*** Downgrading elastic stocks in the textile industry

Following on August 11th, the exchange rate between the *** and the U.S. dollar was lowered by 1136 basis points from the previous trading day, and yesterday, the middle price of the *** exchange rate against the U.S. dollar fell again. In this regard, analysts said that the devaluation on Tuesday, has hit a history of the largest one-day decline, continued depreciation on Wednesday, making the market in the short term the continued devaluation of the *** expected to increase significantly; from the beneficiary industry, China's commodity prices will decline accordingly This will significantly increase the competitiveness of the products. In addition, textiles, garments, shipping, chemicals, and other industries closely related to exports will also receive strong boost. In particular, the textile and apparel industry, which is more dependent on exports, will directly increase the industry's prosperity.

According to data from the Chinese Chamber of Commerce for Import and Export of Textiles, China's textile and apparel exports fell by 2.9% year-on-year in the first half of this year, and the year-on-year negative growth for the first time in recent years. Meanwhile, in the first seven months of this year, China’s textile and apparel exports totaled 155.62 billion US dollars, a year-on-year decrease of 4.4. %. Among them, China's textile exports reached US$62.42 billion, a decrease of 1.5%, and apparel exports reached US$93.2 billion, a drop of 6.2%. With the devaluation of ***, the export of textile and clothing industry will be improved.

Some textile and clothing stocks continued their strong performances. Smith Barney, Luthai A, and Mengjie Home Textiles Limited had a daily limit of 2 consecutive trading days. In addition, Blum Oriental, Luolai Home Textiles, Jihua Group, Taiya Securities, Vosges Co., Ltd., Shinno Textile, and Blond Hair The stocks of many stocks such as Rabbi and Huafang have both increased by more than 10% in the past two days.

In this regard, Galaxy Securities stated that the depreciation of *** on the elastic performance of the textile and apparel sector performance in the following aspects: 1. Positive effect on the price of order ***; 2. Positive impact on sales of orders; 3. Possible negative impact on raw material prices; 4. Hedging weakens the company's performance elasticity; 5. Increase the profits of overseas production layout; 6. The influence of the level of net profit on the elasticity of the company's performance. Selecting individual stocks, it is recommended to benefit from the enhanced performance of the depreciation of ***, and there are three targets of relative safety cushions: Lianfa, Luthai A, and Vosges.

In addition, Guotai Junan said that the current depreciation is a normal part of the pre-repair period, rather than a competitive devaluation, will help ease the pressure on exports. At present, *** is becoming the world’s second-biggest currency and has a great influence. The future devaluation still has 1% to 1.5% of the space. CITIC Securities Research pointed out that in the short term, the reform of the exchange rate formation mechanism will help increase the space for monetary policy and ease downward pressure on the economy. In the medium to long term, the depreciation of *** promotes economic restructuring. It is expected that the depreciation of *** will be gradual.

It is worth noting that investors should be alert to the adverse impact of depreciation on aviation, tourism and other sectors. In the past two trading days, Eastern Airlines, China Southern Airlines and other stocks have taken a different degree of correction.