China’s Currency may Impact Property Risks

China’s property sector, already a nagging economic risk, could become a victim of the unexpected weakening of the country’s currency as developers face rising debt costs.

“Most Chinese developers are heavily exposed to U.S. dollar debt (up to 90 percent of their total debt) with no hedging,” Credit Suisse said in a note Monday. “A potential renminbi depreciation may have a meaningful impact on both developers’ earnings and net gearing – especially since Chinese developers are already highly levered financially.”

The fate of China’s property sector is closely watched as a key economic risk. Capital Economics estimated that the property sector contributed 9.5 percent of China’s gross domestic product (GDP) in 2013.

CNBC

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.