China Can Not Participate In Global Market Shearing Competition

Yesterday, the trend of Shanghai and Shenzhen stock markets was basically similar to that of the global capital market since the beginning of the new year.

Global investors seem to be searching for bills, and from developed countries to emerging markets, no one can avoid it.

Looking at the current global macro-economy, we need to have two perspectives: one is the reconstruction of the global economic map, and the other two is who will pay the cost of the current economic pformation.

Now the capital market seems to have opened the prelude to the wool shearing competition.

The first is to cut wool from resource countries.

Global

International oil prices have been falling for sixth consecutive trading days since the beginning of the new year. Fund managers cut their crude oil positions to the lowest level in more than 5 years at the beginning of the new year.

Regardless of the situation in the Middle East and the situation on the peninsula, market performance is down to you.

In the Asian market in January 11th, US crude oil prices continued to be weak, finishing at a minimum of $32.26 per barrel.

Brazil and Russia and other resource countries are having a hard time.

Ruble in 2015 depreciated more than 20% against the US dollar. Since January 5, 2016, it has again entered a large-scale devaluation channel. At 17:15 in Beijing time, the rouble was 75.4690 against the US dollar, not far from the historical low of 80.1.

The rouble weakness has pushed up inflation in Russia.

According to Bloomberg research, the core inflation rate is expected to decline from 15.9% in November 2015 to 13.8%, while the yields on Russian bonds are rising.

Brazil may be a little comforting to Russia. Data released in January 8th show that Brazil's consumer price index in 2015 was 10.67%, and currency Real's annual depreciation was 33%.

Brazil's central bank set a 2015 inflation target of 4.5%, with a tolerance of 2.5%~6.5%.

Second, we should cut down the wool inside the developed economies, including big banks, hedge funds and even the central bank.

2015

An unlucky year.

According to the preliminary data collected by the US hedge fund research company in Chicago, the average return rate of the world hedge fund industry in 2015 was seventh years lower than that of the S & P 500 index.

If dividends were reinvested, the US wind vane, the S & P 500 index rose 1.4% in 2015, and the HFRX global hedge fund index compiled by the fund research company has fallen by 3.5% as of December 30, 2015, and has lost fourth consecutive years in the stock market.

According to the preliminary report of the SNB in January 8th, the Swiss central bank lost a total of about 23 billion Swiss francs (about US $23 billion 50 million) in 2015, accounting for about 4% of its assets, of which the foreign exchange position lost 20 billion Swiss francs, the gold position loss was 4 billion Swiss francs, and the local currency position of the Swiss Franc increased by 1 billion Swiss francs.

Third, international investors are still running short of China's economy, and China will certainly fight back.

After the sharp fall in the Shanghai and Shenzhen stock markets, in the first week of 2016 and 17 in January 8th, the RMB against the US dollar decreased by nearly 700 basis points during the week.

The drop is more than 0.8%, and the offshore RMB exchange rate has fallen by more than 2.28%.

But it is also during this period that investors who expect the renminbi to continue to fall sharply find that offshore renminbi liquidity is tightening, the cost of borrowing renminbi has increased, and even some banks have been banned.

The cost increase of overnight interbank lending rate (Hibor) in Hongkong increased sharply from 11 to 4% in the morning of the 8 day, the highest since 2013.

Hongkong's interbank lending rate rose from 7.05% on Friday to 11.23% in a week.

You can speculate, but I can also shoot.

China does not want to stick to the strong renminbi, but it will not break through the two bottom line: first, the collapse of expectations, the two is the RMB exchange rate index fell below 100, triggering the emerging market currency wars.

As a result, speculators who are short of money are likely to be taken away by Chinese regulators in one stroke.

Fourth, the wool that will continue to be harvested in the future will come mainly from the Middle East countries with weak industries but abundant reserves.

China needs to take practical measures to prevent marginalization in the global industrial restructuring.

The game of shearing is far from over. China must make no mistake in this process, otherwise it will lose the opportunity for development.

For example, according to Bloomberg report, Mexico Peso has depreciated the value of the renminbi by about 50% in the past 10 years. Considering the cheap logistics between the United States and Canada, a friend of the auto parts manufacturer has gone to Mexico with the pace of BMW.