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US-China Trade War Renewed! (Business Times)

May 14, 2019

I was asked about the impact of a weakening Chinese Yuan (CNY). In my opinion, when we take this on its own, it may be positive for manufacturers BUT this is a trade war we are talking about. Manufacturers in China will be hit as orders shrink, especially if Trump has his way.

Investors should pay close attention to the exchange rate between the USD/CNY. A weaker CNY could actually benefit Singapore companies with operations in China, or incur cost in CNY.

At the same time, if cost goes down but order book shrinks because of the trade war, this may offset some of the potential benefits from the weaker CNY. Hence, it would still be better for the financial markets if there is some sort of resolution between the US and China.