It is expected to rise at least by 3-5% per annum
(a) Negative to Exporters:
e.g. Light Industries, textiles, machineries etc
A drop of 3% = electric appliances, mobile phone, cars manufacturers’ decrease of profit by 30-50%.
A Drop of 1% = 1% drop of textiles industries’ profitability.
(b) Positive to:
# Property and Stock Markets (International hot money)
RMB exchange has risen by >20% since 2005, Property prices in major cities have grown by 2-4 times.
Positive to:
# Enterprises who have huge foreign loans or who need to
import a lot of raw materials/components.
e.g. Paper Mill, Airlines, Car Manufacturers etc
1% escalation in RMB exchange = RMB 500M FX gain for China Southern Airlines.
(2) Economic Growth
-China‘s GDP in 2009 was USD 4.81 trillion (RMB
33,535.30B), > 2008’s by 8.7%.
- GDP for 1st Qtr 2010 was USD 1.18 trillion,
YTY Growth = 11.9%.
- China is the second largest economy in the world
(3) Population and Urbanization
(4) Interest Rate and Inflation
4.1) Interest rate is going to be low in the foreseeable future.
4.2) Inflation affects investment mentality and The People’s Bank’s interest rate policy.
(5) Affordability
5.1) Growth of disposable income
5.2) Mortgage Rate
5.3) Housing Fund Factors affecting property prices in China
(6) Government Policies
6.1) Monetary Policies
6.2) Real Estate Market Regulatory Policies
6.3) Social Welfare Policies
6.4) Labour Policies
6.5) Foreign Investment Policies
(7) Economic Structural Reforms
7.1) Double Track System?
7.2) FX Reform
7.3) Financial Market
7.4) Local Market Demand
7.5) The 12th 5 Year Plan
