PSE stocks affected by Chinese Yuan devaluation


The Chinese government surprised financial markets last week by devaluing the Chinese Yuan currency, allowing it to fall more than 3% against the US dollar.


Why devalue the Yuan currency?

The rationale behind the move is supposedly two-fold:

1. It is said that the Chinese government wants the International Monetary Fund (IMF) to include the Yuan in its Special Drawing Rights (SDR) basket. By allowing the free market to determine the value of the Yuan value, it is now one step closer in being included in the IMF’s SDR basket.

2. More analysts, though, are of the opinion that the devaluation is China’s way of addressing a slowing economy. The move supposedly confirms that China’s economic slowdown may be worse than expected and the government’s decision to devalue the currency is intended to boost the country’s exports.


Losers in the Chinese Yuan devaluation

Whatever the real reason is, it certainly impacted markets worldwide and ultimately created losers in the process. Among the sectors and industries expected to be negatively affected by the Yuan devaluation are:

1. Mining and Commodities

China is the world’s biggest consumer of commodities from oil to metals. With a slowdown in economic growth, demand for commodities is expected to slow down as well. Thus, mining companies and producers of commodities may consequently see a decline in revenues.

2. Emerging Markets and their Currencies

Russia and Brazil, two of the world’s biggest commodities exporters, could immediately feel the impact of China’s slowing demand for commodities.

In addition, emerging markets with high export exposure to China would also come under pressure. These countries include Hong Kong, Taiwan, Malaysia, Singapore and Korea. Fortunately for the Philippines, the country’s exposure to China is less than 4% of its Gross Domestic Product (GDP).


Emerging markets will surely retaliate in order to protect their currencies and their economies. Vietnam already counteracted the Chinese Yuan devaluation yesterday by allowing their currency, the Vietnamese Dong, to depreciate by 1% versus the U.S. dollar.

“Following the strong devaluation of the Chinese yuan, domestic market sentiment is very much concerned with the negative impact of a United States Federal Reserve interest rate increase,” Vietnam’s central bank said in a statement.

Expect other countries to allow their currencies to depreciate as well in response to the Yuan’s decline in value.

3. Exporters of high-end foreign brand to China

Chinese consumers are lavish consumers of high-end goods. But with a weakened Yuan, these foreign imports become more expensive which could lead to lower demand in China for such brands.

4. Gaming companies in Asia

In the past years, gaming resorts in Macau, the Philippines, and other Asian countries have primarily attracted mainland Chinese as customers. With a declining economy, Chinese citizens could reduce their foreign discretionary spending, including expenses in travel and amusement, leading to lower revenues for gaming companies.


PSE stocks affected by the Yuan devaluation

Given all these, which industry sectors and PSE stocks could be affected by the Yuan devaluation? A special report in the Philippines’ stock resource identified Mining and Gaming companies as primarily impacted by China’s move.

Six (6) specific PSE stocks were also regarded as highly vulnerable while eight (8) PSE stocks could be at risk due to a possible weakening of the Philippine Peso (PHP). A complete list of these stocks is available at the Premium Special Stock Report of PinoyInvestor.


Must read these other interesting articles!

About the Author


PSEi support seen at 6,200 and 6,000 amid weaker Peso

In a not-so-surprising move, the U.S. Federal Reserve (Fed) yesterday raised interest rates by 75 basis points (bps) or 0.75% in a bid to tame rising inflation in the United States. This was the third consecutive 0.75% rate hike by the Fed, which brings the federal funds rate, the central bank’s benchmark interest rate, to ... Read more

Official SWIFT Code of BDO, BPI, Metrobank, Philippine banks

When sending cash remittances or wire transfer to a bank account in the Philippines (such as BDO, BPI, Metrobank, Landbank, DBP, etc.), you’ll surely need the SWIFT Code of the bank. Look no further because you can find all the SWIFT Codes you need in this list! Make sure you’re using the right bank code ... Read more

How to Waive your Credit Card Annual Fee (BDO, BPI, Metrobank, RCBC, Citibank, UnionBank)

Without a doubt, one of the most annoying fees that credit cardholders have to pay is the annual fee. Majority of cardholders are familiar with this fee and majority of us likely pay this grudgingly year after year after year. In the case of my credit card with BPI (Bank of the Philippine Islands), I’m ... Read more

Why Filipinos do not become business owners or entrepreneurs

For a majority of Filipinos, entrepreneurship does not seem to be a typical, expected path. This is not surprising, considering that in school, students are primarily taught to become employees after graduation. Students train for years to become staff workers, reporting to a supervisor, and just waiting to receive their wages or salaries every month. ... Read more

My experience investing in Mutual Funds in the Philippines

I started investing in mutual funds when I was 22 years old. As an Overseas Filipino Worker (OFW) then, I was fortunate to be able to save some money at that young age because of my work abroad. One time while I was on vacation in the Philippines, I saw a large billboard in EDSA ... Read more

Income Tax Tables in the Philippines (2022)

The Philippines’ new tax reform bill, known as TRAIN or Tax Reform for Acceleration and Inclusion, was signed into law on December 19, 2017 and its implementation began on January 1, 2018. What are the new income tax rates under the TRAIN law? How will TRAIN affect income taxes of individuals and corporations? How is the ... Read more

PSE Stocks Performance under each Philippine President (1987-2021)

Did you know that Philippine stocks were able to achieve an astounding growth of 800% in a span of 30 years? From 1987 until 2018, the Philippine Stock Exchange index (PSEi) rose from 1,000 points to a peak of 9,000 points — generating a return of 800% over 30 years. (The PSEi is an index ... Read more

SSL 2022: Salary Increases for Teachers, Nurses, Gov’t Employees

Good news to all government employees! There’s a new round of salary increases beginning January 1, 2022! Millions of employees of the Philippine government — including public school teachers, nurses and staff of government hospitals, and workers in local and national government agencies, etc. — will be getting an automatic salary adjustment this 2022 under ... Read more

PSE Trading Hours in 2022: What time open, when closed?

Before you take the plunge into stock trading and investing, make sure you understand what stocks are and how the Philippine Stock Exchange (PSE) operates. Unlike other investments that are relatively safe, stock trading is risky and loss of money is a possibility. So before you deep dive into the exciting world of stock trading, ... Read more

Price Floor and Price Ceiling of PSE Stocks

Trading bands in the PSE come in two forms: Price Ceiling, or the upper price limit, and Price Floor, or the lower price limit.

Leave a Comment