The yuan’s rebound might be undermined by a seasonal hunt for US dollars as Chinese companies prepare to pay dividends to shareholders overseas.
Demand for the greenback and other currencies is set to peak at US$7.8 billion this month, a substantial sum considering that local lenders settled an average of US$11.8 billion of foreign exchange for clients in the first five months of the year.
China’s currency reserves have shrunk every July in the past three years, with former regulator Guan Tao (管濤) saying last week that demand for foreign exchange surges in this period.
China’s exchange rate has turned more volatile in the past two months, climbing the most in more than a year in May and then declining last month before suspected central bank intervention spurred a rally.
Goldman Sachs Group Inc warned that capital outflows have picked up, while data suggest the economy is showing signs of slowing as an official deleveraging drive crimps spending.
“The need for dividend payouts will pressure the yuan and may pressure a recent increase in China’s foreign reserves,” Hong Kong-based Banco Bilbao Vizcaya Argentaria SA economist Xia Le (夏樂) said. “The yuan’s advance in the past few days is not sustainable — short-term factors such as dividend payments and long-term ones like capital outflows will work together to push the currency weaker in the coming months.”
Offshore-listed Chinese firms need to pay a combined US$16 billion of dividends in foreign currency in the three months through next month, according to data compiled by Bloomberg.
That includes US$2.4 billion last month and US$5.9 billion next month.
Hong Kong-listed China Construction Bank Corp (中國建設銀行) needs to pay the equivalent of US$3.8 billion of dividends on July 20, according to a stock exchange filing.
Bank of China Ltd (中國銀行) is to pay US$1.9 billion and China Shenhua Energy Co (神華能源) US$1.2 billion, both next month.
The yuan started last month at an annual high and then lost 0.6 percent to the US dollar over two weeks as bearish bets returned on concern China’s economic growth might have peaked. The currency then surged amid speculation of central bank intervention, erasing its losses for the month to rise 0.6 percent in Asia’s best performance of last month.
“We are heading back to a test of 7 per [US] dollar soon, because fundamentals are bad, “ Hong Kong-based Rabobank Group head of financial markets research Michael Every said. “China has structural outflows and it always will, as long as people want to diversify and it keeps credit growing so fast.”
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
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],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained