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CNBC
25-06-2025
- Business
- CNBC
China doubles down on promoting yuan as confidence in U.S. dollar takes a beating
China is devising more ways for foreign institutions to use the yuan, as international confidence in the U.S. dollar falters. The moves aim at challenging the greenback, experts said, even as the U.S. dollar remains by far the world's predominant currency. The timing is favorable as the U.S. dollar index has tumbled more than 9% this year — while the offshore yuan has strengthened more than 2% against the dollar. In a sign of growing resolve in Beijing to lure the world away from the dollar, People's Bank of China Governor Pan Gongsheng Pan in a speech last week at the high-profile Lujiazui Forum discussed "how to weaken excessive reliance on a single sovereign currency." He also announced plans to set up a center for digital yuan internationalization in Shanghai and promote trading of yuan foreign exchange futures. Beijing has already rolled out a digital version of its currency to replace some cash and coins in circulation. Much of Beijing's recent moves focus on the futures market. Three major Chinese exchanges announced that starting last week, qualified foreign institutional investors would be able to trade 16 more futures and options contracts listed in mainland China. The commodities covered include natural rubber, lead and tin, according to releases on the Shanghai, Dalian and Zhengzhou exchanges. That follows the addition of dozens of other tradable futures contracts for foreign institutional investors earlier this year, according to Zhou Ji, macro foreign exchange innovation analyst of Nanhua Futures, a Hangzhou-based brokerage focused on futures products and research. Zhou pointed out that besides expanding the range of hedging products for international institutions, those contracts increase the influence of the yuan in the global commodity pricing system. In another step toward encouraging global investors to use the yuan, the Shanghai Futures Exchange announced in late May it was gathering feedback for a proposal to allow foreign currencies to be used as collateral for trades settled in yuan. Other recent moves, though incremental, include China allowing qualified foreign investors to participate in on-exchange exchange-traded fund options trading from Oct. 9 for hedging purposes. Earlier this year, authorities also reportedly announced a 500-yuan fee waiver for international financial institutions to open a local account for accessing the bond market. Morgan Stanley in January announced its local subsidiary could officially begin offering brokerage services for mainland China commodity futures, and planned to expand to equity and fixed-income futures and options once it received necessary qualifications. Such access has been years in the making, as the U.S. financial giant said it received China's approval back in May 2023 to set up a wholly owned brokerage in the country. While global finance institutions and investors have long been interested in diversifying to China, Beijing's strict controls on capital outflows and relatively opaque system have discouraged large-scale buying of mainland China assets. While some worry about the unpredictability of U.S. policies in recent months, China has yet to present itself as a dependable alternative, said Matt Gertken, chief geopolitical strategist at BCA Research. "China's rule of law is inferior to the U.S., it does not offer a large and deep pool of liquid assets that is open to foreign investors like the U.S.," he said, adding that Beijing has not been sufficiently addressing the geopolitical risks tied to its markets. It's not just investment products. Over the years, China has developed a sprawling network of offshore yuan clearing banks and promoted the cross-border interbank payment system. Increasingly, Chinese banks lending to emerging market economies have switched to the yuan instead of the U.S. dollar, partly due to lower lending costs, according to analysis published last month by the U.S. Federal Reserve. The world's second-largest economy has also been promoting bilateral trade settlement in yuan, and in February announced $100 billion for businesses in Hong Kong to access yuan-denominated financing. "China appears to be accelerating its de-dollarization efforts, though progress remains uneven," said Dan Wang, director of Eurasia Group's China team. But she noted an increase in yuan-denominated settlements of cross-border payments between energy and commodities companies in China and abroad. Another trend supporting yuan's internationalization is Chinese companies' expansion overseas, especially smaller businesses selling goods online. Startup FundPark said since its financial partners Goldman Sachs and HSBC hold offshore yuan, China-based customers can easily use it for both operations in China and overseas. Chinese authorities also subsidize some of the interest costs for loans denominated in offshore yuan, said Bear Huo, FundPark's China general manager. He said overall use of the currency remains low but growing, although he declined to share specific numbers. At a global level, the Chinese yuan lost some ground in international use in May, according to Swift's RMB Tracker. The data showed that the yuan accounted for 2.89% of global payments by value in May, the sixth most-active currency – down from 5th place in the prior month. The U.S. dollar accounted for 48.46% of global payments, followed by the euro at 23.56%, according to Swift. Beijing's latest efforts to promote the yuan coincide with a wider and more concerted shift away from the dollar in Asia recently. The region is gradually reducing its reliance on the U.S. dollar, driven by geopolitical tensions, shifting monetary dynamics, and increased use of currency hedging. Policy uncertainty by U.S. President Donald Trump has fueled a notable selloff in the greenback, which saw its steepest losses of the year in April. Overseas investors looking to diversify away from America and hedge against U.S. assets are also boosting the yuan, said Ning Sun, senior EM strategist at State Street Global. "Our proprietary data indicates strong inflows to CNY, not a surprise given the good performance of CNY financial assets. Our data tracks only institutional investors, who are still very much underweight in CNY," said Ning Sun, senior EM strategist at State Street Global.
Yahoo
04-06-2025
- Business
- Yahoo
Undiscovered Gems in Global Markets for June 2025
As global markets navigate a complex landscape of trade policies and economic indicators, small-cap stocks have shown resilience despite facing challenges such as tariffs and inflationary pressures. With the S&P 600 and other smaller-cap indices posting positive returns amidst these conditions, investors may find opportunities in lesser-known stocks that demonstrate strong fundamentals and potential for growth. In this environment, identifying undiscovered gems involves looking for companies with robust financial health, innovative strategies, or unique market positions that can thrive even amid broader economic uncertainties. Name Debt To Equity Revenue Growth Earnings Growth Health Rating Mendelson Infrastructures & Industries 23.11% 5.81% 10.57% ★★★★★★ Nantong Guosheng Intelligence Technology Group NA 8.02% 1.71% ★★★★★★ ZHEJIANG DIBAY ELECTRICLtd 0.81% 6.04% 4.07% ★★★★★★ Shenzhen Tongye TechnologyLtd 8.22% 15.89% -9.68% ★★★★★★ Hiconics Eco-energy Technology NA 30.59% 27.60% ★★★★★★ National General Insurance (P.J.S.C.) NA 14.55% 29.05% ★★★★★☆ Jiangsu Lianfa TextileLtd 26.67% 2.17% -26.08% ★★★★★☆ Forth Smart Service 51.94% -6.63% -7.91% ★★★★☆☆ Libra Insurance 45.82% 46.39% 68.41% ★★★★☆☆ Malam - Team 89.67% 12.93% -2.22% ★★★★☆☆ Click here to see the full list of 3171 stocks from our Global Undiscovered Gems With Strong Fundamentals screener. We're going to check out a few of the best picks from our screener tool. Simply Wall St Value Rating: ★★★★★☆ Overview: Nanhua Futures Co., Ltd. offers financial services with a focus on the derivatives business and has a market cap of CN¥7.86 billion. Operations: Nanhua Futures generates revenue primarily through its derivatives-focused financial services. The company's net profit margin has exhibited variability, reflecting changes in cost structures and market conditions. Nanhua Futures, a lesser-known player in the financial sector, demonstrates a strong financial footing with more cash than total debt and a reduced debt-to-equity ratio from 50% to 39.1% over five years. Despite earnings growth of 34.2% annually over the past five years, its recent annual revenue dipped to CNY 5.71 billion from CNY 6.25 billion the previous year, while net income rose to CNY 457.97 million from CNY 401.85 million, indicating resilience in profitability amidst fluctuating revenues. The company's price-to-earnings ratio stands at an attractive 17x compared to the broader CN market's average of nearly double that figure (37x). Delve into the full analysis health report here for a deeper understanding of Nanhua Futures. Assess Nanhua Futures' past performance with our detailed historical performance reports. Simply Wall St Value Rating: ★★★★★★ Overview: Guangzhou Kingteller Technology Co., Ltd. specializes in the research, development, production, sale, and servicing of financial self-service equipment and software both in China and internationally, with a market capitalization of CN¥4.83 billion. Operations: Kingteller Technology derives its revenue primarily from the sale and servicing of financial self-service equipment and software. The company's cost structure includes expenses related to research, development, production, and sales operations. It is important to note that Kingteller's net profit margin has shown variation over recent periods, reflecting changes in operational efficiency and market conditions. Kingteller Technology, a nimble player in the tech sector, has shown impressive earnings growth of 17.5% over the past year, outpacing the broader industry's 8.1%. The company remains debt-free and boasts positive free cash flow, providing a solid financial footing despite recent volatility in its share price. A notable one-off loss of CN¥8M impacted its annual results; however, profitability isn't a concern. Recent dividends were modest at CNY 0.01 per 10 shares for 2024 and CNY 0.02 for Q1 2025, reflecting cautious distribution amid steady net income growth from CN¥5M to CN¥6M year-over-year. Navigate through the intricacies of Guangzhou Kingteller TechnologyLtd with our comprehensive health report here. Evaluate Guangzhou Kingteller TechnologyLtd's historical performance by accessing our past performance report. Simply Wall St Value Rating: ★★★★☆☆ Overview: Lianhe Chemical Technology Co., Ltd. is involved in the production and sale of chemical products in China, with a market capitalization of CN¥8.27 billion. Operations: Lianhe Chemical Technology Co., Ltd. generates revenue primarily from the production and sale of chemical products in China. The company's financial performance includes a notable net profit margin, which has shown variability across reporting periods. Lianhe Chemical Technology Ltd. has shown notable improvements, particularly in profitability, with net income soaring to CNY 49.72 million for Q1 2025 from just CNY 2.69 million a year prior. The company is trading at a substantial discount of 84% below its estimated fair value, suggesting potential undervaluation. Despite an increase in debt to equity from 39.2% to 58% over five years, interest payments are well covered by EBIT at 3.6 times coverage, reflecting manageable financial obligations. Recently, Lianhe completed a share buyback of approximately CNY 80 million for over eleven million shares, indicating confidence in its valuation and future prospects. Take a closer look at Lianhe Chemical TechnologyLtd's potential here in our health report. Gain insights into Lianhe Chemical TechnologyLtd's historical performance by reviewing our past performance report. Click this link to deep-dive into the 3171 companies within our Global Undiscovered Gems With Strong Fundamentals screener. Have a stake in these businesses? Integrate your holdings into Simply Wall St's portfolio for notifications and detailed stock reports. Maximize your investment potential with Simply Wall St, the comprehensive app that offers global market insights for free. Explore high-performing small cap companies that haven't yet garnered significant analyst attention. Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management. Find companies with promising cash flow potential yet trading below their fair value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include SHSE:603093 SZSE:002177 and SZSE:002250. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Recorder
21-05-2025
- Business
- Business Recorder
China's yuan edges up on latest economic stimulus measures
HONG KONG: China's yuan rose against the dollar on Wednesday, extending gains as the latest efforts by Beijing to stimulate a shaky economy was further underpinned by a broadly softer US currency. China cut benchmark lending rates for the first time since October on Tuesday, while major state banks lowered deposit rates as authorities take steps to buffer the economy from the impact of the Sino-US trade war. People's Bank of China Governor Pan Gongsheng also vowed to implement 'appropriately lose' monetary policy to support key areas including technological innovation, consumption, private small businesses, and stabilizing foreign trade. By 03:07 GMT, the yuan was 0.11% higher at 7.2085 to the dollar after trading in a range of 7.2075 to 7.2200. The offshore yuan traded at 7.207 yuan per dollar, up about 0.11% in Asian trade. 'The yuan will likely outperform the dollar in the short term as market sentiment improves' on policy support and following this month's agreement between China and the United States to pause their trade war, analysts at Nanhua Futures said in a note on Wednesday. Prior to the market opening, the PBOC set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.1937 per dollar, 196 pips firmer than a Reuters' estimate. China's yuan slips as investors wary ahead of Sino-US trade talks Based on the official guidance, the yuan is allowed to drop as far as 7.3376. The dollar's six-currency index edged lower to 99.68, extending a two-day slide against major peers, as President Donald Trump failed to convince Republican holdouts to back his sweeping tax bill. Traders were also wary of US officials potentially angling for a weaker dollar at Group of Seven finance minister meetings currently underway in Canada.
Business Recorder
12-05-2025
- Business
- Business Recorder
China's yuan strengthens after progress in Sino-US trade talks, but caution remains
SHANGHAI: The yuan strengthened on Monday despite dollar's rebound, reflecting market optimism after the US and China ended high-stakes trade talks on a positive note on Sunday. But analysts caution that uncertainty remains over Sino-US ties as they await details of any agreement, while China's central bank reiterated it would prevent currency overshooting. The yuan was trading around 7.2279 to the dollar in late morning, 0.13% stronger than the previous close. The global dollar index was up 0.3% in Asia trading hours. US Treasury Secretary Scott Bessent touted 'substantial progress' in trade discussions over the weekend, while Chinese officials said the sides had reached 'important consensus' and agreed to launch another new economic dialogue forum. Details would be announced later on Monday. Regarding the trade progress, 'we don't expect clear, directional breakthroughs in the short term,' Nanhua Futures said in a note to clients on Monday. 'In the backdrop of trade war 2.0, the long-term rivalry between China and the US in terms of economic resilience has just begun,' the brokerage said, expecting volatility ahead. Guan Tao, global chief economist at BOC International and a former forex regulator, said the trade talks 'bolsters the yuan in the short term, but the road ahead is uneven and twisted.' 'The stakes, and complexity of the talks is unprecedented. There will be ups and downs, progress and stalemates,' he told a webinar. 'The biggest certainty is uncertainty.' Reflecting a desire to keep the yuan relatively stable, China's central bank has set its guidance rate roughly around 7.20 per dollar over the past month. On Monday, the midpoint rate was set at 7.2066 prior to market open. China's yuan slips against dollar In its quarterly monetary policy report published on Friday, the People's Bank of China reiterated that it would 'resolutely' prevent forex overshooting risks, and keep the yuan basically stable. China's best choice under the current environment is to keep the yuan stable against the dollar, while allowing it to depreciate against a basket of other currencies, said Wang Jinbin, economics professor at the Renmin University of China. Such a strategy would steady capital flows, while aiding Chinese exports, he said.
Business Recorder
24-04-2025
- Business
- Business Recorder
China's yuan slightly weaker as dollar climbs on trade-war deescalation signs
HONG KONG: China's yuan dipped against the US dollar on Thursday as the Trump administration signaled willingness to lower tariffs on China, leading to a dollar rebound overnight. The greenback got a boost after US Treasury Secretary Scott Bessent said on Wednesday that more than 100% tariffs between the United States and China are not sustainable, along with reports that the Trump administration is considering lowering tariffs on Chinese goods pending talks with Beijing. 'We are going to have a fair deal with China,' Trump told reporters, but did not outline any specifics. By 0415 GMT, the yuan was 0.15% lower at 7.2992 to the dollar after trading in a range of 7.2900 to 7.3022. Its offshore counterpart traded at 7.2999 yuan per dollar , down about 0.19% in Asian trade. As the pressure on exchange rates from tariff news eases, there is a reduced risk of rapid depreciation in the yuan, Nanhua Futures said in a note. China's yuan holds ground on trade optimism, regulator vows stability 'We expect the yuan to fluctuate around 7.30 this week,' they said. Prior to the market opening, the People's Bank of China set the midpoint rate, around which the yuan is allowed to trade in a 2% band, at 7.2098 per dollar, 1,013 pips firmer than a Reuters' estimate. Meanwhile, China is stepping up support for the use of its currency in global trade amid trade tensions with the United States. China's plan to facilitate cross-border financial services will help promote greater international usage of the yuan, a senior central bank official said on Wednesday. The central bank published a plan earlier this week encouraging state-owned enterprises to prioritise yuan usage in payment and settlement as they expand overseas expansion. The dollar's six-currency index was 0.105% lower at 99.68.
