Chinese stocks ended mixed yesterday as the central bank’s surprise decision to allow its currency to fall hit the shares of airlines and importers but boosted exporters as investors bet a weaker yuan would help their competitiveness.

The People’s Bank of China described the near two per cent devaluation early in the day as a “one-off”, based on a new way of managing the exchange rate that better reflected market forces, but analysts wonder if just the beginning of a longer slide in the yuan’s value. The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 0.4 per cent, to 4,066.67 points, while the Shanghai Composite Index was unchanged at 3,927.91.

“Generally speaking, the devaluation is negative for stocks,” wrote Wang Yang, analyst at Guotai Junan Futures. On one hand, the move makes domestic assets less attractive; on the other hand, the devaluation may accelerate capital outflows, triggering passive tightening in liquidity.”

Chinese airlines, typically burdened with heavy debts denominated in hard currencies, dropped on concerns that a weaker yuan would increase their borrowing costs and push up their fuel bills.

China Eastern, China Southern and Air China all slumped more than five per cent in Shanghai.

But exporters rose, even though economists like those at OCBC believed the yuan’s drop yesterday was too mild to give much of a boost to global demand for Chinese goods.