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Diageo, Pernod Ricard stocks bounce back despite fresh yuan devaluation

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Leading spirits producers' share prices rallied today despite another devaluation in China's currency, that hit stocks yesterday.

Diageos stock price was back up today

Diageo's stock price was back up today

Diageo's share price was back up by 1.2% as of 2pm today, though remained 3.5% down on Monday's close. On Tuesday, the Chinese government announced the first of three daily devaluations of the yuan, sparking a slight fall in global markets.

Pernod Ricard, which saw stocks fall 2.4% yesterday, had rebounded by 3.2% as of 2pm while Remy Cointreau was back up by 1.7% after a 3.7% drop yesterday.
China's latest devaluation, of 1.1%, brings the total drop since Tuesday to 4.4%, the biggest drop in two decades. An analyst yesterday told just-drinks the move was down to a Chinese government worried about falling export numbers.

The analyst also said companies such as Pernod and Remy, which import spirits to China, could be at risk of seeing margins squeezed as dollar sales weaken.

Another analyst, Bernstein's Trevor Stirling, sald that companies trading in euros were less at risk because the currency is falling against the dollar.

"Looking at the margin impact, yes they may be 3% down against the dollar, but the euro has probably dropped 5% against the dollar in the past week or two," Stirling said.

Diageo declined to comment on the share price movement.


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