How would revaluation of the Chinese yuan change the picture for European equities?
I think that has more of sentiment impact compared to a reality impact in terms of equities because, even if we did see revaluation, we’re looking at 3% to 5%. I think other factors could be more significant, such as the potential for Europe and the U.S. to impose tariffs on Chinese textile imports. That would have a negative impact on inflation in the two countries and could hit corporate earnings in the retail sector. Imports of apparel from China in the U.S. have exploded [since January, when the quota system ended]. [Imposing tariffs] would be negative for European retailers and negative for those who import from China. Companies that manufacture locally, such as [Spanish retailer] Inditex would be more protected, compared to maybe [Swedish retailer] H&M and [British department store] Marks & Spencer. The real impact of a revaluation could be on the foreign exchange market. It would have a negative effect on the dollar.
