Ferocious Chinese dragons hit India: Which stocks bleed most?

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26 Aug, 2025 12:21

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Moneycontrol BureauChinese dragons are scaring away investors with most of them hurriedly selling stocks with high exposure to the region. China has accelerated depreciation of yuan sending regional currencies and stock markets tumbling.Stocks impacted by the yuan depreciation include Tata Motors. Shares of the auto major tanked 5 percent intraday on Thursday, falling over 12 percent this week alone. Also, China's contribution to Jaguar Land Rover sales have declined for third consecutive quarter. JLR gets 15 percent sales (reduced from 30 percent year-on-year) from the world's second largest economy. JLR also has a joint venture (JV) with Chery Automobile in China.

Meanwhile, Japanese currency yen has hit multi-month highs against its peers, while commodity-linked currencies took a fresh hit after China guided the yuan lower for two days in a row, fuelling anxiety about China's economy and its policy intentions. Maruti is also down 5 percent intraday as yen appreciation will hit its margins. Every 1 percent appreciation in yen means 15 basis points negative impact on the four-wheeler’s margins. Maruti’s exposure to the yen is in form of royalty paid to Suzuki and import of raw material. Around 20 percent of sales comes from yen denominated imports and 5 percent of sales comes from yen denominated royalty outgo.

Commodity stocks such as Tata Steel, Vedanta and Hindalco too are under pressure on the back of a global risk off and as a devalued yuan could lead to further imports into India. Depreciation in yuan makes commodities denominated in US dollars more expensive for Chinese buyers, which could hurt demand and thus further depress commodity prices in a vicious chain reaction.Tyre stocks such as JK Tyre, MRF and Ceat are under pressure as well.

India's steel and tyre companies  are already reeling from cheaper Chinese import and a devalued yuan would mean further squeeze on margins of these sector. Imports from China may surge to an extent even protective measures like anti-dumping duties will have little effect. Financial companies such as Bank of Baroda, SBI, PNB and ICICI Bank with exposure to steel sector also fell 3-5 percent today.

Why are the Chinese dragons so ferocious? China's stock markets were suspended for the rest of the day less than half an hour after opening as a new circuit-breaking mechanism was tripped for the second time this week. The People's Bank of China (PBOC) again surprised markets by setting the official midpoint rate on the yuan, also known as the renminbi (RMB), at 6.5646 per dollar, the lowest since March 2011. There is a rising concerns that China might be aiming for a competitive devaluation to help its struggling exporters. This week's slide comes ahead of the expected release later in the day of China's foreign exchange reserve data for December, which traders fear will show a further sharp decline as investors pull money out of the slowing economy. Some fear the yuan's quickening slide suggests the world's second-largest economy is in deepening trouble, though for now economists say there has been no material change in their expectations of a gradual but bumpy slowdown, with no hard landing.(With inputs from Reuters)Posted by Nasrin SultanaFollow @NasrinzStory