Which European companies are most exposed to a yuan devaluation?
China appears to have embarked on a strategy of currency devaluation in an effort to stabilise its economy. While the yuan has generally been weakening since it hit a high against the dollar in January 2014, the speed
of decline in the last two days has taken the market by surprise. European companies with sales in China will likely see a negative impact on earnings translated into home currencies, while Chinese travel and overseas spending may be hurt by a weaker yuan.
--> Luxury, autos and capital goods
We see ongoing volatility and pressure on the stocks most exposed to China while the rapid devaluation of the yuan continues. The European companies with the most exposure to China are typically in the luxury goods, autos and capital goods spaces:
Swatch Group (20%), Richemont (15%) and Prada (15%) in luxury; Peugeot (25%), Volkswagen (20%) and BMW (20%) in autos; and Kone (35%) and Schneider Electric (14%) in industrials are among the most exposed blue chips in Europe. In terms of small and mid cap stocks, Aixtron (60%), AMS (45%), U-blox (32%), DKSH (30%) and Dürr (30%) have the most exposure.