China's yuan move good for some, bad for others

China's yuan move good for some, bad for others
China airline, paper shares may rise, but Korean exporters could face pressure

By Lisa Twaronite , MarketWatch

TOKYO (MarketWatch) -- Asian equities markets rallied in the wake of China's weekend announcement that it will allow its currency to gradually move against the U.S. dollar, with some sectors seen more likely than others to benefit from the move.

China's central bank said Saturday it would loosen the yuan's de-facto peg to the dollar, while ruling out a one-time revaluation. Analysts expect the yuan to rise between 3% and 5% a year, against its U.S. counterpart. Read more on Chinese yuan move.

"We expect modestly positive reactions from the Chinese equity markets," especially airline shares, as investors price for more appreciation, said strategists at Deutsche Bank.

Chinese domestic consumption "should be the biggest beneficiary of these structural changes," they said, identifying instant noodles, dairy, tobacco and alcohol shares as "key winners."

In Hong Kong trading Monday, shares of Air China Ltd. /quotes/comstock/22h!e:753 (HK:753 8.29, +0.28, +3.50%) /quotes/comstock/11i!airy.y (AIRYY 20.77, -0.58, -2.72%) were up 3.6%, China Eastern Airlines Corp. /quotes/comstock/22h!e:670 (HK:670 3.74, +0.24, +6.86%) /quotes/comstock/11i!cheaf (CHEAF 0.40, +0.03, +8.11%) shares were up 7.1%, and China Southern Airlines Co. /quotes/comstock/22h!e:1055 (HK:1055 3.80, +0.28, +7.95%) /quotes/comstock/11i!chkif (CHKIF 0.40, 0.00, 0.00%) surged 8%. In Shanghai, Air China /quotes/comstock/28c!e:601111 (CN:601111 11.59, +0.57, +5.17%) rose 5.3%, China Eastern /quotes/comstock/28c!e:600115 (CN:600115 7.90, +0.39, +5.19%) rose 5.1% and China Southern /quotes/comstock/28c!e:600029 (CN:600029 7.18, +0.46, +6.85%) jumped 6.4%.