Barron's on China: Yuan revaluation, Dow Chemical, and HDTV

by: Ezra Marbach

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  • Last week, the United States increased pressure on China to revalue the Yuan and curb exports. The
    US imposed new quotas on Chinese textile imports and China announced new
    tariffs themselves.
  • A prominent economist suggested that US pressure could backfire, and flexible exchange rates in Asia could "add
    to global instability" and further brake an already slowing global
    economy.
  • Amid calls for revaluation, Chinese shares stayed flat and Hong Kong stocks fell last week. Hong Kong widened the trading bands around its US dollar peg suggesting that Hong Kong is preparing for change.
  • A revaluation might not only lead to speculators selling Shanghai real estate bought in anticipation of a rise in the Yuan but also to a cooling of the economy. According to Christopher Woods, CLSA Asia Pacific Markets strategist: "investors should be looking to sell short China property names on any strength, unless it is accompanied by hard evidence of a change in government policy".
  • Dow Chemical (ticker: DOW), a manufacturer and seller of chemicals, plastic materials, agricultural and other specialized products and services fell last week after a brokerage firm downgrade. The stock recovered later on
    hopes of increased demand from China.
  • Barron's reports that China should get its first HDTV satellite service this year.