2023-11-28 08:13:35
Cathay Pacific Bank held the “2024 Global Investment Trends Forum” today (28th). Cathay Chief Economist Lin Qichao shared his views on next year’s economy and the stock and foreign exchange markets. He said that the overall financial environment next year will see a dragon in the field. One step distinguishes between the stock market and the bond market. The bond market is like a flying dragon in the sky, while the stock market is “likely to leap into the abyss.”
Further reading:Hong Kong stocks were surpassed by Taiwan stocks in a “golden cross”. Analysts Qian Guanzhou and Zhang Zhenwei: It won’t be a flash in the pan
Screen with growth charts and financial symbols, inflation (Johner Images via Getty Images)
Lin Qichao: Taiwan stocks returned to the position before the interest rate hike
The Taiwan stock market closed at 17,341.25 points today, up 203.83 points or 1.19%. Lin Qichao pointed out that the closing position of the Taiwan stock market today is exactly where it was before the interest rate hike in March 2022. The interest rate increase has been more than 20 months and the stock market has returned to its original point, but the interest rate has changed. The long-term government bond interest rate has dropped from 20% before the interest rate increase. % has reached the current 4.4%, and the Taiwan dollar has also increased from 27 yuan to 31.4 or 31.5 yuan once morest the US dollar. This period of interest rate hikes has been like a dragon suddenly diving into the bottom of a lake.
Lin Qichao said that the United States has raised interest rates by more than 5.25%, the United Kingdom has also raised interest rates by more than 5%, and the Eurozone has raised interest rates by more than 4%. The stronger a country raises interest rates, the tighter the money supply, the stronger the currency value, and the interest rate differential with other countries will increase. The bigger.
Lin Qichao believes that in fact, the interest rate hike in July this year has ended, but the U.S. Federal Reserve has not said it because they are afraid that if it is made clear, it may cause an increase in market borrowing costs. If the public has good expectations for the future, the increase in spending momentum will also make things better. Inflation, which is prone to falling, is back once more.
Lin Qichao: Next year, the boom will be booming, and the bond market will be flying in the sky.
“If the interest rate hike is terminated, the strong status of the US dollar will be affected.” Looking forward to next year, Lin Qichao pointed out that if he had to use an idiom to describe it, he would think of it as “seeing a dragon in the field”, which means that the economy is okay, but the dragon has not yet flown into the sky. , which is relatively beneficial for bonds. Therefore, the bond market is a “flying dragon in the sky”.
The stock market is “perhaps leaping over the abyss”, which means that interest rates are going down, and the dragon will fly up, but sometimes it will fall. The focus of the stock market next year is that semiconductors will restart the cycle, AI will accelerate the momentum of new orders, and the expansion of the price-to-earnings ratio will be limited. , corporate earnings are expected to grow. In short, “inventory replenishment is what everyone is looking forward to.”
The foreign exchange market has entered a period of “excessive strength and regret”. Lin Qichao said that if the United States further tilts toward dovishness, the US dollar will fall from its highs, while the economies of Europe and Japan are still weak, and the US dollar lacks the conditions for a big short position. The Taiwan dollar will be pulled between US interest rates and Taiwan stock prices. .
Lin Qichao pointed out that from a structural perspective, the economy is moving in a healthy direction. In the long term, the world will remain in a situation of low growth and high inflation for three to five years, which is different from the past.
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