Market Adjustment: The Adjustment Of Stock Market Stimulated The Return Of Value Investment.

Despite the impact of the previous three fed interest rates on the stock market, the negative impact is even more obvious. Following the last three months' increase in the Fed's interest rate, the Chinese stock market experienced a more obvious adjustment. The Shanghai composite index was once more than 6% callback, and the gem was down nearly 10%.

However, the stock market is not simply a market supported by liquidity. This round of stock market adjustment has stimulated the return of value investment, and some companies with low price earnings ratio, cash flow and strong earnings expectations have seen a sustained rise.

And this round of adjustment further lowered the valuation of A shares, which has certain bottom effect for the trend of the subsequent period.

The biggest risk of A shares is not the rise in capital costs or the decline in most corporate earnings forecasts, but rather the lack of real companies that can create "concepts".

If careful analysis

The most direct driving force is the high-tech companies. Even Buffett has begun to buy Apple Corp heavily, and he regrets not buying Google and Amazon.

This is why the Fed's two interest rate hike in the past six months has not yet played an important role in shaking up the bull market in the US stock market.

Unfortunately, you carefully look at those companies in China's stock market IPO, basically you do not know, and rarely touch these companies in ordinary life. You can only distinguish what they are doing from the industry keywords in their names, such as certain cement, building materials, certain banks, and so on.

The stock market is the same as human nature. Without leaders, there is no appeal. This is why the major exchanges in the United States must constantly create and publicize the reasons for the listing of leaders' enterprises.

But subject to the "approval system", A shares are more like an operating system that only satisfies the financing of listed companies, rather than an open asset pricing market. This is very difficult and the orientation of entrepreneurs is wrong, because under this logic, the ultimate goal of entrepreneurs is only to get a return after listing, rather than create a great enterprise.

Specifically, in the context of the Fed's interest rate increase, coupled with the current domestic deleveraging, A shares may enter a relatively long period of entanglement.

But with the gradual liquidation of speculative funds, many long-term investors are not sensitive to interest rates. Too much empty is not necessary, there is a bottom, no market probability.

The biggest risk of investing in A shares has become an unpredictable time cost.

Since the last 3 fed rates have not had a substantial impact on the price of gold, from the past two years of historical performance, gold prices will weaken before raising interest rates, but more investors are created to buy points.

This led to this increase in interest rates did not give the gold market more panic, even before the two weeks before raising interest rates, the world's largest gold ETF

SPDR has increased its total holdings by nearly 20 tons in four consecutive positions, and its position has reached a new high of six months.

From the perspective of risk avoidance demand, investors who are optimistic about the gold market at present mainly consider two aspects of risk, one is the risk of credit assets falling down, such as preventing unexpected large-scale adjustment of US stocks. This is beneficial to non credit assets, and the second is the risk of a low US dollar. Since the beginning of the year, the US dollar has experienced interest rate hikes and interest rate hikes. However, the US dollar has depreciated against all major currencies, and the US dollar index has more than 5% callbacks. The price of gold has been affected by this, and has rebounded more than 10% at the beginning of this year.

The newly released us CPI and core CPI in May were significantly lower than expected, which were all lower than the previous value, which led to the market's scruples about the pace of the Fed's continued interest rate hike in the future. Hawks' remarks after the increase in interest rates supported the US dollar, but the weakening trend of the US dollar did not seem to be over yet.

Because the euro and yen in appreciation are not showing signs of reversal at present, the French general election has not been flying black swans, and the German election is also good for Merkel, which has led to a better Euro outlook and a new pressure on the US dollar.

From the perspective of physical supply and demand, the consumption demand of the gold market will gradually recover in the three quarter, and the fundamentals of gold will not be a big problem.

In terms of risk, investors need to focus on the Fed's contraction, which may bring new uncertainties to the price of gold.

It is estimated that after the Fed raised interest rates, gold prices will enter a new wave cycle, leaving aside the unknown factors of geopolitics. Changes in the non US currency market will affect the gold price trend in all currencies.

At present, the RMB is the most special in non US currencies, and the demand for gold in the Chinese market is still at the stage of release, whether it is import demand in physical terms or gold in the domestic market.

Demand is in the expansion stage, and there is a continuous premium for gold in RMB denominated price. The support for gold prices in China will probably continue.

From the specific trend, as the interest rate news has been repeatedly digested, the gold price is facing new choices. Gold prices often have very strong feedback on uncertain events, but once the news starts to move toward the expected value, the gold hedging value will quickly weaken.

Therefore, before the gold price is found to be supported by new uncertainties, the short term is faced with the risk of technical correction, and the hawk's speech released after the Fed's interest rate hikes will need to digest in the short term.

Judging from the medium and long term trend, the gold price should include three factors, one is the demand of the physical market, such as India and China, the second is the US dollar trend, and the third is the performance of other markets.

I prefer third factors, because the Fed will start to shrink in the future regardless of the interest rate raising measures. As mentioned in the foregoing, the assets that have increased enough before the valuation begins to be high will be the first to form an impact.

Gold has been in a relatively depressed environment since 2011, which is 30% worse than the historical high point at that time. It is a low valuation in the world's major assets, which provides support for future price rise.

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