(Yicai Global) May 6 -- Mainland-listed Chinese firms, which lost more than CNY20 billion (USD3.1 billion) last year due to the weakening yuan against the US dollar in the second half of 2020, need support to manage their foreign exchange risks, according to experts.

Companies should be guided to seek professional help to manage foreign exchange rate risks, similarly to buying accounting or legal services, Xiong Peng, a well-known global macro trader, said to Yicai Global. 

China's market of foreign exchange forwards, swaps, and futures should be actively developed to provide firms with tools to mitigate their forex risks, said Li Zongguang, chief economist at China Renaissance.

More than 2,600 listed companies reported a higher figure than CNY10,000 (USD1,544) in exchange losses in 2020 among the nearly 4,300 companies that have disclosed their related numbers, Yicai Global learned by reading their financial reporting.

Among them, 114 companies’ exchange losses exceeded CNY100 million (USD15.4 million), adding up to as much as CNY34.9 billion. Thus, the headline figure would have been about 70 percent bigger if not offset by some exchange gains.

Foreign trade and engineering construction companies were hit the hardest. Those included Power Construction, China Communications Construction, and ADAMA, the three of which all reported higher than CNY1 billion (USD150 million) in exchange losses. Automotive company Lifan Technology, computer vision firm Hikvision, and BYD also logged big figures.

Gainers

However, aviation and real estate firms were benefiting from such fluctuations. There were 52 listed companies with exchange gains of more than CNY100 million last year.

Seven companies were particularly fortunate as their exchange gains exceeded CNY1 billion, including the four airlines of Air China, China Southern Airlines, China Eastern Airlines, and Hainan Airlines. That helped the aviation firms narrow their individual losses of more than CNY10 billion during the Covid-19 pandemic. The other three gainers were China State Construction Engineering, Rongsheng Petrochemical, and Greenland Holdings.

Editor: Zhang Yushuo, Emmi Laine，Xiao Yi