Measurement And Management Of Foreign Exchange Risk Exposure In Telecommunication Industry

With the increase in the overall volatility of RMB exchange rate, China’s enterprises are exposed to gradually increasing foreign exchange risk, which exerts effect on the external purchase and sale quantity of enterprise products, the relative price of products abroad and the enterprise profits, and then affects the competitiveness of the enterprises in the global market. Telecommunications industry is the basic industry of national economy in China, and it plays a significant role in stipulating economic development. The telecommunications industry both include equipment manufacturing enterprises and communication service enterprises, but there more or less involves import and export trade and management of foreign exchange assets. It is of practical significance to study the foreign exchange risk exposure of the listed companies in the telecommunications industry.On the basis of the previous scholars’ research and theoretical analysis, through the empirical model and the descriptive statistical analysis, this thesis conducts analysis towards the foreign exchange risk exposure of the listed companies in the telecommunications industry, the analysis tools include 5 kinds of capital market methods, empirical models and cash flow methods, namely Adler —Dumas model, Jorion and its extended model, Williamson model, Fama-French three-factor model, Chue-Cook.It can be found through data analysis that on the whole, after the reform of RMB exchange rate in 2005, the foreign exchange risk exposure of the telecommunications industry takes on the a rising trend, and after the peak of the global financial crisis that began in 2007, the foreign exchange risk exposure of the telecommunications industry has not decreased, which suggests that the enterprises of the telecommunications industry haven’t adopted all kinds of effective risk aversion ways and financial instruments of RMB derivatives to improve enterprises’ foreign exchange risk aversion ability. In terms of the specific methods, cash flow method cannot check out the foreign exchange risk, but under the inspection system of capital market method, Fama-French method and Chue-Cook method can identify the foreign exchange risk exposure, and it also suggests that for the telecommunications industry, the impact of exchange rate change on the company’s market value is more obvious than that on the corporate cash flow or operating income. From the perspective of foreign exchange currency, almost every listed company of the telecommunications industry checks out significant foreign exchange risk exposure of euro and dollar in a variety of methods, except for Fujian Fufa, Jade Bird Huangguang and BesTV, each enterprise also checks out significant foreign exchange risk exposure of yen.Then this thesis analyzes the influence factors of foreign exchange risk exposure, the telecommunications enterprises with more total assets, higher internationalization degree, higher book-to-market ratio and higher proportion of H shares, their foreign exchange risk exposure of dollar is also more significant. According to the existing data, it also expounds and analyzes the foreign exchange risk cases of the two enterprises ZTE and China Unicom.Finally, combined with the above analytical conclusion, it puts forward the corresponding recommendations in terms of the foreign exchange risk exposure in the telecommunications industry, first, it proposes the foreign exchange risk management tools that can be adopted by the hedging tools and other telecommunications enterprises, second, it presents ideas and suggestions concerning how the financial system construction manages the foreign exchange risk better in the next step.