Revaluing the RMB.

Revaluing the RMB is a matter of when, not if.  It is widely known that the RMB is undervalued and the Chinese government realises that it has to let the RMB appreciate. This would bring down the cost of living in the country and help put a lid on inflationary pressures.  However, China wants to do so at its own pace. 

The Chinese government is and has always been very concerned about not losing face. A confrontational attitude from outsiders would do more harm than good.

When the RMB is revalued upwards and we can expect this to happen in a series of steps in time, foreign companies with assets in China and with earnings denominated in the RMB will surely benefit. Also, foreigners should find investing in Chinese companies and assets attractive in such a situation as the value of their Chinese investments in their home currencies would likely increase.

China is on track to overtake Japan as the largest economy in Asia and companies which are well positioned to benefit from the growth of the Chinese economy will most likely do better than peers which are not.

CapitaRetail China Trust posts 7.5% rise in net property to $19m in 1Q
Friday, 23 April 2010

© 2010 - The Edge Singapore

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Yuan Gains May Help China Vault Past Japan to Be No. 2 Economy

April 19, 2010, 1:36 AM EDT


April 19 (Bloomberg) -- China’s anticipated move to let its currency appreciate may help the nation overtake Japan as the world’s second-largest economy, Australia and New Zealand Banking Group Ltd. said.

 A 5 percent revaluation against the dollar could see quarterly gross domestic product exceed Japan’s as soon as July- to-September this year, estimated Liu Li-Gang, a Hong Kong-based economist at ANZ. The Chinese economy is likely to vault past Japan by year’s end even if the yuan remains stable, Liu said in an e-mailed interview.

Read complete article here:
Yuan gains may help China vault past Japan to be No. 2 economy.

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Weak Chinese Currency "Not Just An American Problem,"
FT's Martin Wolf Says.
Posted Apr 22, 2010 07:30am EDT by Peter Gorenstein



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STI gains 0.4% to 2,980.69 at closing
Thursday, 22 April 2010

© 2010 - The Edge Singapore

I am getting somewhat bored with saying more or less the same things everyday for a while now.  The market has not been very exciting either way.  So, I am giving myself a break from doing a "Charts in brief" post today.  However, Genting SP's price caught my eyes as it touched a low of 85c before closing at 86c today.  I am not vested in this counter but the amount of interest it has generated as the biggest story in Singapore's entertainment and hospitality industries in recent times got me looking on as well.

Technically, it would seem as if a test of the previous low at 83.5c achieved on 4 March is on the cards. The 20d, 50d and 100d MAs are all downtrending.  The MACD is still below zero and has formed a bearish crossover with the signal line.  OBV shows distribution taking place.  MFI shows a lack of buying momentum.  Stochastics has just dipped into oversold territory. 

A bearish picture is obvious, no doubt. However, the selling down lacks strong conviction, in my opinion.  If we look at 18 Feb which was the day the $1.02 support gave way completely, the volume was extremely high.  Volume has been relatively low since that day as price retreated.  I am not saying that price could not go lower but I am saying that the current selling pressure does not seem as great as it was earlier this year.  Having said this, price could go lower and I see 80c as a significant support level.

What if 80c gives way? Well, a look at the weekly chart shows the 100wMA at 75c and this should provide a stronger support.

Related post:
Genting SP: Stale bulls' second chance?