“The scheme should have limited impact on the yuan’s valuein the initial stage due to official restrictions and becausefirms need time to get familiar with the procedures,” LiuDongliang, currency analyst at China Merchants Bank inShenzhen, said. “But with its expansion in the long run, it will increasepressure for the yuan to appreciate as the yuan’s internationalstatus strengthens.” FIRST DEALS Although the total amount in the first batch of deals wassmall, less than 14 million yuan ($2 million), state media saidaround 400 Chinese companies had already won approval toconduct yuan business and predicted huge potential. “It will help both of them save costs,” Xu told Reuters onthe sidelines of a ceremony to launch yuan settlement. “ForChinese companies, it also has the function to avert exchangerate risks.” Caught off guard and partly lacking the skills to hedgeagainst foreign exchange volatility, many small Chineseexporters have closed shop after China revalued the yuan by 2.1percent against the dollar in July 2005.
The scheme would also be trialled between the Associationof South East Asian Nations and Yunnan and Guangxi regions insouthern China before it is launched elsewhere. The yuan hasappreciated by a further 19 percent against the dollar sincethen. In announcing the yuan settlement scheme in April, Beijingsaid it would initially be confined to certain areas, includingHong Kong and Macau, outside mainland China, and to Shanghaiand China’s key export province of Guangdong in the south. However, the builders will unveil that pent-up demand hasstarted to prop-up declining house prices, underpinned by datafrom Halifax and other mortgage lenders.
trading updates from five housebuilderswill reveal little by way of additional market insight for thesimple reason that the industry is entering its normal ‘quieter’period,” said analysts at Bank of America/Merrill Lynch. “Peoplewill drift away from new build because they won’t have the samelevel of stock,” he added. Furthermore, Persimmon (PSN.L), Barratt Developments(BDEV.L), Redrow (RDW.L) and Bovis Homes (BVS.L) will reveallittle in the way of new indicators as to how long the downturnwill last, say analysts, or when the market will reach thebottom of the slump “We suspect the… “In September, we may see things slip back again on atransactional side,” said Hughes.
“I do not buy that this is thebottom of the market on price, but I don’t think we’ll see afurther major drop in volume,” he added “H2 numbers could be very low indeed.” said Hardy. Robin Hardy, analyst at KBC Peel Hunt agreed thathousebuilders “won’t want to look forward” when they update themarket as the rest of the year could pose more of a challenge tothe builders. Banks continue to curb lending, and the onset ofquieter summer trading as well as rapidly depleting stocks mayhit volumes and prices further. “We will hear a continuing trend of stabilisation on volumesbut at a very low level, and a short-term stabilisation ofprices,” Mark Hughes, co-head of research at Panmure Gordon toldReuters.
“But any growth you are seeing, it’s coming from anincredibly low level,” he added. Current commentary is likely to be positive said AndrewGardner at MF Global, “although the housebuilders will probablysound quite frustrated with regards the outlook”. Positive data and trading updates kickstarted confidence inthe sector in the first half, with shares in UK housebuilders.FTASX3720 rallying 10 percent, bouyed by home buyerstrickling back to the market. By Lorraine Turner LONDON, July 6 (Reuters) – British housebuilders will reportstabilising sales and prices this week, but trading updates willbe marked by a cautious tone and muted comment on the outlook asa dearth of mortgage lending continues to crimp momentum.
