news Could the Declining Yuan Hurt the Chinese Domain Market?

[Arpit131]

A very important question indeed.
Currency rates do affect our day to day transactions especially for people dealing in two different currencies.

In an article on 88domains, here are some of the key things pointed out:

"From the activity we've been seeing, we don't anticipate the stock market drop to have a major impact on domain prices, although the growth we’ve witnessed in recent years could decelerate a bit. Naturally, some investors will try to weather the storm on all fronts by pulling their money out of the markets altogether."

"And while the market may continue to experience growth from Chinese organizations who see tremendous value in these short domains, some domainers who are actively looking to flip such domains may not pursue these investments as aggressively."

What is your view on this? Will the Chinese domain market decelerate due to the declining Yuan issue?

 

[Joseph Green]

It may be counterintuitive, but no, it is not decreasing their interest in domains.

As Chinese investors lose faith in their stock market, they need a better place to invest their cash: domain names.

From what I've seen, it's strengthening the Chinese domain market.

 

[paul79]

from knowing how the forex/stock market works i would agree with joseph above - in times of trouble on these markets ppl look for safe havens to put their cash in

 

[djum]

When market crash safe heaven is not domains, safe heaven is CASH! That's why they say "Cash is the king". If you have cash you can go and buy assets: stocks, domains, real estate on fire sale. If you have domains, you need to sell them first, but guess what will happen with the price when crash happens?
It will go down, so first it won't be easy to find customer at all, and second, price of domains will go down, same as price of all other assets. You either will have to sell at loss or be forced to stay invested for few years until price recover.

I don't understand the " issue" of fallin Yuan they talking about though. It was devaluated on 5%, yes. But after that there were no issues. Are they trying to predict future devaluations by Chinese government?

 

[paul79]

good point - in my original reply i was meaning people diverting their cash flow into premium domains as a longer term investment yes. certainly until the yuan starts to rise again to a favourable level where it makes sense to sell and have the flow go back into the exchange markets

 

[djum]

Yuan only went down 5%, and only compared to USD. It may still look strong against weaker currencies. Chinese stock market went down from 5100 to 3000-3200, but thats different, it's not Yuan in any way. Now when correction might be over it could be good chance to buy stocks again and profit from market growth, who knows..
As long as government don't mess it up. Afterall China is one country where they consider 6% growth too slow and not enough.

 

[Rick Ace]

Well, if the yuan declining represents a long-term decline in the Chinese economy (or something sort of a recession), the domain market will suffer.

 

[Templr]

The flux of the stocks in China was/is nothing compared to what has is happening in US or (Europe) for example. Its just that China has never experienced such a dip in long time.

What we read and watch in the West is different to actual evidence based reality.

We can't always take one source to randomly disect, for instance there was big hype about India in domaining this week and that over China.
But the fact China is much more technically developed and way ahead of India in terms of business development, this data has often been neglected.