Citi Research has told clients it is worried China's currency devaluations will lead to further downside for companies with large China exposure.
"Markets fear that the latest RMB devaluation reflects policymaker concerns about the strength of the underlying domestic economy – China has officially entered the global currency war," Citi's Robert Buckland wrote in a note Thursday. And "fears about the ongoing economic slowdown have been enhanced, not reduced, by the recent policymaker actions."
Buckland noted that stocks on their screened list with more than 20 percent of sales in China and market caps of over $5 billion have already fallen 10 percent since June due to the slowdown.
However, they see even more downside ahead if China's central bank continues to devalue the yuan.
The report said:
"Despite this underperformance, they are not yet especially cheap given their EPS (earnings) momentum has also been deteriorating. If the recent depreciation of CNY continues, this is likely to put further downward pressure on EPS. …The recent CNY depreciation probably means more downgrades to come."
Here are stocks with the most to lose from this currency war according to Citi...