China’s capital outflows are accelerating and the central bank is selling larger amounts of foreign exchange, Goldman Sachs Group Inc warned as the yuan headed for its biggest annual decline in more than 20 years.
A net US$69.2 billion exited the nation last month, compared with a monthly pace of about US$50 billion since June, Goldman economists led by Hong Kong-based M.K. Tang (鄧敏強) wrote in a note on Friday last week.
Money has been leaving in yuan payments for 14 consecutive months, while the central bank’s yuan positions have slumped the most since January. The situation could get worse, CEB International Investment Ltd head of research Banny Lam (林樵基) said.
Photo: Reuters
“Capital outflows and yuan depreciation will continue or even worsen by the end of this year and the first quarter of 2017, as investors are getting increasingly concerned about a stronger [US] dollar and China’s economic conditions,” Hong Kong-based Lam said. “The yuan will reach 7 very soon. Policymakers will keep tight capital control in the near term, but will continue to internationalize the currency in the long term.”
The equivalent of US$33.6 billion exited China via yuan payments last month, compared with US$29 billion in October, according to the Chinese State Administration of Foreign Exchange.
The monetary authority’s yuan positions — which reflect the amount of foreign currency held on its balance sheet — slumped by 383 billion yuan (US$55 billion) last month, central bank data showed.
A total of US$1.1 trillion of foreign currency has left China since August last year, when China devalued the yuan, Goldman Sachs said.
In the spot market, the offshore yuan spiked higher after the central bank strengthened its daily fixing, which limits onshore moves to 2 percent on either side.
The monetary authority raised the rate by 0.28 percent, the most in nine sessions, to 6.9312 per US dollar yesterday. That was stronger than an Oversea-Chinese Banking Corp Ltd (華僑銀行) prediction of 6.9463 and a Mizuho Bank Ltd projection of about 6.9600.
“The fixing was very, very strong,” Mizuho Asia currency strategist Ken Cheung said in Hong Kong. “The PBOC [People’s Bank of China] is sending a signal that it wants to slow the depreciation pace when the onshore sentiment has been deteriorating quickly and capital is leaving the nation quickly.”
The offshore yuan surged 0.36 percent to 6.9424 per US dollar as of 2:01pm in Hong Kong, while the onshore rate gained 0.1 percent.
The yuan traded in Shanghai is heading for a loss of 6.7 percent for this year, the most since 1994.
Ten-year government bonds fell, with the yield rising 5 basis points to 3.4 percent, while one-year interest rate swaps rose 5 basis points to 3.5 percent.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”