This time the central bank's epic money printing has received a warm response in China, and the A-share market has continued to rise sharply.
I originally wrote an article about macroeconomic analysis these days, but now that I have too many followers, I am afraid of being reported, so I will not publish it. After all, if you follow Teacher LI on Twitter now, you may be invited to have a chat. I will just briefly talk about it.
1. Exchange rate:
The RMB does not have the conditions to appreciate. It held on to the key point of 7.3 before in order to wait for the US to cut interest rates. However, after the US cut interest rates, the interest rate gap between China and the US has not narrowed. It has only given China a certain amount of easing space. The situation of continued outflow of foreign capital will not change, and foreign trade is also shrinking. This time the RMB has appreciated sharply because it took advantage of the US interest rate cut to massively withdraw liquidity in the offshore RMB market, and then pulled up the market to guide the appreciation of the domestic exchange rate. This trick cannot last long, and the maximum is 6.95-6.9.
2. Stock Market:
Since I started writing mirror in 2021, I have always emphasized that every rebound of A-shares is the last chance to escape. This wave of policies is to let the leeks take out all their bank deposits to leverage stocks, and there is a high probability that they will end up with a mess. I judge that the week after National Day is the best opportunity to leave. It is difficult to break through 3,300 in this wave, and the limit is only 3,500. Now many people are shouting 4,000 or 5,000 points, which is either stupid or bad. Huijin borrowed 1 trillion to protect the stock market at the beginning of the year, and ate a lot of chips below 3,000 points. These chips need to be taken over by the leeks.
3. Property market:
The two biggest increases in the Chinese real estate market were the monetization of shantytown renovation and price increases to reduce inventory in 2016-2017, which doubled housing prices in two years. The second was the massive money injection in 2019-2020, which increased by at least 50%. Starting from the high point in 2021, housing prices in cities such as Shenzhen and Hangzhou, where people speculate on housing with leverage, have basically fallen to the level of 2016-2017, trapping most people. Shanghai and Beijing are slightly better, probably at the level of 2018-2019. I think Shenzhen and Hangzhou will at least return to the level before the price increase in 2016, and Shanghai and Beijing will return to the level of 2016-2017 before they can stabilize.
This epic money release is essentially the beginning of unanchored money printing. This is the bottom line set by Zhu in 1994 during the financial reform. It has never been broken in the past 30 years. Now the economy is so bad that Pandora's box has to be opened. If the money continues to be released without a bottom line, only one can be maintained between the exchange rate and the stock market/property market.
Investment advice:
1. Don’t speculate in stocks and buy houses
2. If there is a way, convert RMB into US dollars or US dollar assets
3. If there is no other way, buy physical gold in China, which can avoid the RMB exchange rate risk and resist geopolitical risks.
