Firms remain positive despite yuan meltdown

Despite China’s economic slowdown and the rapid decline in value of the yuan, law firms are remaining positive.

China cut interest rates again yesterday, for the fifth time since November, amidst concerns the world’s largest economy may be slowing faster than expected, as the value of the yuan continues its decline.

According Herbert Smith Freehills corporate group head Michael Ziegelaar, law firms aren’t likely to see the effects of the China’s economic slowdown. 

He said clients will still looking for opportunities, just different ones.

“In the current situation, people are looking for value opportunities so it opens up other opportunities for people to buy companies where they think there is value given the current economic conditions,” he said.

“On the IPO front, while the stock markets are looking bad, we’re working on a couple of IPOs where they’re in attractive sectors and people are looking for opportunities to invest money that continues, I think and people are looking for the right opportunity.”

The Sydney Morning Herald reported yesterday that Chinese share values have reached their lowest since 2007 and commodities have fallen to a 16 year low.  Ziegelaar said solid companies will continue to do well, despite the downturn.

“If you don’t have a good story, I don’t think you can expect to have much success with an IPO but if you’ve got a good business, in an attractive industry, IPOs remain open as well,” he said.

“I think the clients will consider opportunities a bit more carefully but I think from what I’m seeing and what I’ve seen over the last few weeks, I don’t think it’s really made them too pessimistic or concerned about things,” he added.

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