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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (29718)	5/10/2005 3:19:19 AM
From: mishedlo	Respond to of 116555

Exporters hurt, retailers less so if China revalues yuan - Morgan Stanley Tuesday, May 10, 2005 6:46:46 AM afxpress.com BEIJING (AFX) - Exporters based in China will lose out from a yuan revaluation but retailers who source from China should be able to push back or pass on price increases, Morgan Stanley said In a note to clients, the investment house said most exporters with production bases in China would be hurt by an appreciation of China's currency, the yuan, because their revenue is in dollars while their costs are yuan-demoninated. The yuan has been pegged at 8.28 to the dollar for more than a decade. However, some analysts believe it could appreciate this year as authorities try to limit growth in foreign exchange reserves and address the concerns of trading partners Morgan Stanley singled out Hong-Kong listed textile maker Fountain Set as most at risk from a yuan revaluation "A one pct revaluation in the renminbi could result in around four pct reduction to our 2005 earnings estimate," it notes By comparison, its 2005 earnings estimate for food and beverage company Tingyi could rise by four pct on the same one pct revaluation because part of the firm's costs are in dollars Morgan Stanley said Greater China retailers such as Esprit and Giordano could see their sourcing costs from China increase with a currency appreciation "However, given their large volume and strong bargaining power and the general overcapacity in the garment industry, they should be able to push back on some of the price increase," it said Offshore retailers such as Australia's Coles Myer and Harvey Norman and South Korea's Shinsegae are capable of passing on the cost increases to consumers or of sourcing elsewhere, the investment bank concluded