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

In the first half of 2026, Chinese non-financial A-share companies experienced a significant rise in currency losses, amounting to 107 billion yuan, or 5.5% of their total net profit, according to a report from UBS. This marked a substantial increase from the average of 0.4% seen between 2015 and 2025. The yuan's value appreciated by around 9.5% against the US dollar, with the exchange rate falling below 6.7 at times.

During this period, China's exports remained robust, with dollar-denominated sales surging by 19% year-over-year up to August 2026. However, the stronger yuan negatively impacted the value of foreign-currency revenues for exporters with yuan-denominated costs. Sectors with high exposure to overseas revenue faced the most considerable foreign exchange-related earnings pressures, noted UBS.

Two primary factors contributed to the surge in foreign exchange losses. First, the growth in overseas business exposure, with foreign revenue making up 18.7% of total revenue in 2025, up from less than 10% in 2010. Second, Chinese companies operated more profitably abroad, with gross profit margins 2.8 percentage points higher than domestic margins in 2025.

The Chinese government's control over corporate foreign exchange hedging remains limited, as evidenced by the 2025 data, where ratios were at 30%. In contrast, a 2021 survey revealed that around 80% of Japanese manufacturers employed foreign exchange hedging instruments.