Unless The Policy Is Wrong, A Shares Are Not Risk-Free This Year.

The market expects the renminbi to depreciate, but there is actually another rate cut expectation.

We predict that China's trade surplus will reach US $100 billion this year, at least one hundred billion more than last year.

This trade surplus is also a big part of our entire current account.

The flow of capital is not the most important wave of China's foreign exchange flows across the border.

If you look at the capital, it was expected that the Fed would raise interest rates and China's interest rate reduction, which would cause the pressure of the devaluation of the RMB.

But in fact, we are now finding that if the prices of bulk raw materials fall and central banks cut interest rates in the past few months, interest rates in China and other major countries are widening.

Because our interest rate cut is relatively small, and at the front end, especially in the short term, the interest rate declines more slowly.

For example, we see that the central bank recently made 28 days of counter repurchase, which is 4.85 interest. Last Friday, it did 14 days, or about 3.8.

As you can see, where is the interest rate in the world at such a high level? In the ten year, the US Treasury bonds went to 1.7 yesterday, and at the zero point in Europe, how many central bank interest rates are negative in the world? So we feel that the expectation of the market now is to coordinate with the central bank's interest rate cut. If our central bank decides not to cut interest rates, the RMB will even have the pressure of upgrading.

In this year's economic growth is not good, inflation is very low, but the large trade surplus, the choice of policy, you can cut interest rates, also can be reduced or depreciated. Under these options, we have always believed that the best and best option is to reduce interest rates, rather than touch the renminbi.

Why? Because we are already the largest export country in the world. Our export growth rate is still far higher than that of many other countries, and the domestic demand of other countries is not good. In this case, the RMB depreciates and it is useless. The trade frictions will definitely rise. And if there is no inflation in the country, the rate cut is to support domestic demand, and the depreciation is more support for the growth of external demand. When two are available, why not choose to support domestic demand?

So there is a possibility and what should happen.

I think what may happen, we may think too much about the impact of US dollar interest rate increase in the market, and forget that China's trade surplus will probably have a bigger change this year under the improvement of terms of trade.

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In the past, we have been improving China's economic prospects, including the expectation of reform.

But there is indeed one thing that restricts the rise of the stock market. That is to say, our monetary policy is tight, which is quite lags behind when compared with the changes in our economic situation.

That is to say, in the short term, there is still considerable pressure.

The reaction at the time of the rate cut is that we feel that some short-term risks have also been alleviated, and I think it is reasonable for the market to respond to a certain degree.

Why do we say once again that the central bank's interest rate cut is expected to be reduced? Or why is it the first time why the Central Bank of the world is doing the same thing?

No, when we did not fall in oil prices, then there was an expectation of 2.6 or even 3 of inflation this year: 2015.

With this cut in oil prices, I don't think this year's inflation can see more than 1.5 of the possibility. Then everyone in the world is beginning to worry about deflation. I think China is also worried about deflation.

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The first goal is inflation or CPI stability, neither inflation nor deflation, so from the implementation of a good monetary policy, such a high positive interest rate is not sustainable either from loan interest rate or from deposit interest rate.

The market is guessing time and intensity, but I think this is not only a matter of time, but a matter of time.

As for how to achieve this? Is it to cut interest rates? Now some people say that it is down to the standard. In fact, the central bank also says that it has many other tools, but what effect should we see in the market?