How To Trade China's RMB Depreciation

China’s surprise decision to devalue the Renminbi caught global markets off guard this week. However, now that Wall Street has had time to digest the move, several analyst have weighed in on ways to trade China’s decision.
Here’s what Deutsche Bank has to say.

Airlines
Analyst Vincent Ha believes that the 13-17 percent drop in Chinese airline stocks following the move is overdone and that the core of their businesses remains strong. “We think that any excessive weakness in share price could be a good opportunity to buy,” he writes.

Deutsche Bank recommends Chinese-traded Air China, China Eastern Airlines, and China Southern Airlines.

Commodities
Analyst Grant Sporre discusses why the devaluation will make metals more expensive to import to China. “The immediate impact will be that the arbitrage between domestic and imported supply closes up, discouraging imports in favor of domestic supply in commodities such as coking coal and zinc,” Sporre explains.

Deutsche Bank maintains Buy ratings on Rio Tinto Plc RIO, BHP Billiton Plc BBL and Vale SA VALE.

Utility/Alternative Energy
Analyst Michael Tong sees limited impact on the majority of Chinese domestic energy and utility names. “The HK/China utility/renewable/environmental space has relatively limited overseas operations and their revenues and costs are largely RMB-based, thus the currency risks from RMB depreciation are mainly for companies with high USD&HKD debt exposure,” Tong explains.

Tong mentions equipment makers CIMC Enric and gas company Towngas China as the companies with the largest export mix in their respective sectors.

Deutsche Bank has Buy ratings on Chinese-listed Beijing Enterprises and China High Speed Trans.