Date
16 January 2017
China Overseas Land and Investment, chaired by Hao Jianmin, and other mainland developers are likely to be hit hard by the RMB depreciation as they hold a lot of offshore bonds. Photo: HKEJ
China Overseas Land and Investment, chaired by Hao Jianmin, and other mainland developers are likely to be hit hard by the RMB depreciation as they hold a lot of offshore bonds. Photo: HKEJ

RMB depreciation to weigh heavily on mainland developers

Mainland property developers China Overseas Land and Investment Ltd. (00688.HK) and China Resources Land Ltd. (01109.HK) are expected to be among worst hit by the renminbi depreciation because a big portion of their loans came from overseas, the Hong Kong Economic Journal reported on Thursday.

Offshore debts constitute 82 percent of China Overseas Land’s loans and 75 percent of China Resources Land’s borrowings, the newspaper said.

Greenland Hong Kong Holdings Ltd. (00337.HK) and Fuguiniao Co Ltd. (01819.HK) are also expected to be hit hard by the Chinese currency’s depreciation as their liability to equity ratios have reached more than 200 percent, the report said, citing data from UBS AG.

The weaker yuan will have a big impact on the mainland property, which is just starting to recover with the inflow of speculative capital, according to a Bloomberg economist. 

Analysts with the Hongkong and Shanghai Banking Corp. said machinery and metal plays will suffer while semiconductor and footwear makers will gain from the lower renminbi.

Assuming a 2 percent drop in the currency’s value, Lonking Holdings Ltd. (03339.HK), Coolpad Group Ltd. (02369.HK) and Zoomlion Heavy Industry Science and Technology Co. Ltd. (01157.HK) are projected to see their net profit fall by 11 percent, 20 percent and 32 percent respectively.

On the other hand, the renminbi deprectiation will benefit Lenovo Group Ltd. (00992.HK) and Shenzhou International Group Holdings Ltd. (02313.HK), which are expected to see their net profit grow by 5 percent and 3 percent respectively.

Hong Kong retailers and Macau casinos, which are already reeling from the continued decline in the number of mainland tourists, will suffer more as their currencies gain more value against the renminbi, analysts said.

[Chinese version中文版]

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