BEIJING: China’s exports exceeded expectations in the last month of 2015, rising 2.3 percent from a year ago in yuan-denominated terms. Slight gains in early early trade put the yuan 0.1% up on the week, but it was still almost 1.4% weaker against the dollar than it started the year and has lost almost 5% since August.
China’s yuan fell sharply in early trade in the offshore market Thursday, cutting into some of the gains the currency made earlier this week when the Chinese central bank intervened to prop up its value. The FTSE 100 of Britain rose 0.8 percent to 5,980.29. China’s main stock indexes, however, reversed direction in the afternoon session, pulling the Shanghai Composite Index .SSEC back over the 3,000 mark to end up 2 percent, while the CSI300 index .CSI300 closed up 2.1 percent.
The Chinese yuan might weaken further this year – reflecting its overvaluation and China’s economic slowdown – but the pace is to be modest to as Beijing tries to avoid volatility in financial markets and corporate debt payments, JPMorgan Asset Management said yesterday. The world’s second largest economy is a major exporting nation and a major consumer of the commodities needed to produce these goods in Chinese factories.
A steep currency depreciation would accelerate capital outflows and stem fund inflows, a situation that would be unfavorable for stock markets in China and corporate debt payments, Hui said. So high trading volume, more cross-boarder e-commerce and more high-tech imports.
“The offshore yuan has been falling again today which has put pressure on the Hong Kong dollar”, said Kenix Lai, a senior market analyst at Bank of East Asia in Hong Kong. Benchmark U.S. crude fell 59 cents to $30.61 per barrel in NY. The onshore yuan trades under the band of 2% above and 2% below the daily fix, unlike its offshore counterpart, which trades freely in any direction and magnitude.
While the supply and demand factors that have driven prices almost 18 percent lower this year are a concern, and are hurting exporters and energy company shares, lower oil and gas costs are a boon for many resource-scarce Asian economies.
Fears over China’s weakening economy will remain one of the “dominant forces” in global markets he said, arguing that equities were unlikely to stage the same “big relief rally” they enjoyed a year ago.
“The fall in new yuan loans showed there was little demand for investment and reflected sluggish economic performance in the real economy”, said Li Huiyong, an economist at Shenyin & Wanguo Securities in Shanghai. South Korea’s Kospi added 1.4 percent to 1,916.57.
