On November 28 and 29, driven by the Federal Reserve's remarks, U.S. bond interest rates plunged, the U.S. dollar dived, and the yuan appreciated.
However, on the 29th, A-shares** and GEM even fell by 1%, and Hong Kong stocks were even worse, falling by more than 2%!
Everyone is very puzzled, why A shares are not played according to common sense?
Have we ever thought about it ourselves?
Is the common sense we are talking about out of our own will?
Next, I will explain the reasons to you.
The exchange rate and ** are correlative, not causal.
For example, the yen has been depreciating all the way, and Japan is still soaring
Of course, the routines of China and Japan are different, so they can't be compared like this.
Japan, on the other hand, has abandoned the exchange rate, lowered interest rates, and over-issued currency.
Japan's purpose is to stimulate the economy and stimulate inflation.
But neither of these got up.
Therefore, money can only go to one place, and that is the capital market and the property market.
And our country cannot let the exchange rate fluctuate too much, nor will it push the interest rate to 0, and then issue money indiscriminately without control.
As a result, our ** is much more sensitive to US rate hikes.
If our country also allows the exchange rate to be bold, and boldly cuts interest rates and releases water, then our ** can also rise.
But this kind of ** has a price, that is, our international competitiveness will decline, international capital will flee, technology will flee, the status of the RMB will decline, and credit will decrease. (These costs are devastating!)）
Therefore, there is no causal relationship between the RMB exchange rate and A-shares.
The appreciation of the renminbi is either an expectation of a stronger domestic economy or a weaker US economy. (Note the two words "expectation").
When these two things happen, there is a high probability that foreign investors will also rush to raise A-shares.
So**The common factor behind the exchange rate is the economic contrast between the two countries.
On the other hand, this time the renminbi has appreciated.
The cause is the weakening of the US dollar.
The weakening of the US dollar is due to the weakening of US Treasuries.
The weakening of US Treasuries is due to a shift in Fed monetary policy expectations.
The shift in monetary policy expectations is due to the expectation that the U.S. economy is starting to weaken!
Look at ourselves in reverse.
Although the economy is gradually recovering, what about expectations?
Poor expectations!
Therefore, foreign capital has not yet received a clear signal to increase positions.
What is a clear signal to add to a position?
For example, the improvement of social finance, the reversal of M1, and so on.
Although no clear signals were given, butThe energy of foreign shorting has been exhausted.
In fact, this situation is not isolated. It has also happened in history.
In 2018, for example, on November 1, the exchange rate reversed.
But the CSI 300 didn't really reverse until January 4. The small market did not fall below a new low, and took the lead in opening**.
During this period, there was a net inflow of foreign capital as a whole, but it was still no match for the sell-off of domestic capital
After January 4th, both Social Finance and M1 appeared**. This signal is important.
As a result, domestic and foreign capital have formed a joint force to promote a wave of surge.
Later, because the rebound of social finance and M1 did not last, it also experienced a wave of retracement, and then it was a long grind!It was not re-** until the end of 2019.
This round**, from the exchange rate to the CSI 300 real**,The interval is 2 months!
However, there is ** during the period. But **and then**, this makes investors even more desperate.
It's equivalent to serving you a bowl of noodles after you have been starving for 5 days, and you are about to finish your bite when he removes the noodles again.
But that's it!Accidents can happen at any time, and the short term is extremely random!
Looking at 2020, there was a wave of appreciation in the exchange rate on March 19.
Later, the exchange rate continued to depreciate and reached a high on May 27.
Interestingly, on March 19, CSI 300**13%, and the largest intraday decline was even close to 4%.
I remember panicking at the time, and everyone was asking, why did the renminbi appreciate, ** fell so scary?
This time, because the Federal Reserve directly lowered the interest rate to 0, the intensity was very large, and the water released was swept around the world. Therefore, A-shares have a very high correlation with the exchange rate.
In addition, we can also find some cases of the opposite.
For example, at the end of April 2022, the CSI 300**, but the exchange rate depreciated all the way.
The CSI 300 and the exchange rate diverge. Northbound funds were a little hesitant at first, but then they flowed in sharply.
Why is this happening?
On the one hand, I didn't expect the Fed to raise interest rates so aggressively.
On the other hand, foreign investment** is mainly due to the rising expectations of China's economic recovery.
There are more typical cases of this divergence.
For example, from April 2016 to the beginning of 2017, the RMB depreciated all the way, foreign capital went all the way, and the CSI 300 also went all the way
The renminbi depreciated to its lowest level in January 2017, followed by the CSI 300**. Finally, in May, the performance-driven rally began**.
The interval is more than 3 months.
How to explain the divergence in 2016?
The main reason is that the domestic economy is gradually stabilizing, and the proportion of foreign capital in A-shares is still very low!
But the time lag of the 2017 increase** is also real.
It is important to note that the exchange rate and ** are correlational, not causal.
There are two fundamental reasons for foreign investors to increase their positions in A-shares:
1.The U.S. economy is expected to weaken, monetary policy shifts, and global liquidity is easing.
2.China's economy is expected to strengthen!
Both of these factors will also push up the exchange rate!
That's why we saw the exchange rate appreciating and A-shares rising.
It's like when we hear a rooster crow, the sky slowly brightens.
But is it because the rooster crows?
Apparently not!There is a higher level of common cause behind the crowing of the rooster and the dawn: the rotation of the earth!
It is worth noting:
First, the more acute the Fed's monetary policy pivot and the stronger the U.S. recession expectations, the more aggressive the foreign capital will cover A-shares
Second, the stronger the expectation of domestic economic recovery, the more fierce the replenishment of foreign investment
Third, the more rapidly the Fed pivots, the stronger the expectation of China's economic recovery, and the sharp increase in foreign capital replenishment.
Look at the present?
On the one hand, the Fed's monetary policy is still slowly adjusting market expectations
On the other hand, although China's economy has been slowly recovering, the market's expectations are weak, and there are even many bearish voices.
As a result, the correlation between the exchange rate and A-shares** is lower, and the time lag will be slightly longer!
If there is an unexpected sharp U-turn by the Federal Reserve, or domestic M1, social finance, PMI and other data improve more than expected, the correlation between A-shares and the exchange rate will increase sharply. The time lag will be shortened!
There are a lot of plausible theories circulating in this market, and they are all linear and simple.
Because it's simple, it's easy to remember.
But the economy and ** are very complex, and there is never a linear logic.
We should peel back the cocoon to find out the underlying logic behind itFind out the common cause of that higher order!
Once we are able to think with underlying logic and higher-order thinking, we will naturally not be easily misled by others!
In addition to this, we must also understand that fluctuations are extremely random from day to day. Because there are a lot of distractions every day.
For example, there has been a recent assessment period, the geopolitics of TW, the sudden jump in the repo rate of the exchange (indicating that funds are tight), the speculation of the Beijing Stock Exchange, and the small composition of foreign media (the target of next year's fiscal deficit will be reduced) and so on.
Therefore, the short-term trend is extremely difficult.
What we should do more is to find the key points that affect the megatrend from many factors.
Then wait patiently for overseas liquidity to continue to improve, and for China's economy to continue to recover.
If you can't be confident, **the slightest fluctuation, you will panic!
Now this stage is to wait patiently!
Wait!Isn't that a simple thing?