On the way to the dinner after finishing my last story, the thought came out: Will yuan be revalued this year if many companies and organizations begin to invest overseas this year?
The two things seems unrelated at the first sight. But we can relate to both in some circumstance.
First, where will Ping An, or its probable adviser Alliance Capital invest its 1.75 billion US dollars? It may not a difficult question for the companies to answer the question, especially Alliance Capital, the global fund management company with different portfolios for different customers.
But now it seems that many fund managers are putting more and more money in mainland China and Hong Kong. According to an inverview conducted by unlinkable SCMP, the chief executive of the Standard Charted Bank said that half of the money flowing in China are "hot money", seeking higher profit than what they could get from other places.
Hong Kong is another place for U.S. fund managers to invest, according to one of my previous stories.
So it means that Ping An will probably invest part of its investment, in the yuan currency, back into China, under the suggestion of Alliance Capital, because the return is possibly higher than other places. Ping An 's money will surely experience two exchanges: First Ping An exchanges yuan for US dollars from Central Bank, then Ping An exchanges US dollars for yuan if the money invest back to China.
No one will lose in the process if yuan remains its value. But things will be different if yuan revalue in the future. If yuan is up by 0.01 per cent, it means that 17 million yuan will disappear in the reality only from the process of two exchanges. Of course, Ping An doesn't want to see it, nor did the other two insurers, China Life and PICC.
Also the National Social Security Fund (NSSF) 's 170 yuan will be prepared to invest outside China.
It is hard to say who will benefit if yuan is revalued, but it is easy to know that all the Chinese investers, who has already put their money on the overseas markets, will lose on the circumstance.