Dividend Payments to Ease CNY Appreciation Pressure

Seasonal dividend payments of $61bn from Hong Kong-listed Chinese firms between June and August will incrementally slow but not reverse the RMB's appreciation trend. Strong trade-related USD supply continues to dominate the currency's path as USDCNY trades below 6.80.

Key Takeaways

• 1.Dividend payments from HK-listed Chinese firms (est. US$61bn Jun-Aug) will likely slow RMB appreciation but not reverse the downward trend for USDCNY.
• 2.Robust USD supply from goods trade (~US$60bn/month) remains sufficient to offset the seasonal demand for dividends (~US$20bn/month).
• 3.The PBoC is actively managing the pace of RMB appreciation, evidenced by a widening 500pip spread between fixing and spot rates.

Table of Contents

• Key takeaways
• China in Focus
• PBoC continues to manage the pace of the move
• Key facts about dividend payments
• Dividends' impacts on FX should be relatively modest
• News and views

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