The central parity of the RMB depreciates by thousands of points, which may benefit textile and clothing exports

On August 11, the central parity rate of RMB against the U.S. dollar was reported at 6.2298, down 1,136 basis points from 6.1162 on the previous release day (August 10), the largest drop in history.
At the same time, affected by the active devaluation of the RMB, domestic commodities denominated in RMB rose strongly on the 11th, with only a few varieties closing lower. In this regard, many industry insiders said in interviews with reporters that with the depreciation of the RMB, China’s commodity prices will fall accordingly, which will significantly increase the competitiveness of products and boost exports. Therefore, the overall commodity prices have improved on the 11th. Boost.
In fact, in addition to the bulk commodity sector, industries closely related to exports such as textiles, shipping, chemicals, etc. have also received a strong boost.
​Bulk commodities welcome good news
On August 11, the central parity rate of the RMB dropped sharply by more than 1,000 points, the largest drop in history. The central parity rate of RMB against the U.S. dollar was at 6.2298, a new low since April 25, 2013.
According to the central bank’s explanation, first, after improving the quotation of the central parity rate of the RMB exchange rate, market makers refer to the previous day’s closing exchange rate quotation, and the spread between the past central parity rate and the market exchange rate is corrected at once. Second, a series of macroeconomic and financial data released recently have divided the market’s expectations for the RMB exchange rate. Market makers are paying more attention to changes in market supply and demand. On the 11th, there were about 200 central parity quotes based on the previous day’s closing exchange rate of 6.2097 yuan. Basis point depreciation.
It is worth noting that after the news of the depreciation of the RMB central parity rate came out on the 11th, the performance of domestic commodities denominated in RMB swept away the previous decline on the same day, and the overall trend rose strongly. According to the reporter’s rough statistics, among the 45 main domestic commodity futures contracts, only three futures contracts, including the main rapeseed contract, the main wheat contract and the main petroleum asphalt contract, closed down that day, while the main futures contracts of Shanghai Silver, Shanghai Copper, The main stocks of Shanghai gold rose by more than 2%.
“The current depreciation of the RMB central parity rate is undoubtedly a great benefit for domestic commodities priced in RMB.” Liu Xinwei, an analyst at Zhuochuang Information, said in an interview with reporters, “China’s commodity prices are expected to fall accordingly, making The competitiveness of products has increased significantly, further boosting commodity exports.”
In addition, the steel industry is also a typical example. “Previously, domestic steel exports have been showing significant growth. However, as some varieties no longer have tax refunds, the market was once very pessimistic about the situation of steel exports this year.” A broker told Reporter introduction.
According to public information, in 2014, China’s steel exports grew at a rapid pace, with exports exceeding 90 million tons, an increase of 50.5% compared to 2013. However, it is worth noting that among these exported steel varieties, nearly 40% are boron-containing steels. At the beginning of 2015, boron-containing steels were no longer included in the tax rebates. This once caused the outside world to worry about the steel export volume this year. .
“The country has always been in a state of overcapacity. If export demand is curbed again, it is likely to have a reverse curb on domestic steel prices. The current depreciation of the central parity rate of the RMB may lead to a significant reduction in steel prices and the production of products. Competitiveness has also increased, which is a big boost for exports. However, this boost may not be immediately effective in the short term, but the export cost pressure can be significantly alleviated.” said the brokerage person mentioned above.
Judging from the performance of the capital market on the 11th, individual stocks in the steel sector performed well. Data show that as of the close of trading on August 11, the steel sector in the domestic A-share market rose by 1.52% as a whole, with individual stocks including Nanjing Iron and Steel Co., Ltd. (600282.SH), Bayi Iron and Steel Co., Ltd. (600581.SH) and Benxi Iron and Steel Plate (000761.SZ). ) rose by more than 9%, and in the futures market, the main rebar contract also rose by 0.15% that day, closing at 2,053 yuan.
In fact, in addition to steel, the gold sector is also experiencing good news. Xiao Lei, a researcher at Shiyuan Financial Holdings, believes that the depreciation of the RMB will have the most direct impact not only on markets such as exports, but also on the commodity market for investors. Affected by the sharp decline in the RMB exchange rate, quotes in RMB Prices of gold and silver soared rapidly.
Data shows that as of the close of trading on August 11, the main contract of Shanghai Gold closed at 226.3 yuan, an increase of 2.51%, and the main contract of Shanghai Silver closed at 3361 yuan, an increase of 3.42%. Related stocks also experienced daily limit surges in the secondary market. On the 11th, gold concept stocks led all concept sectors to rise, rising 7.9% as of the close. Among them, Hunan Gold (002155.SZ), CICC Gold (600489.SH), Chifeng Gold (600988.SH) and other stocks reached their daily limit.
​Textile chemical industry boosted
​In addition to the bulk commodity sector, the textile and chemical industries, which have been sluggish before, are also expected to benefit.
It is worth noting that the textile industry is currently facing a situation of negative growth. According to the China Chamber of Commerce for Import and Export of Textiles, China’s textile and apparel exports fell by approximately 2.9% year-on-year in the first half of this year, the first year-on-year negative growth in recent years. At the same time, in the first seven months of this year, China’s textile and apparel exports totaled US$155.62 billion, a year-on-year decrease of 4.4%. Among them, China’s textile exports were US$62.42 billion, down 1.5%; clothing exports were US$93.2 billion, down 6.2%.
“The textile industry has always been oriented towards foreign trade exports and has a relatively high degree of dependence on exports. The current lower RMB exchange rate will give a more obvious boost to the industry.” The above-mentioned brokerage person told reporters.
“On the one hand, it will help the company reduce costs and improve product competitiveness. The company hopes to get more orders. However, this process will have a long-term impact and there will be no immediate results.” A business owner Mr. Zhang, the person in charge of the textile foreign trade company, told reporters, “On the other hand, it is beneficial for export-oriented companies in the industry to also gain benefits in exchange, and the purchasing power of foreign currencies will also be enhanced, which can stimulate demand. However, it is worth noting However, for some larger companies, the boosting effect may not be obvious, because most of them will lock the exchange rate with banks, and it is difficult to obtain benefits from expectations.”
According to the after-hours data on the 11th, at the close of trading on August 11, the textile and apparel sector surged 4.01% across the board, and more than 10 stocks in the overall industry sector reached their daily limit. Similar to the textile industry, the chemical industry has also gained confidence in exports. On the 11th, the chemical industry sector also received a significant boost.
As of the close, the chemical sector as a whole rose by 0.99%, with Qianjiang Biochemical (600796.SH), Gansu Electric Investment (000791.SZ), Chitianhua (600227.SH) and other stocks reaching their daily limit.
The above-mentioned securities dealer also told reporters, “Most of the boost brought by the lower RMB exchange rate comes from the boost in exports, so the shipping industry, as the main force in transportation, will naturally become the industry sector that benefits more.”