RMB Depreciation Of The Textile Industry To Benefit From Listed Companies Is Expected To Usher In A Positive Stage.

At present, there are two claims for the future trend of the renminbi. One is that the renminbi will not depreciate in the long run, and the other is that the renminbi will continue to depreciate. Enterprises importing raw materials from Europe and America may postpone purchases to foreign suppliers, see if the exchange rate is to be sold again, or ask for an extension of payment. If it can be discussed with the exporters, allowing the postponement of the delivery date will be delayed payment.

The industry generally believes that the depreciation of the RMB will benefit the export business, especially the textile and clothing leading companies which account for a relatively high dollar settlement. On the one hand, it will help to increase the company's orders. On the other hand, most of the companies will settle in US dollars, and the exchange rate can also be obtained under the depreciation of the RMB.

According to the latest data from China foreign exchange trading center, the central parity of RMB against the US dollar in November 23rd was 6.8904, down 125 basis points from the previous trading day. Experts say the short-term rebound in the RMB exchange rate is expected to be limited. According to the analysis of the industry, the spot exchange rate of the RMB against the US dollar has dropped sharply, mainly in US dollar settlement, and the export business accounts for a relatively good stage in the larger textile and apparel listed companies.

"The devaluation of RMB will help enhance the competitiveness of enterprises' export products, so that enterprises can get more orders and drive export growth," GF Securities issued Research Report. Guang Fa Securities believes that to a certain extent, it helps to slow down the order outflow caused by the rising production cost of domestic labor and environment in recent years, and the growth rate of export volume continues to slow down, or even a negative growth trend.

Thanks to the appreciation of the renminbi and the rising cost of labor and raw materials, the competitiveness of China's textile and garment industry in the world's main markets has been weakened in recent years. textile Clothing exports showed a year-on-year decline.

In the first three quarters of 2016, the US economy gradually recovered, but the market was still in a doldrums. According to the latest statistics of the General Administration of Customs of China, the export volume of textiles and garments in China in 2016 October was 21 billion 460 million US dollars, down 5.73%, down 9.28% from the same period last year. Among them, exports of textiles (including textile yarns, fabrics and articles) amounted to US $8 billion 598 million, down 6.64% compared to the same period last year. Exports of garments (including garments and accessories) were US $12 billion 862 million, down 10.96% from the same period last year.

From January to October 2016, the total export volume of textiles and clothing in China was 222 billion 561 million US dollars, down 5.31% from the same period last year, of which the total export volume of textiles was 88 billion 132 million US dollars, down 3.25% compared with the same period last year. The total export volume of clothing was 134 billion 429 million US dollars, down 6.62% from the same period last year.

Although the demand for overseas developed markets, especially the European market, is hard to improve in the short term, the industry believes that the depreciation rate of the RMB against the US dollar will depreciate by 1%, and the sales profit margin of the textile and garment industry will increase by 2% to 6%. Moreover, the scale of China's textile and garment industry ranks first in the world, and the impact of exchange rate changes on the industry is huge.

Insiders pointed out that the textile and garment industry has a higher dependence on exports. The devaluation of the RMB will help companies reduce costs and improve product competitiveness. Enterprises will get more orders, and on the other hand, it will help export enterprises gain foreign exchange earnings. The depreciation of the renminbi means that the purchasing power of foreign currencies will increase, which will further stimulate. consumption It is conducive to the export of textile products.

"Because the company is facing the minority, it is connected. Loose order Generally, it is a sign for half a year. Therefore, the depreciation of RMB will benefit the company in the short term, but the long-term trend is still good. The listed companies of the textile industry told reporters that if the RMB depreciated for a long time, it would be good for a long time, but if it was only short-term, the impact on the company's performance would not be obvious.

Some analysts have pointed out that because the orders of overseas customers are all ahead of schedule, customers usually issue letters of credit for 30 days or 90 days. The fluctuation of short-term exchange rate will not change significantly for the increase of export enterprises' income. The key is to observe the next exchange rate change. If exchange rate changes continue, orders and quotations will be affected. Exporters should start from the standpoint of exchange rate preservation and choose to make long-term forward settlement and sale of foreign exchange or RMB options in banks, so as to avoid potential risks caused by exchange rate fluctuations.

However, some listed companies say that although the exchange rate downward changes are clear about the industry, most companies have already adopted a series of measures to hedge exchange rate risks, such as import hedging, US dollar financing and forward foreign exchange transactions, and so on. The positive impact on the performance of enterprises should be analyzed in specific situations.

Another export oriented textile and apparel listed company told reporters that although the depreciation of RMB is favorable for textile and garment export enterprises, because RMB is related to the international market, it is necessary to see the reflection of the international market in the future.

Statistics show that between November 4th and November 21st, the central parity of the RMB against the US dollar suffered a 12 consecutive drop, with a cumulative depreciation of 1494 basis points, with a depreciation rate of 2.21%. Although there was a brief rebound in November 22nd, it fell again in November 23rd. Some experts believe that there will be devaluation pressure on the RMB against the US dollar in the short term. In the long run, China's economic fundamentals do not support the long-term depreciation of the RMB, and a large number of foreign exchange reserves will also provide support for the long-term strength of the RMB.

Yu Yongding, a member of the Chinese Academy of Social Sciences, said recently that a country like China could hardly depreciate greatly. However, AllanvonMehren, chief analyst at dusk bank, said that the yuan will gradually depreciate. As China's economic growth is under pressure and its debt risk is rising, the Federal Reserve is restarting its interest rate increase, and foreign direct investment (FDI) will no longer be a net inflow to keep the renminbi under pressure.