In the global financial world, often dominated by the dynamics of Wall Street and the force of the dollar, the rise of one Alternative currency like it yuan It may appear as a marginal event. However, the strengthening of this currency during the month of May rekindled the spotlight on Beijing and his bag, bringing out a crucial question for international investors. Has the time comes to focus on Chinese actions?
Yuan takes altitude: what has earned and what the prospects
According to updated data, the Yuan onshore – that is, the currency exchanged within the continental China – has gained about the1.4% Compared to the dollar in the month of May alone, with an exchange rate of 7,1674 For a dollar, the highest level since last November.
The strengthening is not the result of the case, but the result of a series of strategic choices of the People’s Bank of China (PBOC), who has adopted an accommodating monetary policy, cutting interest rates to support economic growth and while looking for stabilize the currency.
To confirm this, the central bank recently strengthened the fixing daily yuan (official equality compared to the dollar) with the strongest intervention since last January, clearly reporting the intention to carefully manage the volatility without leaving room for fluctuations excessiveas in the case of the Taiwanese dollar.
For Goldman Sachs every +1% of the Yuan can be worth +3% on the stock exchange
Goldman Sachs is also believed in the potential of this dynamic, who in a note dated May 26 stressed that the strengthening of yuan It could represent a catalyst for the Chinese stock market.
According to the strategists of the US bank, every 1% of Yuan appreciation against the dollar would translate into a potential gain of 3% for Chinese shares, thanks to a combination of factors:
- a better perspective on corporate profits;
- a greater influx of foreign capital;
- An increase in market trust.
In line with this vision, Goldman saw the I raise its 12 -month prediction For the Yuan-Dollaro gearbox, bringing it from 7.35 to 7.
Furthermore, the strengthening of Yuan is not the only element that plays in favor of China. The country has recently benefited from a quarter of commercial respite with the United States, which has Tensions loose generated by the tariff policy of the administration of Donald Trump.
This more relaxed climate favored the recovery, relaunching the interest in Chinese assets, in a context in which the sentiment towards the United States remains uncertain
Because a strong currency can be an advantage for actions
The link between strong currency and positive share markets is not obvious, but can be explained in different ways. The strongest yuan:
- reduces the cost of imports;
- strengthens the trust of internal consumers (encouraging consumption);
- The purchasing power of foreign investors increases, making Chinese titles more attractive.
In addition, a currency in appreciation disincentive the capitals and can lead to a Increase in revenue in strong currencyespecially in the Export-Oriented sectors, where the margin allows it.
But is it really the right time to invest in China?
Despite the encouraging signals, the shadows that still weigh on the Chinese economy cannot be ignored. There Crisis of the real estate sector it was not completely resolved, and the growth of GDPalbeit recovering, remains under pressure compared to the historical standards of the country.
However, it is precisely in contexts like these that can be found opportunity. The strengthening of the Yuan, supported by a central bank that appears intent on avoiding instability, can represent a Anchoring for investors looking for exposure to emerging markets less related to the volatility of the US dollar.
In addition, the prices of Chinese actions, after years of opaque performance, remain relatively low in terms of assessments (multiple p/s lower than many western bags), which could offer interesting Margini di Rialzo If the global sentiment is to improve.
In this context, Goldman Sachs’ words should not be underestimated: a stable and strengthening change can give real impulse to the equity markets.
Of course, every investment It involves risks and must be carefully evaluated. For those who have a medium-long term perspective and try to diversify the wallet, the idea of increasing their exposure to Chinese actions-perhaps focusing on strategic sectors such as consumption and financial services-does not appear so reckless today.
