This article was first published on the official account of "Shan Ren Xing", subscribe to the official account of "Shan Ren Xing".
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01
In the early hours of yesterday morning, the most expensive voice in the world sounded.
The Fed announced the first interest rate cut in four years, and cut rates by 50 basis points in one go, lowering the target range for the federal funds rate to 4.75%-5.00%, and the federal funds rate is expected to fall to 4.4% by the end of 2024.
Has this rate cut exceeded your expectations?
At the same time, the Fed's interest rate cut has also attracted a lot of attention and speculation, such as China's stock market, exchange rate, housing prices, imports and exports, and so on.
So, what impact will the rate cut have on these sectors, as well as on our industries and businesses?
02
First of all, let's listen to the views of Dr. Shan Ren, chairman of Shan Ren Niu Shang and commentator of CCTV Phoenix.
The Fed's first interest rate cut in four years has indeed attracted a lot of attention and sparked a lot of speculation.
Everyone is very concerned about whether the Fed's interest rate cut will make China follow suit, and will it affect our stock market and housing prices?
My view is that the Fed's interest rate cut does not mean that China will cut interest rates, let alone that China's stock market and housing prices will rise.
In this, I think there are three points that I can talk to you about.
First of all, the Federal Reserve, as the central bank of United States, like our People's Bank, is primarily responsible for the country's economic situation.
After the Fed's previous continuous interest rate hike policy, the United States personal consumption expenditures price index, also known as CPI, fell to about 2.5% in August, close to the Fed's long-term inflation target of 2%, which means that inflation has eased.
At the same time, the average monthly employment growth in the past three months in the United States was 116,000, the growth rate was significantly lower, and the unemployment rate also increased to 4.2%.
At this time, the fight against inflation is no longer the main goal of the Fed, but to promote market growth and prevent an economic slowdown.
This is the underlying logic behind the Fed's interest rate cuts.
Second, China's monetary policy is highly independent.
There is an impossible triangle here, we have chosen the independence of monetary policy and the strong control of the exchange rate, and we do not only benchmark against the US dollar, then we will lose the free liquidity of capital.
We have not followed the Fed's monetary policy to make decisions, and whether the Fed cuts interest rates or not will not disrupt China's monetary policy arrangements.
Just like the Fed raised interest rates all the way in the past two years, what is our domestic monetary policy?
in the rate cut.
Therefore, the Fed's interest rate cut does not mean that China will cut interest rates, nor does it mean that housing prices and stock markets will definitely rise, and there is no direct relationship between them.
Of course, whether the Fed cuts interest rates this time or not, our own rate cut expectations are very strong.
Why?
Because of the lack of consumer expectations and confidence.
Residents do not borrow money or do not borrow money, do not consume or do not consume, the overall demand of the market is weak, respectively, it has been differentiated, some industries are doing very well, such as new energy vehicles, some industries and enterprises are under great pressure, and will not easily expand the scale.
Especially for traditional enterprises that specialized in serving a certain field and object in the past, the more important thing today is how to transform their service objects, tap their needs, optimize their products, and keep their business growing.
As for the real estate market, can the problems accumulated over the past few decades be reversed by the Fed's interest rate cuts?
We ourselves don't know how much monetary policy and targeted policies, has the real estate market reversed?
Domestic policies don't work, so why do United States cut interest rates as soon as they work?
That's not a joke.
Third, international finance is very complex, and there are too many variables and game factors in it, and it is difficult to say "what will happen".
Just like our monetary policy is independent, but the Fed's interest rate cut will still bring most countries around the world into a rate cut cycle together.
Theoretically, all of this would push the dollar index down and the dollar depreciate, causing more money to flow to emerging markets with higher yields, and China does have an opportunity.
From the perspective of global capital market valuations, the valuation of U.S. stocks is at an all-time high, while China A-shares and Hong Kong stocks are both in the depression of the global valuation market.
So, the Fed's interest rate cut is good news, but will the money have to come? Don't you have to have these funds, and don't other markets have profit margins? Do we have a good investment target and imagination?
These will affect the specific flow of capital markets.
At the same time, the wave of interest rate cuts is to encourage market development and invest more funds, which is indeed good for the demand of the global market, especially for the production capacity of producing countries.
However, if the dollar depreciates, the RMB will also face upward pressure, which will affect the profit settlement of foreign trade enterprises denominated in US dollars.
At this time, you need to use foreign exchange related tools to ensure your profits, which is more complicated, and we will spend time tomorrow talking about it separately.
Therefore, in general, this is a kind of pluralistic influence, there is no definite and inevitable absolute statement, only in the midst of change to judge the situation and choose the most beneficial plan for yourself.
03
Next, the views of Mr. Song Zi, a senior investor and columnist of Shan Renxing.
The lottery has been drawn, and the Fed has finally cut interest rates, and the rate cut has exceeded most people's expectations.
In the article a few days ago, I predicted and analyzed that this round of interest rate cuts is a "preventive interest rate cut", and if the rate cut exceeds 50 basis points, it will be significantly positive for RMB assets.
The positive for RMB assets is reflected in two aspects:
1. The RMB appreciates and the US dollar depreciates;
2. Appreciation of stocks and real estate.
Let's look at the currency first, today's US dollar offshore yuan as of 19 o'clock last night is quoted at 7.0655, the yuan has appreciated significantly, hitting a new high in a year and a half.
The Fed said that there may be another 50 basis point interest rate cut in the fourth quarter of this year, and it can be said that the renminbi has reversed the depreciation trend since the US dollar interest rate hike in 2022, and there is a situation of capital flowing back to the yuan.
I have counted the movements of assets in the past 8 interest rate cut cycles in the past 40 years in the United States.
This rate cut is a precautionary rate cut, which is to prevent an economic downturn.
In the past five precautionary interest rate cuts United States, most of them have been conducive to the rise of US stocks, but not to the trend of US dollar assets, that is, the US dollar has depreciation pressure.
A 50 basis point interest rate cut will lead to a significant weakening of the US dollar, and the RMB will face stronger upward pressure.
Second, the appreciation of stocks and real estate.
The flow of dollars to the renminbi will bring more capital to the Chinese market, increasing market liquidity, which is reflected in the stock and real estate markets.
On September 19, the real estate development sector saw a sharp rise, with the index up 2.28%, the CSI 300 index up 0.79%, and the MSCI index up 1.19%.
Is today's rally short-term or long-term?
I have also statistically studied the three interest rate cuts in the United States since 2005 in the last two decades, and I have observed the 30-day, 60-day, 90-day, and 120-day trends of China's three major stock indexes.
For example, the CSI 300 index did not rise significantly, and even fell a little. However, the ChiNext index and the SME index have risen significantly, reaching a maximum of 16%.
The depreciation of the dollar and the appreciation of the renminbi will cause liquidity to drive stock prices higher, similar to the rise in the renminbi in 2005, which led to a rise in stocks by more than 500%.
For stock investment, buying stocks is buying companies, we should not only pay attention to liquidity, but also pay attention to the operating performance of the companies behind the stocks, not to say that United States interest rate cuts, China's stock market will definitely be what happened, funds to come, then to be optimistic about the investment target.
Of course, many friends will be concerned, what will be the impact of the United States interest rate cut on different industries?
Two years ago, I had an export customer who asked me if I wanted to delay the settlement of foreign exchange.
At that time, the renminbi was depreciating in a cycle, and according to my judgment, I suggested that he postpone the settlement of foreign exchange, and the exchange rate difference in two months would be equal to his profit in the previous year.
Now that we have entered the cycle of depreciation of the US dollar and appreciation of the RMB, what changes will occur in the operation of enterprises?
I focus on the analysis of the import and export industry for your reference.
1. Export-related industries:
The appreciation of the renminbi may exert some pressure on export-oriented industries, such as textiles, clothing, home appliances, etc.
The products of these industries are priced in dollars on the international market, and the appreciation of the renminbi will make the products less competitive and the export earnings may be reduced.
Home appliance companies such as Midea and Haier have enjoyed the export advantage of low exchange rates in the first two years, and may be affected after the US dollar cuts interest rates.
Of course, these industries can also respond to exchange rate fluctuations by improving product quality, added value, and opening up other markets.
2. Import-related industries:
For industries that rely on imported raw materials, such as petrochemicals, steel, aviation, non-ferrous metals, agricultural product processing, etc., the appreciation of the RMB can reduce the cost of raw material imports, which is conducive to improving the profitability of enterprises, and may have a positive impact on the stock price performance of related industries.
Like aviation relies on imported fuel, food and beverage processing enterprises need to import a large number of soybeans, sugar and other agricultural products, in the recent year, the price has dropped by 20%, the cost will further decline, improve the gross profit margin of enterprises.
Of course, international finance is a very complex multi-variate and multi-subject player market.
Moreover, the Fed has cut interest rates not only once, but also once in the fourth quarter, and perhaps two or three more next year, which is a long-term adjustment process.
Therefore, keep a calm mind, pay attention to every major policy change, and grasp the opportunity of wealth redistribution.
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Editor-in-Charge | Luo Yingfan
The pictures are all from the Internet
This article does not constitute any investment advice, the stock market is risky, investment should be cautious
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