Tencent is no longer one of the world’s 10 biggest firms
Currency has not breached key psychological level in a decade
HONG KONG: There are growing signs China’s yuan may weaken past 7 per US dollar, a key psychological level it hasn’t breached in a decade.
The latest came in a China Securities Journal commentary yesterday, where former central bank adviser Yu Yongding said authorities should refrain from market intervention and that tolerance of yuan weakness is needed for exchange-rate reform. The currency has already crossed the long-defended level of 6.9 against the US dollar and is near its lowest since 2008.
“Yu’s commentary is likely part of China’s efforts to shape expectation and prepare for the yuan to breach 7 per US dollar, so that the market wouldn’t panic when it happens,” said Xia Le, Hong Kong-based chief Asia economist at Banco Bilbao Vizcaya Argentaria SA.
The depreciation has fuelled concern in the US – which is due to publish a report on currency manipulation next week – that China is deliberately weakening the yuan.
At a briefing on Tuesday, Foreign Ministry spokesman Lu Kang said there was no intention to use the currency as a tool in the trade dispute by devaluing it to stimulate exports. He also said US concern over the recent weakness was “groundless and irresponsible.”
“China probably won’t let the yuan break the key 7 psychological level before the US Treasury report, as it still intends to show goodwill and hopes not to escalate trade tension with a weaker currency,” BBVA’s Xia said. HONG KONG: More bad news for Tencent Holdings Ltd – the Chinese Internet giant has lost its spot as one of the world’s 10 biggest companies.
After shedding over US$200bil in market value this year, more than any other company worldwide, Tencent has been replaced by Exxon Mobil Corp in the top of the rankings based on market capitalisation.
When its share price hit a record high in
The yuan has tumbled 9% against the dollar in the past six months.
The decline has come as a trade war flared between the world’s two largest economies, and as their monetary policies continue to diverge. A further drag came on Sunday, when the People’s Bank of China said it would cut the reserve requirement ratio, the fourth such move this year. Options trades show rising expectations the yuan will slide to 7 per dollar. January, the Shenzhen-based company was in the top five along with Apple Inc, Alphabet Inc, Microsoft Corp and Amazon.com Inc.
Tencent returned more than 67,000% from its initial public offering through January, but then turned south this year on a run of bad news including a rare drop in profit and a regulatory crackdown on gaming in China.
Tencent has tumbled nearly 40% in Hong
“If we see more such comments surface in the near term, there’s a chance that the yuan will keep weakening,” said Gao Qi, a Singapore-based currency strategist at Scotiabank, referring to Yu’s remarks.
“A break of 7, which may happen due to a strengthening dollar rather than China guiding the yuan lower, will likely lead to larger volatility in Chinese stocks and Asian emerging markets assets.” — Bloomberg Kong since Jan 23, and fell for a ninth straight day Wednesday, on track for its worst ever run. It was down 0.9% as of 1.42pm yesterday.
Mitchell Green, Santa Barbara-based founding partner of Lead Edge Capital which manages US$1.5bil of assets, said the sell-off could continue as investors panic.
Tencent’s market cap is now US$353bil, while Exxon Mobil’s is US$365bil. — Bloomberg