A Shares Follow The Trend Of Economic Growth, L Trend Ups And Downs.

Since the beginning of May, the RMB has continued to depreciate against the US dollar, especially since the June 24th referendum in Britain, the depreciation accelerated. In July 6th, the US dollar went against the central parity of RMB to the 6.7 pass.

Domestic investors remember vividly that the two devaluation of the RMB in August 2015 and January 2016 triggered a great turbulence in the financial market, and A shares fell two points in all.

However, this time the renminbi depreciates, the stock debt rises.

Why is that? What is the trend of RMB exchange rate in the future?

What will be the impact? Standing in the medium-term dimension observation, nearly half a year not only economic L type, A share also showed a L trend of interval shocks.

Therefore, unlike the 2014-2015 years of big fluctuation, the market is in the L range shock pattern in 2016. Structural opportunities are constantly changing. This requires investors to strengthen industry and micro research.

RMB

It is the normal release pressure of marketization rather than the competitive depreciation.

May 2014 -2015 May, the Fed's withdrawal from QE and the expected increase in interest rates, the dollar index from 80 to 100.

During this period, commodity prices plummeted, the major currencies depreciated against the US dollar, the euro, the pound and the yen depreciated by 15%-25%, and some of the emerging currencies even depreciated more than 30%.

However, during this period, the renminbi anchored the passive appreciation of the US dollar for various reasons and became the second largest currency in the world, which is not consistent with China's economic downturn and the period of monetary easing in the past 2014-2015 years.

During this period, the pattern of weak recovery in the world economy remained unchanged, but China's export growth slowed sharply.

Therefore, in August 11, 2015, we took the opportunity to reform the pricing mechanism of the middle price, and the RMB exchange rate began to release pressure.

Since May this year, the depreciation of the RMB against the US dollar has been quite different from the macroeconomic background and financial environment of August 2015 and January 2016, which led to very different results.

The two devaluation in August 2015 and January 2016 was in a very unfavorable macroeconomic and financial environment. In the second half of 2015, the stock market fluctuated under the pressure of abnormal fluctuations in the stock market, export decline, and enterprises going to stock. The pressure of economic downfall was greater. At the same time, A shares were in a critical period of rapid decline and deleveraging, and market confidence was relatively weak. Therefore, the first two devaluates had a strong impact on market confidence.

Great pressure.

However, since the beginning of 2016, the real estate investment has been bottoming up, the end of stock going to the end, the steady growth policy in the first quarter, and the large-scale credit launch. The economy L has bottomed out. At the same time, the A shares have entered the shock market from the fast fall stage, the economic and financial stability has increased, and the capital outflow has become more difficult. Therefore, the depreciation of the RMB against the US dollar since May 2016 has less impact on the domestic economic and financial market.

Looking forward to the future, it is expected that the RMB will continue to adjust according to the new intermediate price rule. As long as the domestic economy and finance are basically stable, the effect of exchange rate adjustment on the financial market will not be too great.

In June 30th, the central bank made a public statement. "In recent years, the international foreign exchange market has been greatly affected by the British" off Europe ", and the RMB has depreciated against the US dollar.

But on the whole, the RMB exchange rate is still operating in accordance with the existing mechanism of the exchange rate of the day before yesterday and the exchange rate of a basket of currencies, and the RMB exchange rate for a basket of currencies has remained basically stable, and the market is expected to be stable.

Recently, the market has seen the pattern of stock debt rising. It is not only a domestic phenomenon in China, but also a global phenomenon. We suspect that it is largely against the market.

Loose expectations are heating up.

Domestic economic inflation has opened up room for monetary policy easing again. After the international referendum in Britain, the Fed's interest rate hikes are expected to be postponed, and the European Central Bank and the Bank of England have indicated that they may adopt further monetary easing measures.

At the same time, the recent market risk appetite has been repaired, and the risk events such as the Fed's interest rate negotiations, the UK's referendum and other referendum risks have been landing on the floor, and the RMB exchange rate has been released.

In recent years, the global central bank has made monetary policy loose to the extreme, but the economic recovery process is still fragile, and it has not triggered inflation predicted by monetarism. The US, Europe and Japan are still fighting for deflation.

According to the monetary quantity equation MV=PQ, the massive currency has not triggered the recovery of the economic Q in the world. Instead, it has fallen into the trap of liquidity and pushed up the rise of generalized price P through the decline of the velocity of money.

The super money did not flow into the real economy, and therefore did not cause inflation (narrow price P). Where did the money go? The super currency was absorbed by asset prices, the US housing market was high and the yield of European Japanese bonds fell to 0.

This logic can also explain that China's currency over 2014-2015 did not cause inflation, but triggered a surge in stock market, bond market and housing market.

During the recession, the currency exceeded the right rate.

It has a profound impact, triggering a large class of asset price rotation.

Low interest rates systematically lift the valuation center of all large categories of assets, which leads to asset allocation pressure and asset shortage, liquidity overflow and all valuation depressions.

The first half of 2014-2015 is the big year of the stock market (we predicted in August 2014 that "5000 is not a dream"). In the second half of 2015, the first half of -2016 is the new year of the housing market.

After the "high wind and big walk", we have predicted that the "first tier house prices will be doubled". In 2016, it may be a big year for commodities. (we pushed gold at the beginning of the year), all of them were buffalo (we pioneered the reform of cattle, cattle and buffalo in 2014).

We recommend gold and interest rate debt in the previous weekly report.

This week, it is proposed that "as the economy returns to the downlink and the inflation comes to the top, we will gradually recognize that the market is easing up on the easing of monetary policy, which will benefit the bond market, commodities, gold and even the stock market in the short term."

Standing in the medium-term dimension observation, in the past six months, not only the economic L type, but also the A share also showed a L trend of interval shocks. The possible reason is that the denominator (risk free interest rate and risk preference) has changed little. The valuation system has returned to the molecular fundamentals and the national team has been maintaining stability.

Therefore, unlike the 2014-2015 years of big fluctuation, the market is in the L range shock pattern in 2016. Structural opportunities are constantly changing. This requires investors to strengthen industry and micro research.

Is there any possibility that A shares will get out of the L range shock in the future? The catalyst for upward breakthroughs will come from over expected monetary easing and key point selling pressure. The catalyst for future downfall will come from credit debt risk fermentation, geopolitics, and less than expected reform.