He Zhicheng: The Spread Of The European Debt Crisis Will Bring The A Shares Back To Its Original Form?

On the 10 day, the A share market followed the European and American stock market plummeting. At the close, the Shanghai Composite Index fell 45.38 points, this week will be engulfed, and it will go back to 2440 points (ten day average line support).

The stock market plummeted because of the sudden spread of the European debt crisis to Italy, and the euro plummeted.

On Wednesday, the yield of the 10 year Italy treasury bond rose to a new high of 7.476% since the advent of the euro. In view of the fact that Greece, Portugal and Ireland were forced to seek assistance after the yield of treasury bonds exceeded 7%, and the international Rating firm also continued to downgrade the highly indebted countries after the yield of treasury bonds exceeded 7%.

Therefore, the vast majority of investors regard 7% as the "life and death line".

As the European debt crisis will greatly shake the confidence of the global financial system, especially the banking system in Europe and the United States, the global market is in danger of avoiding risks. Cash for the king has become the main option of the investment market.

The euro fell 300 points on Wednesday, including Thursday's Asian session, and the Australian dollar also fell 300 points.

The signal from the market is that not only the European debt crisis is terrible, but if the global economy goes into recession, the demand for commodities market will be greatly reduced.

I have always believed that the spread of the European debt crisis to Italy is almost a matter of certainty, and is likely to erupt before the end of the year.

However, the euro last week showed a tenacious stance, and it also carried a strong rebound from the Greek referendum crisis, showing that the ECB has been intervening.

Why did the market suddenly change its face on Wednesday? Why does the euro have to wait until Italy's 2010 budget vote is "dramatize" before changing its face to start a liquidation?

Two reasons: first, political power exceeds the impact of debt crisis.

Italy's budget was passed by the "zero objection" on Tuesday, which indicates that Berlusconi's supporters are unable to control the parliament again, and Italy has no "strong man" anymore.

Berlusconi compared himself to a strong man. He said that if the strong man walked away, Italy would be in a state of long-term chaos.

A chaotic political situation may be even more troublesome for the Italy people who have to cut their deficits and suffer too much hardship.

The two is the new European central bank governor, Delagi, who is Italian.

After Delagi took office, he did two things: first, the euro cuts interest rates; the two is to buy Italy bonds vigorously. According to the published data, last week bought about 9000000000 euros and bought about 8 billion euros this week.

The move to reduce interest rates is a foregone conclusion that Draghi pursued a weak euro policy and tried hard to buy Italy bonds to prevent the European debt crisis from spreading to Italy immediately.

However, his efforts to prevent Italy's bond yields from soaring are doomed to failure, because the European stability fund does not have enough funding to support the bailout, but only by the power of the European Central Bank plus the 300 billion euros of the European stabilization fund, it is a drop in the bucket.

It should be said that the market has seen this point, and Delagi is very afraid that others say he "favoritism" and will choose to abandon it at the last minute.

After the abandoning of the European Central Bank, will the euro collapse instantly? Most importantly, will the A share follow the "burn bag"? Recently, at the 2011 International Annual Conference of the international finance forum held in Beijing, the president of the International Monetary Fund, Lagarde, used the words "extremely dangerous" to the European debt crisis, but she was full of hope for China.

Lagarde also commented on China's monetary policy and real estate policy in a rare way. She said, "if China's economic development is not very good, it needs to relax the tight monetary policy in a timely manner". At the same time, she used the word "China needs to revitalize the real estate market", which surprised many people at the scene.

In my view, Lagarde is very sure about the crisis. China is indeed different from Europe. It is also different from the United States. China can achieve the purpose of maintaining growth through flexible fiscal policy and a little loose monetary policy, and is likely to avoid the crisis.

Since China will fine tune the policy, then I firmly believe that the A share market will not fall into another bear market 2300 points.

Further analysis shows that the fear of the European debt crisis in the global market comes mainly from the European debt crisis, which will greatly erode the global banking system, which mainly refers to European and American banks.

From the present point of view, the US banking industry has about 170 billion euros of European debt, and the European commercial bank has about 800 billion euros.

With leverage and mutual holding, the banking industry in Europe and the United States is indeed a mess.

But China's banking industry rarely holds European debt, so the possibility of direct impact is very small.

As for the European debt held by the Chinese government, there is no much to lose at the moment, because the euro is down and the US dollar is rising. It is a seesaw.

Moreover, if the European debt crisis really causes the euro area to be in a great predicament, it should be favorable for China's medium and long term development. The euro will fall by 1000 points, European goods will be relatively cheap, and European assets will also be cheaper.

At that time, we can easily visit the "asset supermarket" in Europe.

Because of this, I conclude that European leaders will resist and will not let the euro fall sharply.

In short, the impact of the European debt crisis on the A share market is mainly psychological. The nature of the A share market will not be greatly affected by the European debt crisis.

There was a sudden accident in Italy on Wednesday, and the stock market fell by dozens of points, which is normal.

It is expected that the 2440 points of Shanghai stock index can be maintained.

I still believe that the A share market will go out of the unique landscape that the whole world envied, like the Chinese economy.