China's A-share exporters face rising currency losses in H1 2026 says UBS

Investing.com -- Foreign exchange losses for China's non-financial A-share companies reached 107 billion yuan in the first half of 2026, equal to 5.5% of total net profit, according to a UBS report released Wednesday. This marks a sharp increase from the average of 0.4% recorded between 2015 and 2025.

The yuan strengthened approximately 9.5% against the dollar from its low on April 9, 2025, to September 21, 2026, when the USD/CNY exchange rate briefly fell below 6.7. China's exports remained strong during this period, with dollar-denominated exports rising 19% year-over-year through August 2026.

The currency appreciation reduced the yuan value of foreign-currency revenues for exporters with yuan-denominated costs. Sectors with high overseas revenue exposure faced the largest foreign exchange-related earnings pressures in the first half of 2026, UBS said.

Two factors drove the increase in foreign exchange losses. Overseas business exposure has grown, with foreign revenue reaching 18.7% of total revenue in 2025, up from below 10% in 2010. Overseas operations remained more profitable, with gross profit margins 2.8 percentage points higher than domestic margins in 2025.

Chinese companies maintain limited currency hedging practices. Data from the State Administration of Foreign Exchange showed corporate foreign exchange hedging ratios stood at 30% in 2025. A 2021 survey found approximately 80% of listed Japanese manufacturers used foreign exchange hedging instruments.

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