Yuan Appreciation and the affected NYSE Co.

DateTime: 03:33:15 21 Jun 2010
China's signal it will let its yuan currency appreciate is good news for global manufacturers and resource companies that supply the world's third-biggest economy with the equipment and commodities it needs to fuel growth.

China's signal that it will allow its yuan currency to appreciate could make winners out of companies with strong foreign businesses, like machinery maker Caterpillar.
On the other hand, it could dampen the outlook for China's own exporters and commodity producers. A relatively mild yuan appreciation against the dollar of about 5 percent would cause losses at these companies, according to a Reuters poll conducted at China's top trade fair in April.

Following is a list of some likely winners from any yuan appreciation.

Foreign Resource Companies
The shares of Brazilian mining giant Vale [VALE 27.73 0.85 (+3.16%) ] traded in New York picked up gains and were the seventh most actively traded issue on the New York Stock Exchange on Monday.
Freeport-McMoRan Copper & Gold [VALE 27.73 0.85 (+3.16%) ] rose more than three percent and was among the 15 most active stocks in New York.
In Canada, base metal producers Inmet Mining [IEMMF 49.293 3.4593 (+7.55%) ], First Quantum Minerals [FQM-LN 4379.00 245.00 (+5.93%) ] and Teck Resources [TCK 35.81 1.04 (+2.99%) ] all rose on Monday on hopes China's move would increase its resource imports.

Foreign Heavy Machinery Makers
The world's largest maker of earth-moving equipment, Caterpillar [CAT 66.07 0.22 (+0.33%) ], could be a major winner. The U.S. machinery giant sells billions of dollars worth of machinery and products to China each year.
Its group president said on Saturday that Beijing's move would help lift U.S. exports.
Second-ranked Komatsu said every 1 percent rise in the yuan would boost its operating profit by 1.1 billion yen ($12.1 million).
Caterpillar shares were up 0.4 percent late on Monday and Komatsu rose 4.6 percent in Tokyo.

Foreign Automakers
Foreign automakers that sell cars in the world's largest vehicle market, such as BMW, Volkswagen, General Motors, PSA Peugeot Citroen, the Renault-Nissan alliance and Fiat, should also gain.
BMW would benefit the most if the yuan continues to rise against the euro—an outcome that is far from certain—as its auto manufacturing joint venture with Brilliance China imports about half its parts, mainly from Germany.
BMW shares were up 2.7 percent, Volkswagen rose 1 percent, Renault rose 3.6 percent, Nissan rose 2.8 percent, Fiat fell 0.2 percent and Brilliance rose 4.8 percent.

Consumers, Techs
U.S. companies such as General Electric [GE 16.10 0.15 (+0.94%) ], the parent company of CNBC.com, and Procter & Gamble [PG 61.10 -0.20 (-0.33%) ] are likely to make currency exchange gains when their China profits are converted into U.S. dollars.
A spokeswoman for GE, which makes many of the products it sells in China in that country, said the U.S. conglomerate does not expect "any material impact" to its earnings from the change.
Credit Suisse analysts estimated every 10 percent of appreciation of the yuan versus the dollar would boost the revenue and earnings of U.S. electric equipment makers by about 1 percent.
PC maker Lenovo Group [PG 61.10 -0.20 (-0.33%) ], which earned 47 percent of its sales in China in 2009, reports earnings in U.S. dollars. Lenovo shares were up more than 5 percent on Monday.
Yum Brands [YUM 42.79 0.30 (+0.71%) ], which owns the KFC and Pizza Hut fast-food chains and generates more than one-third of its profits from its 3,500 locations in China, regards the move as good news, said spokesman Jonathan Blum.
"China represents our No. 1 growth opportunity and we expect this to be a very positive development over the long-term," Blum said.
No. 1 chipmaker Intel [INTC 21.19 -0.21 (-0.98%) ] expects limited effect from the change, a spokesman said.
"All of Intel's transactions worldwide are conducted in dollars so the effect of currency fluctuations is not a direct one on the company," said spokesman Tom Beermann. "There would be secondary effects if currency valuations caused demand for our products (or products that use our chips) to increase or decline overseas."
Shares of Baidu [BIDU 76.36 2.27 (+3.06%) ], China's top search engine, closed up 3 percent on the Nasdaq Monday. GE, Yum and Lenovo all rose; Procter & Gamble ended down for the day.

(source : CNBC)