The Fed'S Interest Rate Increase Will Have A Profound Impact On China'S Financial Market.

Last week, the world's financial markets were concerned about the US non-agricultural data. In fact, they were concerned about the probability of raising interest rates by the Federal Reserve. As investors in the Chinese market are no exception, waiting for the emergence of us non-agricultural data lies in the fact that the Fed's interest rate increase will have a profound impact on China's financial market. Why is it a moderate profit? The main reason is that China's capital account is not completely open. It can not achieve free convertibility of capital account, and capital outflow is controlled. Unlike Russia and Asian crisis countries such as Thailand, China's resistance to capital outflow is not a sharp increase in interest rate but a way of plugging, such as increasing foreign mergers and acquisitions, investment auditing, and cracking down on underground banks to curb illegal capital flight. The effect is still objective, February. External storage The deposit is back to 3 trillion yuan mark, reaching 30051 billion US dollars, an increase of 6 billion 900 million US dollars, which can effectively alleviate the market's concern about the Federal Reserve's interest rate hike in March.

US Labor Department released data show that the United States in February non farm employment increased by 235 thousand, is expected to increase by 200 thousand, the former value from 227 thousand to 238 thousand, the unemployment rate in February was 4.7%, 4.7% is expected, the former value 4.8%, for the fed to raise interest rates in March to further clear obstacles. But the pay growth figures are disappointing. The average hourly wage in February increased by 0.2%, an increase of 0.3%. The former value was revised from 0.1% to 0.2%, an increase of 2.8% over the previous year, with an expected increase of 2.8%, and the former value was revised from 2.5% to 2.8%. Speaking from the beautiful data and the Fed top officials represented by Yellen, the probability of raising interest rates by the Federal Reserve in March has reached 93%. China's financial market will face some uncertainties. The phenomenon of stock exchange double kill may not appear at the beginning of 16 years, but on the basis of the Fed's rate hike cycle, it is expected that interest rates will rise again 2-3 times this year, and China's capital market is still not optimistic.

In the meantime, the central bank has continuously raised the public operating capital interest rate by 10 basis points. Although the market interpretation is different, there is one thing that is unquestionable, that is, raising the interest rate of funds and slowing down the pressure of RMB depreciation. From the perspective of liquidity release, the central bank also focuses on recovery rather than net investment, raising the cost of domestic capital and raising the rate of return on capital. The main purpose is to hedge the Fed's interest rate hike expectations, because the Fed's interest rate increase will lead to a smaller margin in the US and China, which will lead to capital outflow. China's foreign exchange reserves have been reduced for 7 consecutive months. On the occasion of the Spring Festival, the downward pressure on the economy continues. Mobility The pressure of currency depreciation has increased, capital outflows have intensified, liquidity has been tight, liquidity has not been released and external liquidity has also been objectively existing, liquidity is also tight, and central bank monetary policy has been in a dilemma. So for a long time, no tools have been used to reduce instruments. According to the central bank's view, monetary policy is returned to healthy neutrality. In fact, it is a tight neutral market, which is not good for capital market but moderate.

The appreciation of the US dollar, the depreciation of the RMB, and the return of US dollar capital to the US will lead to a decrease in foreign investment in China. This is not conducive to the recovery of the economy, and it will also become a bad asset in the capital market. After all, the stock market's rise depends on the economic base. The Ministry of Commerce announced on Thursday (February 16th) that the actual amount of foreign capital (FDI) in January was 80 billion 100 million yuan (US $12 billion), a decrease of 9.2% over the same period last year. The growth of foreign investment will increase domestic investment and relax monetary policy. However, it is difficult for us to relax monetary policy, but it will be difficult for us to implement more proactive fiscal policies and increase the deficit. This will be restricted by the deficit rate. In the 17 years, the Chinese government arranged only 3% of the deficit rate to be lower than the actual deficit level of 16 years, so the 17 year economic recovery still has variables. This may be one of the reasons for the fading of the real estate tax. Debt risk We should increase the pressure of short Renminbi and increase the pressure of capital outflow, which is the opposite of a coin.

The central bank's monetary policy is constrained, investment will follow passive decline, the real economy financing problem will be further fermented, capital market will face greater financing pressure, in fact, at present, IPO says normalization, but around 10 per week is actually a big expansion of IPO. This is an inevitable practice. In order to recover the national economy, we can only sacrifice part of the interests of shareholders. Increasing equity financing has reached a consensus, especially the financing difficulties of SMEs is the focus of capital market support, the development of gem is an important part of the prime minister's report, and some people suggest that gem IPO can not stop faster.

The depreciation of the local currency will push up the prices of imported products, while China's imports are mainly concentrated on raw materials such as coal, pulp, crude oil and iron ore. Shen Jianguang provided a set of data. In February, the import of coal, iron ore and crude oil increased by 145.1%, 107.9% and 69.4% respectively. Among them, import prices contributed greatly, coal prices doubled in February compared with the same period last year, and iron ore prices rose nearly 80% over the same period last year. Correspondingly, the import of coal and iron ore increased by 30.6% and 13.4% respectively. And the price of basic materials will be spanmitted to CPI in varying degrees. This is the conductivity of import inflation. This will further restrict the central bank's monetary policy. At the same time, the rise of raw materials will also embezzle the profit margins of downstream industries. Some enterprises can pass on the cost. Some enterprises can not pass on the cost, but can only suffer from it. Most private enterprises are concentrated in the lower reaches, and the profit situation may deteriorate further, hindering the revival of private investment.

CME Fedwatch shows that the probability of raising interest rates by the Federal Reserve in March is 93%, and the probability of raising interest rates in June is 96.8%. The interest rate market in March has been digested, and the estimated impact is not particularly large. However, the impact of interest rate hike in June and the interest rate increase in September will have a progressive effect on China's market, and there will be a process of quantitative change to qualitative change. The key is to see whether the central bank's monetary policy changes and the economic recovery can be expected in the market. According to the official statement, the central bank's monetary policy is in accordance with the official saying that it is necessary to maintain a healthy neutral and not tighten the monetary policy while limiting the output of bubbles. However, the problem is here. Whether the central bank raises interest rates or reduces interest rates, the central bank believes that its monetary policy is moderate, so that the market can not be judged. But the author thinks that the central bank may continue to raise interest rates passively for 17 years instead of the Federal Reserve raising interest rate. Under the pressure of economic downfall, the negative consequences of passive interest rate increase will be magnified. Therefore, the 17 year stock market trend is a central bank's passive interest rate increase, economic recovery falsification and expansion pressure. We need to examine the Fed's interest rate cycle on China's capital market.

For more information, please pay attention to the world clothing shoes and hats net report.