Wednesday, 23 December 2015

The year of reversal for the mighty yuan

Looking back over 2015 Shanghai’s stock market performance SHCOMP, -0.43%  can appear relatively reassuring — still up almost 13% year-to-date despite the summer swoon.

But the big story of the past year is not Chinese equities but the reversal in the yuan USDCNY, +0.0247%  and money inflows into China.

This is significant because Beijing now finds itself in uncharted territory; attempting to juggle a controlled currency depreciation, while also seeking to plug mass capital outflows. If authorities lose control, investors may have to cope with the fallout from a much larger currency adjustment in the world’s second-largest economy.

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