The U.S.-China trade war is difficult to extinguish in the short term. Coupled with Trump’s vigorous suppression of Chinese technology products, the Asian supply chain has been harmed. Foreign investors have sold Taiwan stocks for 12 consecutive years in order to avoid risks, causing the New Taiwan Dollar Continued derogation. Price increases are not ruled out when steel with imported raw materials is sold domestically; the textile industry will still take risk aversion.
The outcome of the U.S.-China trade war is unclear. The United States continues to suppress China’s high-tech products. The trade war is difficult to end in the short term. Related supply chains in Asian countries have been affected, and foreign investment has also accelerated. To avoid risks, the New Taiwan dollar has depreciated for six consecutive years. On May 23, the New Taiwan dollar closed at 31.547 yuan against the US dollar in the Taipei foreign exchange market, down 1.7 cents.
The legal person said that the impact of the continued depreciation of the New Taiwan Dollar on enterprises mainly depends on whether the functional currency used for revenue is New Taiwan Dollar, the United States dollar or other currencies. If it is priced in US dollars, it is converted into If you buy raw materials and sell finished products in US dollars, the exchange gains and losses will be less obvious.
The legal person pointed out that Taiwan’s trade is export-oriented and mainly holds U.S. dollars. Changes in the trend of the New Taiwan Dollar will also affect financial reports. If the New Taiwan dollar depreciates further against the U.S. dollar, it is expected that the exchange earnings of export-oriented listed OTC companies in the second quarter will be better than expected. It is expected that export concept stocks and other companies will lead to a recovery in corporate profits; on the contrary, if imported raw materials are priced in U.S. dollars, the finished products When selling domestically, exchange losses are inevitable.
The legal person stated that stocks that benefited from the depreciation of the New Taiwan dollar include foundry, automotive components, solar energy, passive components, industrial computers, machine tools, textiles, Shoemaking and domestic tourism; however, victim stocks include the steel industry and the food industry that imports soybeans, wheat, and corn as raw materials.
Fengxing, a large steel manufacturer in central China, pointed out that since Fengxing’s raw materials are mostly U.S. container scrap steel priced in US dollars, it is inevitable to produce various steel products for domestic sales. There will be pressure on profits, and we do not rule out gradually increasing product prices in the future to make up for exchange losses.
China Steel Corporation, the leader in the steel industry, said that although China Steel imports iron ore and coal in US dollars, more than 40% of its products will eventually be exported, which can offset some coal and iron ore exchange losses; however, the steel products sold to downstream customers are priced in New Taiwan dollars, but the downstream customers reprocess them and export them abroad in U.S. dollars. When the processing costs and profits are fixed, the depreciation of the New Taiwan dollar is conducive to exports. , downstream customers have a certain profit, but they are less likely to ask Sinosteel to sell at lower prices. Therefore, Sinosteel can breathe a sigh of relief and reduce the pressure to sell.
Far East New, which has always been a major player in the textile industry, said that Taiwan’s textile industry is mainly exported. This wave can enjoy the benefits of the depreciation of the Taiwan dollar. If the US dollar position in hand is exchanged for new The Taiwan dollar will be beneficial to Far East’s new revenue and profits, but it will not be much better. The main reason is that imported raw materials and chemicals must also be used in the textile process, and some of the exchange benefits will be offset between import and export. .
Far East New pointed out that since it is difficult to predict how the New Taiwan Dollar exchange rate will change in the future, hedging measures will still be taken. However, during the depreciation process of the New Taiwan Dollar, the number of safe-haven positions The proportion is a little smaller, but if the exchange rate begins to bottom out, safe-haven positions will increase.
Uni-President Securities said that Trump’s concentrated firepower against China has frightened the global financial market. Market investment confidence is weak, and international funds flow to safe-haven currencies. The continued appreciation of the U.S. dollar and the Japanese yen and the sharp depreciation of Asian currencies may cause the flight of hot money from Taiwan stocks and weaken the momentum of funds, which will be detrimental to the subsequent performance of Taiwan stocks.
Foreign exchange traders pointed out that looking forward to the market outlook, the depreciation of the New Taiwan dollar will be difficult to stop in the short term. If it continues to maintain a daily depreciation rate of nearly 1 cent, it is not ruled out that the price of 31.700 yuan will be tested in the short term. It may also touch the 32 yuan mark; the follow-up mainly depends on the development of the US-China trade war, foreign investment trends and whether the trend of Asian currencies has temporarily stabilized. If the Asian currencies stop falling, the pace of depreciation of the New Taiwan Dollar may be slightly slowed down.
