http://www.wsj.com/articles/with-yuan-devaluation-china-digs-a-hole-for-commodities-1439292219 With the biggest single day devaluation in the yuan in 20 years will we see more to come?
Certainly higher prices for imported goods including swiss watches for the chinese consumer. Australia also hit as a big commodities exporter - with the Australian Dollar falling also against the USD immediately following the yuan devaluation.
A higher yuan fix does not necessarily mean that price tags in yuan will be higher. Importers and Swiss watchmakers will probably bear most of the impact, which they can afford I guess (The Swatch Group's EBITDA margin is above 23%!) It's the political shift and the economic slowdown that have had the greatest impact on the local luxury good market. With regards to the export market (Chinese buying abroad), it's clear that should the yuan continue to slide vs. major currencies, it could have an impact. But bear in mind that the yuan has appreciated a lot vs. the Euro and the Yen over the past year. So there is some ample room for depreciation...
Orders really had slow down, whatever export data they are doing... its just dud IMO... Try walking into Canton Fair 5 years ago, and now. Most will tell you business had been getting worst and worst... Last thing Chinese is doing to kick start the economy again...
A much needed adjustment, and more to come IMO. Continued Chinese gov't actions to pump up the yuan is not a sustainable strategy.
In the short term, raw material prices will likely decrease. But the idea is in the long term the weaker yuan will spur exports. In the meantime, my SM 300 Master is still keeping time to <1second a day!
The Yuan is not a floating currency. Point is that it is not "sliding", it is being 'slid' so to speak, and this is the contentious issue particularly with the US. Some nameless bureacratic clique in the Chinese finance ministry actually pegs the price. Being a brutal one-party state with a history of planned economies, together with a massive dose of national hubris, these wallies think they can play with international monetary systems at will. If the Yuan was floated, it would be of considerably higher value. Control of the exchange rate is one means that China thinks it can stay ahead of its manufacturing competitors. In the process it is hurting Western economies as well China knows, leading me to be a label Nazi - anything made or produced in China gets a wide berth.
This is a comment that was specific to the vintage market, but a NY based dealer recently told me he was already feeling the impact of a combination of Chinese withdrawal and $ strength versus European currencies - both leading to a significant drop in 'tourist money' coming in...