Ask a question about the appreciation and depreciation of RMB

You can think about the consequences of RMB appreciation:

Now: 1 $ = 8.3 yuan

After appreciation: 1 USD = 7 yuan RMB.

The current export price of a product made in China is 10 USD = 83 yuan RMB.

Export price of domestic products after appreciation: 10 USD = 70 yuan RMB.

Is that clear? International settlement is in US dollars or gold, not in RMB, but in China.

Due to the appreciation, we produce the same product. You can get 83 yuan before the appreciation, and you can only get 70 yuan after the appreciation.

Appreciation is only beneficial to vested interests for the time being, that is, their 70 yuan is equal to 83 yuan for the time being, and their purchasing power is greatly increased, which then leads to rising prices and even inflation, because our paper currency circulation is certain.

So: the external appreciation of RMB is actually the internal depreciation. As can be seen from the above equation, our gross national product is fixed. Whether it is up or down is the dollar amount of one unit (it can be trillion or 100 billion), the appreciation is the RMB amount of seven units (it can be trillion or 100 billion), and the non-appreciation is the RMB amount of 8.3 units (it can be trillion or 100 billion).

Know why others want us to appreciate RMB, and why we insist on not appreciating RMB!

Chairman Mao said: Imperialism won't kill me!

It is good for aviation, paper making, park development, real estate, communication operation, communication equipment and other industries, but bad for other industries except aviation, and bad for industries such as steel, audio-visual equipment, oil exploitation, textiles and clothing, and components.

The transmission path and scope of the impact of RMB appreciation on major industries are different, which can be analyzed from the following angles as a whole:

1. Foreign exchange liabilities will benefit obviously, mainly including aviation, trade and other industries. Because these industries have more foreign exchange liabilities (especially US dollar liabilities), the appreciation of RMB will bring exchange gains and losses to these industries, especially airlines, which often have huge US dollar liabilities, so they benefit obviously.

2. Import-oriented industries of raw materials or parts will also benefit, mainly including papermaking (pulp import), steel (iron ore import), automobile (some important parts import), petrochemical (crude oil import), chemical fiber plastics (raw materials import), aviation (aviation equipment import), clothing (high-grade fabrics import) and other industries. Because these industries need to import related raw materials and parts every year, the appreciation of RMB will reduce the costs of these industries to some extent. For example, 70% of the pulp cost in China's paper industry, and 38% of the pulp is imported. Therefore, the appreciation of RMB will obviously reduce the cost of the paper industry, thus obviously improving the profitability of the paper industry.

3. Investment products industries will also be sought after by certain funds, mainly including real estate with land value, park development and other industries, and coal and non-ferrous metals with resource value. Due to the small appreciation, overseas funds may gain appreciation gains by investing in land or real estate owned by companies in these industries, thus increasing the attractiveness of funds to these investment products industries, thus triggering price increases.

4. Traditional export-oriented industries are directly impacted, including textiles and clothing, household appliances, machinery and other products. Due to the rising cost brought by RMB appreciation, the profit rate of these industries will be reduced, but we think that only 2% appreciation will have little impact. Companies in these industries, especially leading enterprises, will have strong anti-risk ability through cost reduction and appropriate price transfer.

5. Industries with international pricing will be affected to some extent, including non-ferrous metals, petrochemicals, steel, electronic components and other industries with international pricing. Because the prices of products in these industries are greatly influenced by international prices, in the case of RMB pricing, the appreciation of RMB will reduce its selling price, which will lead to a decline in profits.

6. Industries replaced by imported products will also be adversely affected to a certain extent, including automobiles, construction machinery, steel and household appliances. The products of these industries are fiercely competitive with imported products. The appreciation of RMB will lead to the decline of RMB quotation of imported products, which will reduce the competitiveness of local products to a certain extent and further affect the profitability of these industries.

7. Foreign trade service industry may be indirectly damaged. Because the appreciation of RMB may bring some adverse effects to China's foreign trade, especially exports, and may bring some adverse effects to ports, airports and shipping, but the appreciation may also stimulate the increase of imports to a certain extent, so its impact is relatively small.

The impact of RMB appreciation on various industries is complex and multi-angle, and it is often a combination of negative and positive. Summing up and analyzing, combined with our analysis of the changes of profitability of key companies in various industries under the circumstance of RMB appreciation of 2%, we think that RMB appreciation is good for aviation, paper making, park development, real estate, communication operation, communication equipment and other industries, but it is not good for other industries except aviation, and has some negative effects on industries such as steel, audio-visual equipment, oil exploration, textiles and clothing, and components. However, judging from the performance changes of key companies we track, other industries are generally relatively neutral.

Real estate: Real estate holding companies benefit the most.

The appreciation of CITIC Securities has mixed effects on the real estate industry;

Negative effects: Continued excessive appreciation of the currency will lead to economic slowdown (because FDI and net exports decline), and the demand for foreign capital will decline, which will lead to a decline in real estate demand and inflation, which will lead to a decline in real estate prices.

Positive effects: First, the expectation of appreciation leads to an increase in foreign investment demand for real estate. The expectation of currency appreciation will lead to the influx of foreign capital and a large amount of investment in real estate, thus increasing the demand for real estate investment and pushing up housing prices, which is inevitable in the process of currency appreciation; Second, the income effect and wealth effect lead to an increase in domestic real estate demand. Appreciation leads to cheaper prices, increased disposable income and increased demand for housing.

The superposition of positive and negative effects forms the final impact of appreciation on real estate. Therefore, the ultimate impact of appreciation depends on the macroeconomic trend after appreciation. If the economy can maintain high growth, appreciation is good for real estate, and if the economy is in serious recession, real estate will also be damaged.

The impact of appreciation on house prices is the earliest continuous rise, then the bubble forms, and finally the bubble bursts and the house prices fall. So is the history of Korea, Japan, Taiwan Province Province and other countries or regions. The reasons for this process are:

At the beginning of appreciation, the economic situation was good and the demand increased, especially the demand for foreign capital, which led to the rise of house prices; In the process of appreciation, house prices are rising and bubbles are forming, but the macro-economy supporting house prices is increasingly negatively affected; Finally, the currency rose to the highest level, and house prices reached the highest point, but exports were greatly affected, foreign capital retreated, and the macro economy began to decline. At this time, the bubble burst and house prices fell.

The cycle length of the whole process depends on the appreciation cycle length, which is generally long, such as 4 years in Korea, from 1986 to1990; Japan is 24 years, from 197 1 to1995; China Taiwan Province Province is 8 years, from 1985 to 1992.

In the early days of RMB appreciation, it was good for real estate, the demand for real estate increased, and house prices rose.

Real estate listed companies will benefit from appreciation: first, the appreciation of properties held and reserved; Second, the increase in demand will speed up the sales progress; Third, rising house prices will increase the gross profit margin.

The biggest beneficiary is the property holding company, which can enjoy the benefits brought by the long-term rise in housing prices. These companies include Financial Street, China Merchants Property, Commodity City and OCT. Secondly, development companies with large land reserves can only benefit from the increase of project gross profit through the appreciation of existing reserves, and the cost of new reserves will rise, so they cannot maintain long-term high gross profit. Such companies include Vanke and Gemdale.

However, influenced by the state's regulation of the real estate industry, the appreciation will not change the downward trend of the growth of residential development companies.

Tourism: Income effect is greater than price effect.

At present, among the inbound tourists of CITIC Securities in China, Hong Kong compatriots account for the largest proportion, exceeding 60%, while foreigners only account for 1%; However, in the foreign exchange income of international tourism, foreigners account for nearly 50% and Hong Kong compatriots account for nearly 30%. Among the foreigners entering the country, Asia accounts for more than 60%, Europe and America account for about 20% and 1% respectively. From the structure of the former 15 major source countries, it can be seen that exchange rate changes can affect inbound tourists and international tourism income mainly in Asian currencies: Japanese yen, Korean won, ruble and US dollar, as well as Hong Kong dollars and Macao dollars.

The impact of exchange rate changes on inbound tourism is mainly price effect. According to the national tourism competitiveness index compiled by WTTC, the price competitiveness index of China tourism is very high. In 2003, the average hotel price in China was US$ 98.43, ranking 120 among 2 12 countries and regions in the world. Based on this, China tourism price competitiveness index is 89, ranking third among 2 12 countries and regions. In 2004, the average hotel price in China was $72.65438 +03, ranking 106 in the world. Based on this, China tourism price competitiveness index is 80, ranking 16. In 2004, the ranking of price competitiveness declined, but it was still in the forefront.

China's tourism products and services are cheap all over the world. Therefore, even if the RMB appreciates, the number of inbound tourists will not be significantly reduced because of the price effect for China tourism, which is already very cheap. Moreover, at present, the competition in the inbound tourism market is fierce, and the price effect of a small appreciation of the renminbi can be digested by travel agencies and hotels.

China's international tourism product structure is still in the primary stage, that is, group sightseeing is the mainstay, and holiday products are far from mature. This product structure is characterized by low price sensitivity of tourists. Take 1994 as an example. In that year, the RMB exchange rate merged to 8.7 RMB/USD. In a normal year, inbound tourism should increase substantially, but the actual situation is that the growth rate of inbound tourists in that year was the lowest point (5.2%) from 190 to 2002.

Exchange rate appreciation will have a significant impact on outbound tourism through income effect. In recent years, the tendency of residents to travel abroad has been increasing, and the scale of outbound tourism has been expanding. The appreciation of RMB will improve residents' outbound spending power, and travel agencies with outbound travel qualifications will benefit from it. This will also divert some people who originally planned to travel in China, which may have an impact on the reception volume of domestic hotels and scenic spots, but the number is slight and negligible.

On the whole, we still insist on the judgment at the beginning and the middle of the year, that is, the appreciation of RMB exchange rate will have a price effect on the demand of inbound tourism market, but the effect will not be great, but it will have a positive income effect on domestic tourism and outbound tourism. Judging from the situation in the first half of the year, the growth rate of inbound tourism exceeded expectations and the growth rate of domestic tourism slowed down. The appreciation of RMB helps to promote domestic tourism, and the overall impact on the tourism market is positive.

Commercial benefits of RMB appreciation

The impact of RMB exchange rate appreciation of CITIC Securities on the commercial retail industry is mainly reflected in three aspects:

The first is the income effect. In the short term, exchange rate appreciation will bring wealth increasing effect, enhance the actual purchasing power of consumers, promote the growth of commodity consumption, and benefit the commercial retail industry. However, if RMB appreciation has a great impact on national economic growth, consumer confidence index will drop, consumption growth will slow down, and retail enterprises will be damaged.

The second is the price effect. Mainly reflected in the decline in the price of imported goods, resulting in the superposition of income effects, stimulating consumption growth and benefiting retail enterprises. Among them, department stores with a large proportion of imported goods have benefited significantly.

The third is the channel effect. After the exchange rate appreciated, the export price competitiveness declined. Previously, domestic export-oriented consumer goods manufacturers would seek domestic channels as substitutes, thus benefiting commercial retail enterprises in terms of supply quantity and price. The bargaining power of the sales terminal to suppliers will also be significantly improved. Among them, the chain business with channel advantages should benefit the most.

The appreciation of RMB has also had a certain impact on the entry of international commercial capital. On the positive side, foreign exchange earnings will promote the expansion of foreign capital that has entered; On the negative side, raising the threshold of initial capital will inhibit the entry of new capital. As far as the current situation is concerned, international commercial capital is mainly purchased at home, so after the appreciation, the internal and external competition in the commercial field will be further strengthened.

In addition, the appreciation of RMB will also promote the increase of commercial store rents through the real estate price effect, so those enterprises with commercial real estate assets will also benefit.

Generally speaking, the appreciation of exchange rate will hinder the international sales channels of domestic manufacturers, and the value of domestic sales channels will be highlighted. We judge that the Ministry of Commerce has attached great importance to domestic trade since last year, and preparing for RMB appreciation is also an important reason.

However, we should also see that it will take some time for the above three effects to occur, and with the existence of the procurement cycle, the steady and small appreciation of RMB will not have a significant impact on the performance of commercial listed companies this year.

It is suggested to pay attention to chain commercial enterprises with network advantages and excellent commercial real estate enterprises, such as An Baili, New World, Dashang, Hualian Supermart and Suning Appliance. In the medium term, exchange rate appreciation will help the performance of these companies.

Petroleum and petrochemical sub-sectors have their own advantages and disadvantages.

The exchange rate of CITIC Securities is the main external factor affecting the profits of petrochemical industry. The petrochemical industry is highly dependent on import and export, especially on bulk raw materials. The change of exchange rate directly affects the profits of enterprises. Due to the different dependence of different sub-sectors on import and export, the impact of RMB appreciation on different sub-sectors is also different.

From the perspective of import and export, the rise of exchange rate will inevitably lower the import threshold and increase the difficulty of export. For capital and technology-intensive products, China mainly imports, such as synthetic rubber and synthetic resin, while exports mainly focus on basic chemical raw materials. The advantage in this respect is resources, not technology. Therefore, the appreciation of exchange rate will inevitably strengthen the import of high value-added products, which will lead to the intensification of international products' possession of the domestic market. At the same time, it will further squeeze the profit space of resource chemical products.

Influence on crude oil exploitation industry. For the crude oil exploitation industry, at present, China is highly dependent on imports. According to the data of 2004, China's dependence on crude oil imports reached 40%. Domestic crude oil prices are set in dollars according to international crude oil prices. There is a question about the exchange rate of RMB against the US dollar. Theoretically, if RMB appreciates by 1%, the price of imported crude oil will decrease by 1% in RMB. For the domestic crude oil exploitation industry, the selling price will also drop by 1%, which is unfavorable to the exploitation industry.

Influence on oil refining industry. For the oil refining industry, due to the appreciation of RMB 1%, the cost of crude oil is equivalent to a decrease of 1%. The pricing mechanism of refined oil price is interval mechanism, and the sales price is not only related to international pricing, but also related to pricing mechanism. Therefore, domestic refined oil prices and costs are not linked. If the price drop of refined oil is less than that of crude oil, it will be good for the refining industry. Under the current pricing mechanism, the adjustment of refined oil price lags behind the change of market price. Therefore, the appreciation of RMB will directly reduce the import cost of crude oil and bring benefits to the refining industry. The sustainability of this positive trend will depend on the extent and frequency of the government's adjustment of refined oil prices.

Impact on bulk chemicals. The midstream products represented by synthetic resin, synthetic rubber and synthetic fiber currently import more than export. Although domestic products are in short supply, if the RMB appreciates and the price of imported products decreases, it will intensify competition in the domestic market and suppress the price of domestic products. In terms of cost, naphtha is affected by many factors, such as exchange rate and pricing mechanism, which may narrow the price difference space of midstream products. The decline in exchange rate will lead to the same decline in domestic product prices, and the cost depends on many factors. Therefore, the ultimate impact of exchange rate is that the price of end products falls more than the cost, which has a negative impact on bulk products.

Influence on comprehensive petrochemical companies. For comprehensive petrochemical companies, the main raw materials are supplied from abroad, such as crude oil, and their products mainly meet the domestic market, so the rise of exchange rate will benefit from the reduction of costs, but its consumer market may face the impact of cheap foreign products. For the domestic market with low self-sufficiency rate, due to the appreciation of RMB, the price drop brought by the leading price of imported products will be greater than the cost drop, and the exchange rate rise will bring negative effects to these enterprises.

For end products, the fluctuation of exchange rate will also directly affect the profit of products. Because the prices of its upstream products and its own products are affected by exchange rate fluctuations, the final result will be a comprehensive reflection of upstream cost transfer effect and foreign competitive pressure.

In a word, exchange rate will have different effects on petrochemical sub-sectors through price and market competition, and demand will partially offset the effects of price fluctuation and intensified market competition. At the same time, although the exchange rate factor is an influencing factor, it is not the dominant factor. If the fluctuation range of RMB exchange rate is between 5%- 10%, such range will not have a fundamental impact on the petrochemical industry.

Food and beverage industry: limited impact

The RMB appreciation of CITIC Securities has limited impact on the food and beverage industry and listed companies, and it is slightly different for different sub-industries.

Based on the huge domestic consumer market scale and the short time of marketization and internationalization of most companies, the consumer market of food and beverage listed companies is mainly in China, so the negative effect of RMB appreciation on product export is not obvious in the food and beverage industry as a whole.

It has a great negative impact on a few enterprises with relatively large export income, such as Fengyuan Biochemical (000930), Angel Yeast (600298), st DJI (600695), SDIC Middle Road (600962), Ji Xinzhong (000972) and ST Tunhe (600737).

Judging from the cost of imported raw materials, the appreciation of RMB is beneficial to the performance improvement of Tsingtao Beer (600600) and Yanjing Beer (000729), because imported malt accounts for a large proportion of the production costs of these two beer enterprises. Considering the purchasing cycle of beer barley and the appreciation rate of only 2%, the performance improvement of these two companies this year is very limited, and our preliminary calculation is between 1~2%, without considering the possible negative impact of RMB appreciation on the small amount of beer exported by these two companies.

The appreciation of RMB will reduce the price of imported milk powder and bring greater impetus to the production of reduced milk in domestic dairy enterprises, but the appreciation of 2% has little effect.

Theoretically speaking, the appreciation of RMB will reduce the price of imported food and beverage to a certain extent, and bring price competition pressure to domestic enterprises, especially the wine industry that investors are concerned about, but we think this effect is very limited. Because the appreciation of RMB 2% is insignificant compared with the sharp reduction of tariffs, price competition will not become the strategic choice of the world food and beverage giants in China.

The appreciation of RMB will reduce the import cost of machinery and equipment, thus reducing the capital expenditure level of dairy listed companies and beer listed companies that use imported equipment more at present and improving the profitability of assets. As far as the wealth effect is concerned, the appreciation of RMB will increase the value of RMB assets of domestic residents, thus increasing the demand for brand catering products with high added value, which is generally conducive to the better development of superior catering listed companies.

Have a different impact on steel enterprises.

RMB appreciation of CITIC Securities is beneficial to reduce the cost of steel industry. For the steel industry, China is currently a net importer. In 2004, the import volume of steel, iron ore and scrap steel was US$ 20.7 billion, US$ 654.38+0.27 billion and US$ 2.3 billion respectively, and the total annual import volume was US$ 35.7 billion. In 2004, the exports of steel, billet and ferroalloy were US$ 8.3 billion, US$ 2.3 billion and US$ 2.65 billion respectively, with a total export of US$ 654.38+0.3 billion.

With the increase of the total amount and proportion of imported iron ore year by year, the appreciation of RMB exchange rate will help the iron and steel industry to reduce production costs and further improve the competitiveness of China iron and steel industry.

Considering that the product market of China iron and steel enterprises is mainly the domestic market. At present, the supply and demand of China's long profile market is mainly affected by domestic supply and demand, and the plate market, especially the thin plate market, is closely related to the international market. However, the plate price in the international market is obviously higher than that in the domestic market, so the change of RMB exchange rate is good for the steel industry as a whole.

Considering the exchange rate change of RMB 5~ 10%, the profit of the whole industry will change by 10%.

The impact on specific steel enterprises is different. Among them, Baosteel, Maanshan Iron and Steel Co., Ltd., Tangshan Iron and Steel Co., Ltd. and Wuhan Iron and Steel Co., Ltd., which mainly rely on imported ores from abroad, have benefited the most. The rise of H-share price will further promote the rise of A-shares in mainland steel. From the perspective of risk factors, lowering the domestic steel price denominated in local currency after the appreciation of RMB may lead to a decrease in the export of steel consumption industry and an increase in the quantity of imported steel, which may lead to the deterioration of the situation of oversupply in the industry.