Yuan Devaluation Impact: Developers Will Cut Home Prices, Investors Buy Gold

There have been a couple articles out recently debating the impact of devaluation on home prices. Devaluation Will Cause Home Prices to Decline and Counter View: Yuan Depreciation Makes Home Prices Rise were two recent posts. The price drop argument has several components, but one is the foreign currency debt of developers.

Chinese Developers Hit By Yuan Devaluation
According to a research note by JP Morgan, an average of 38 percent of debt belonging to China’s property developers has been borrowed in foreign currency, and almost all of this foreign denominated debt has been in US dollars or Hong Kong dollars.

This argument is repeated in another article from iFeng: 人民币贬值央行表态: 房企降价销售 加快回款
Reverse observed, the financial sector is also the main reason for the sharp appreciation of the past 10 years, housing prices attributed to appreciation of the renminbi, during the rise of domestic prices and RMB appreciation of the channel appears in the time node photogenic match.

Devaluation impact on housing prices is negative, the mainland housing prices will face pressure to enhance overseas financing costs, financing exchange rate losses will increase. Centaline Dawei, chief analyst believes that devaluation is bearish on housing prices, housing prices is likely to accelerate sales outstanding, may also cut prices.
As for gold:
RMB exchange rate down also affected the price of gold and silver and other investment products, precious metal prices to attract the enthusiasm of investors to buy the paper gold and other financial products. There are a lot of investors want to increase the value of assets through this channel. However, the China Industrial and Commercial Bank of precious metals business unit hold precious metals trader Liu Xiao was felt in the second half, the precious metal is still continuing downward pressure in recent ICBC Guangdong Branch. Liu Xiao believes that although the price of gold dropped $ 1920 highs has exceeded 40%, but the market demand is still weak, with the Federal Reserve to raise interest rates're just "paid off", from now, gold and silver prices in the next six months will still continue to remain weak current pattern of decline, the downside is there are about $ 100.
Other arguments are recycled in the article, such as U.S. dollar financial products having a low yield. Everything is generally predicated on the yuan devaluing by 10% at most, with most analysts forecasting a smaller overall decline. If depreciation accelerates, developers will cut prices to recoup capital and investors will buy precious metals.

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