Chinese companies in Hong Kong are abandoning a long-held practice of reporting earnings in dollars in favor of the yuan.
Want Want China Holdings Ltd. made the switch for the first time since its 2008 listing when reporting first-half earnings last month, while Hengan International Group Co. dropped the Hong Kong dollar figures it has used since at least 2001. China Resources Beer (Holdings) Co. said it moved to yuan-denominated reports to reduce the impact of currency moves.
While Capital Link International Holdings Ltd. says the growing international importance of the yuan means it no longer makes sense for the nation's companies to report in a foreign currency, JPMorgan Chase & Co. says the weaker Chinese currency is triggering the move. The yuan will decline a further 1.3% to a six-year low by the end of the December, according to analysts' median forecast in a Bloomberg survey.
Recommended For You
"It's flattering when the yuan is appreciating but it makes the numbers poor when the yuan is falling," said Adrian Mowat, the chief Asian and emerging-market equity strategist at JPMorgan. Companies "recognize after recent yuan weakness that it makes the numbers less favorable in Hong Kong dollars."
The yuan has fallen 9.2% against the dollar since the start of 2014, after climbing 37% in the previous 10 years. An unexpected devaluation in August last year fueled volatility in the currency amid concern policy makers would allow a faster pace of depreciation.
The yuan is more suitable currency because most of the company's revenue is from China and recent fluctuations in the exchange rate has no direct relevance to business operations, Want Want said in a statement. The seller of snack foods and beverages said more than 90% of its revenue and business activities are in the mainland. Hengan, which makes diapers, said the yuan is more representative of its business operations.
"If you have more business in China and your revenue, expenses are more related to the yuan, it makes sense to switch your base currency," said Tai Hui, chief Asia market strategist at JPMorgan Asset Management. "Ultimately it's about exchange rate management."
Bigger Role
China's currency is set to join the International Monetary Fund's basket of global reserves next month, more than 22 years after the Communist Party set a long-term goal of full convertibility. The yuan doubled its share of global currency trading in the three years through April 2016, according to the latest triennial survey conducted by the Bank for International Settlements, highlighting the rising prominence in the world.
Some companies haven't made the switch. Citic Ltd., China's biggest conglomerate, cited the depreciation of the yuan as a factor behind its 46% drop in half-year profit. Instant noodle maker Tingyi (Cayman Islands) Holding Corp., which gets all its revenue from China, still reports in dollars.
Companies on Hong Kong's benchmark Hang Seng Index receive 74% of revenue from the mainland based on a market weighted average, according to data compiled by Bloomberg.
"The yuan has become enough of an international currency to no longer need to report in dollar or Hong Kong dollar terms," said Uwe Parpart, Hong Kong-based chief strategist at investment bank Capital Link. "The yuan has become a respected currency."
Bloomberg News
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
