Analysts warn the yuan faces earlier-than-usual seasonal weakness as Chinese firms hedge nearly $70bln in dividends, with June’s $24.1bln peak a record. (pro tip – Much hedging is likely already done).
Analysts warn the yuan faces earlier-than-usual seasonal weakness as Chinese firms hedge nearly $70bln in dividends, with June’s $24.1bln peak a record. (pro tip – Much hedging is likely already done). Post from earlier this month: Y uan seen strengthening despite seasonal headwinds as fundamentals and flows dominate .
Summary: Mainland Chinese firms listed in Hong Kong have announced dividends totalling nearly $70 billion over the coming months, with June’s estimated $24.1 billion payout a record for the month July and August distributions are projected at $15.4 billion and $19.5 billion respectively Analysts say lower hedging costs and cheaper forward rates are prompting firms to convert FX earlier than usual, potentially bringing yuan weakness forward The PBOC has eased rules to reduce forex costs while maintaining a firm yuan fixing, signalling it is monitoring the situation closely A note of caution is warranted: the scale of hedging disclosed publicly suggests corporate treasuries have likely already executed a substantial portion of their FX conversions, meaning spot market pressure may be more limited than headline figures imply The yuan typically faces seasonal selling pressure during the summer dividend season, but the earlier timing and record payout size make this year’s episode worth watching The Chinese yuan is expected to face its familiar summer selling pressure earlier than usual this year, as mainland firms listed in Hong Kong move to lock in exchange rates ahead of a record dividend season. Analysts point to lower hedging costs and cheaper forward rates as the catalysts bringing FX conversion demand forward in the calendar. However, a degree of caution is warranted in reading too much into the scale of the numbers being cited.
Mainland firms listed in Hong Kong have announced shareholder distributions totalling nearly $70 billion over the coming months. The peak arrives in June, when payouts are estimated to reach $24.1 billion, a record for…