Exchange Rate Has Even Become A Double-Edged Sword Of The Stock Market.

In the past 7 trading days,

But through the "appreciation representation", the real effective exchange rate of RMB is depreciating.

While the exchange rate of RMB against the US dollar is constantly changing, the RMB is depreciating from the real effective exchange rate announced by the BIS.

The index has exceeded 120 in February, rising 2.87 from last month, at a record high.

The divergence of the US dollar against the RMB exchange rate and the RMB real effective exchange rate actually reflects the gradual withdrawal of RMB from the US dollar and the linkage with a basket of currencies under the weakening trend of the US dollar.

Inflation is undoubtedly the core of all the factors that affect the operation of A shares at this stage.

From a recent interest rate increase, we can see that despite the risk of economic slowdown under the tightening policy, the government is still very firm in regulating prices.

The effect of this policy orientation on the stock market is that the stock market is highly sensitive to inflation. Therefore, factors conducive to the improvement of inflation expectations will also help to improve market sentiment.

The appreciation of the RMB against the US dollar is conducive to easing the pressure of imported inflation.

The risk of international factors to domestic inflation is mainly due to the continuous rise of commodity prices.

Domestic dependence on imported raw materials such as oil, coal and iron ore is very high, while international commodities are mostly denominated in US dollars. The appreciation of the RMB against the US dollar will directly reduce the cost of raw materials for downstream industries of these industries, thus helping to reduce the pressure of imported inflation.

We believe that the high exchange rate has become the "double-edged sword" of the stock market.

Exploring the investment opportunities of stock market appreciation, the most direct clue comes from possible changes in earnings.

On a short-term micro level, appreciation will lead to the cost or income of the enterprises involved in import and export business, thereby affecting their profits.

Aviation, refining, paper making, engineering, machinery and other industries will benefit from the cost of raw materials or equipment which are mainly purchased from foreign countries. However, the export revenue of textile, clothing, household appliances, building materials and other industries will be relatively large, and income will be more sensitive to the exchange rate. Appreciation of the renminbi will weaken the competitive advantage of the products.

Data show that in all 2133 listed companies, the proportion of overseas business income in 2009 accounted for more than 10% of the total revenue of the main business. There were 536.

From the distribution of overseas income of these companies, more than 50% of the company's overseas business revenue accounted for less than 30%.

The higher the proportion of foreign income to total business income, the greater the exchange rate risk faced by enterprises.

From the point of view of the plate distribution of listed companies involved in export business, the proportion of small and medium-sized listed companies in the export business is the highest. According to the annual report data in 2009, there are 209 small and medium-sized board listed companies whose overseas business income is above 10%.

Moreover, for these 209 companies, the average value of their overseas income in total business income is 43.17%, which is also the highest among all sectors.

It can be seen that in the case of continuous appreciation of RMB, the negative impact of SMEs' earnings is relatively greater.