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The rapid appreciation of the Chinese currency against the US dollar is taking a big toll on Asian companies using China as base for exports to the United States, according to a top US business official. The higher yuan hits china-based exporters.

The yuan has risen 12 percent against the dollar in 2008, and the currency breached a key psychological level of 7.0 yuan to one dollar on April 10.

The higher yuan makes US exports more competitive with Chinese goods in their home market, while business costs for largely Asian companies producing and exporting from China will rise as they pay more local currency for labor and raw materials and sell their products to the US market in dollars. 

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Foxconn International Holdings Ltd (FIH), is the trading name of Hon Hai Precision Industry. It is by far the largest manufacturer of electronics worldwide. It is Taiwan´s largest company, with approximately $50 billion in sales per year.

FIH (stock ticker: 2038.HK) is listed in Germany (Berlin, Frankfurt and Munich) and Hong Kong, but their main activity goes on in Hong Kong. Their main products: motherboards, graphics cards, computer cooling solutions, apple products and cell phones. They have big clients such as Motorola, Sony Ericsson, Nokia and Apple.

The timing to invest in this company seems about right since Apple´s iphone 3G will be made by FIH. They have won  a contract for 3 million units shipping in June, and this could be just the start.

Let´s analyse the numbers of these company and see the stock price evolution:

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Their is optimism that the worst is in over is the sentiment in Asian markets. Benchmark indices in Australia, Singapore, South Korea, Taiwan and the Philippines all gained more than 2%.

At this levels, Korea, Singapore, Taiwan and Hong Kong are all trasing above the moving average, showing possitive prospects. Indonesia, Malaysia and Philippines still haven´t reach this condition, joining China and India in the not so optimistic group.

China finished slightly possitive after being 4,2% up in yesterday´s session. Of all asian markets, I believe China is the most overpriced one. I would not bet on it, due to the big inflation problem that they should fix. On the other hand, Yuan or Renmimbi, the local currency, will probably appreciate and there exists a good opportunity for investors.

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