(Bloomberg) -- Some investors are overestimating the stockpile of Chinese money that could be converted back into yuan, as firms may not yet be ready to...
-- Some investors are overestimating the stockpile of Chinese money that could be converted back into yuan, as firms may not yet be ready to abandon dollar holdings, according to Goldman Sachs Group Inc.US assets remain attractive to Chinese firms, given the still-large interest rate differentials between the two countries and weak domestic sentiment, analysts including Xinquan Chen wrote in a note Friday.
“Our gauge suggests much smaller dollar hoarding by exporters from mid-2022 to 2024,” the Goldman analysts wrote. “The recent yuan appreciation against the dollar is mostly driven by external factors, especially by the changes of market pricing for faster Fed rate cuts and US election, which would discourage yuan shorts.”
For Goldman, the potential return from US assets is still high for yuan holders, and that’s a key factor in any repatriation decision for Chinese firms.“The persistent feedback we receive from corporates is that they will only sell their dollars if the carry profile changes or if they are confident the dollar is on a downtrend,” the analysts said.Dividend information Reference is made to the Q2 2024 Presentation released 30 August 2024.
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