Yuan Appreciation - Impact on HK?

What does it mean for Hong Kong?

How do I take advantage before yuan appreciation in terms of investments? Are things going to be more expensive in Hong Kong like oil, rice, pork or other necessities? Thanks for the advice.

Yuan appreciation means two things:

(1) First, the yuan will become more valuable vs. the HK dollar - i.e., it will take fewer yuan to purchase HK dollar-priced goods and services. So, people and businesses on the Mainland who have yuan will find goods and services in Hong Kong relatively cheaper. This may encourage more Mainland consumers to acquire more goods and services in Hong Kong, which, in turn, may cause prices in Hong Kong to rise in sectors like real estate and others where Mainland consumers are most active.

(2) second, the reverse is also true - i.e., it will take more HK dollars to buy yuan, which means that HK consumers will find goods and services in Mailnand China more expensive, including Mainland-made products that are shipped to Hong Kong. That may lead to a decrease in Mainland-bound business from Hong Kong in a range of sectors, ranging from products in Hong Kong that are imported from the Mainland to retail prices in Shenzhen.

Chris

How do I take advantage before yuan appreciation in terms of investments.


Easy, start buying RMB now. Even borrow if you have to since lending rates in HK are very low.


As soon as they re-value the RMB, sell it all for a nice tidy profit :)

Let's factor China into this equation. China has one of the top property bubbles right now that can change things on a global scale. Forget the rise in Sing, HK or the bubble that never deflated are are #1 and #2, AUS and CANADA.


Why do you think the Chinese are so careful about the Yuan revaluation.


Put is this way, when construction is 60%+ of GDP, in which is now in China since exports have fallen off the map, there are only two other countries which did this, one is Japan in the 80's and the USA in 1929.


Condos and Commercial RE in China purchased by speculators is massive and if China turns off the presses domestically they are in trouble.


China will have to likely devalue their currency as to start a trade war and/or focus on using foreign treasuries to cover.


This is when I see commodities take a tank on lack of demand given so many raw materials are getting swallowed up by China.


Timeline, who knows how long China will demand 9% growth and do everything possible to get there not thinking of the compounding issue.


Some estimate loosing stream end of 2010 and trouble brewing spring 2011.

property in hk will be more attractive for mainland buyers.