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Straits Times 3,124.90 -2.84 -0.09%
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China’s RMB Devaluation, STI Feels Aftershock
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By: Louis Kent Lee
Articles (199) Profile

After China surprised the world to change the basis of valuing the RMB, the Straits Times Index was soaked in the red for two days after the lion city resumed trading, post national day celebrations.

It is expected that there will be further follow-up changes from the PBoC, especially with the anticipated rate hike in either September or December.

However, what is the exposure that market watchers can expect to be felt locally from this devaluation move?

In our view, players in the oil and gas, commodities and banking sectors will bear the most of this impact.

Banking giant DBS, has more than one-third of its gross loans from Greater China and Hong Kong. DBS saw a near 8.3 percent slide over the same two days after the national day holidays.

Although big companies like CapitaLand and Global Logistic Properties have about 40 percent of total assets in China, both companies maintain a natural hedge by borrowing in local currencies.

In the aftershock of the devaluation move, we feel that the appetite for risky assets in Singapore in the near term will be reduced.

Louis is a qualified accountant with the ACCA, and is the Research Editor at Shares Investment magazine.

Please click here for more information about this author.

DBS Group Hldgs  -- -- --   
Business: [FY18 Total Income] Institutional banking (43.7%), consumer banking/wealth management (42.9%), treasury markets and others (13.4%).

Insight: Apr-19, 1Q19 net profit rose 9% to a record $1.7b.... Read More
CapitaLand  -- -- --   
Business: Co develops, owns, and manages real estate properties. [FY18 Geographical] China (41.2%), S'pore (38.5%), Europe & others (18.6%), Vietnam & Others (1.7%).

Insight: Apr-19, 1Q19 revenue fell 23.8% while net profit d... Read More


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