Should China's currency be increased in value, there would be many winners and losers among Hong Kong's listed companies.
The calls from some of China's largest trading partners to strengthen the yuan have grown steadily louder over the summer, with more countries joining the chorus.
In recent weeks the United States, Japan and Korea have all argued for China to let its currency strengthen.The yuan's value is effectively kept within a narrow trading band around 8.28 for every US dollar. Any change in the yuan's value would have a marked impact on the performance of many companies in the mainland and Hong Kong.
Beneficiaries of a stronger yuan would include companies who generate most of their revenue in yuan from domestic sales in China. Every yuan earned in sales would be worth more in terms of overseas currencies.
Consumers would also find the yuan in their pockets was worth more and might spend more in the shops in mainland China, where imported goods would be cheaper. And visitors to Hong Kong from across the border would also get more Hong Kong dollars for their yuan, which could help boost retail sales here.
Tung Tai Securities associate director Kenny Tang Sing-hing believes clothing retailers such as Giordano, Texwinca Holdings and U-Right International could benefit from these effects. Jeweller Hang Fung Gold could also benefit. A stronger yuan would also lower the cost of imports, which could deliver huge benefits for firms that buy a lot of raw materials from abroad.
