will decline. The first direct impact of the manufacturing recession is the rising unemployment rate, which is likely to cause a series of economic, social and political problems.
2. Triggering the impact of "hot money" on the financial system
The financial market is not perfect, and there are few financial instruments used to hedge risks; The central bank has no experience in implementing monetary policy under flexible exchange rate, and its ability needs to be tested; Domestic financial institutions have huge non-performing assets and the financial system is fragile. All these indicate that under the expectation of RMB exchange rate fluctuation, we do not have the ability to resist the impact of a large number of "hot money" on the financial system.
3. Ignore the inherent pressure of hidden fiscal deficit on RMB depreciation
Due to the imbalance of domestic finance, including huge bank bad debts, the gap of social security fund, the domestic debt accumulated by the issuance of government bonds and the debt owed by local governments, there is great pressure to create jobs, and so on. In a sense, these are hidden fiscal deficits. Solving any of these problems implies the internal pressure of RMB depreciation. Before solving these problems, letting the RMB appreciate rashly will lead to a greater depreciation of the RMB in the future, thus aggravating the fluctuation of the exchange rate in the future.
4. cater to the expectation of speculative capital and create asset bubbles.
The appreciation of RMB will bring greater appreciation expectation. Reducing foreign direct investment in China will attract more short-term capital inflows of indirect investment, create greater external imbalances, increase investment and speculation in real estate and stock markets, and even create false prosperity and bubbles, which will damage the "body" of real estate and stock markets and mislead the economy to develop in an irrational direction.
Second, the impact on the stock market.
(1) Substantially beneficial to the A-share market, but there are certain risks and new differentiation.
The appreciation of exchange rate will bring about the capital market effect, which will make a large amount of foreign capital invest in the stock market, which will be conducive to the expansion of market funds, activate the A-share market and enhance market confidence. From the medium and long-term technical point of view, it is undoubtedly a huge substantive benefit. At the same time, by promoting direct investment