Just on the 24th, a major event that attracted global attention occurred in China. The central bank, the China Securities Regulatory Commission and the three major departments jointly launched a number of major measures. This situation of a joint effort by one bank, one commission and one bureau is extremely rare in the entire history of New China.

And the most important one is the disguised purchase of stocks of 800 billion. In order to take care of friends who have no basic knowledge of this matter, I will explain all the terms, namely, lowering the reserve requirement ratio and interest rates. The simplest way to understand it is that the central bank is opening the floodgates to release money from financial institutions and find ways to get the money from financial institutions into the hands of enterprises and ordinary people. Reducing the interest rate of existing mortgage loans is what everyone is most concerned about. This time it has been reduced by 0.5 percentage points, which is equivalent to a loan of 1 million, equal principal and interest, and a 30-year mortgage. In an instant, 100,000 yuan has been reduced. It is almost like giving everyone a free car. The strength is very considerable.

Then, the down payment for the second house is made clear to all those who have bought a house. This is to lower the threshold for buying a house, which is essentially to stabilize the situation in the real estate market. Finally, the big move that made the industry boil was that the central bank spent 800 billion to support the Chinese stock market. What is the specific situation? Ah, the so-called 800 billion to buy stocks is not the central bank buying directly, but the central bank first took out 500 billion worth of national bonds and central bank bills, and went to securities funds and insurance companies to exchange their stock assets.

Then they took another 300 billion and lent it to listed companies at an ultra-low interest rate, almost for free, so that they could use the money to support their own stocks. You can completely understand this 800 billion as the central bank's targeted support for China's stock market. The reason why it is called targeted support is that it is clearly written in black and white that the 800 billion can only be used to buy stocks. If you want to buy a house or invest abroad, you won't get a penny. This kind of behavior of the central bank buying stocks is very rare in Chinese history, and what is even more shocking is the attitude of the central bank. Do you know what the central bank governor said?

He said that 500 billion was not enough, and there was a second 500 billion. If 300 billion was not enough, there was a second 300 billion. If that didn't work, there was 333 trillion. His implication was that the central bank would support China to the end and must prop up China's stock market assets. With the central bank's tough attitude and the introduction of five major policies, the global asset market turned upside down overnight. First, the A-share market came back to life, with more than 5,100 stocks collectively rising, reaching a high of 2,952, and there was a situation of regaining 3,000 points in one fell swoop.

Then the RMB exchange rate soared. The offshore RMB against the US dollar regained the 7.0 mark and rose to 6.9952. It seemed that overnight, all our lost confidence returned. Of course, some people will be confused. For example, some people will ask why the central bank should support the stock market this time? They think that if you have money, you might as well invest in real estate or give it directly to yourself. So why do you support the stock market? Do many people have this idea?

It is normal for ordinary people to think this way, but the central bank is far beyond the imagination of ordinary people. Everyone knows that China's industry is invincible in the world, and a country can match the industrial strength of the entire West. But haven't you discovered something amazing? That is, the market value of Chinese companies is almost only a fraction of many American companies. For example, American companies such as Apple, Nvidia, and Microsoft are often worth trillions of dollars, and even the highest point can directly exceed 3 trillion US dollars, while many Chinese technology companies are valued at a maximum of hundreds of billions.

Although there is indeed a certain gap between Chinese companies and American companies, the gap is certainly not so exaggerated. Why does such an outrageous thing happen? The answer is that China is the world's number one industrial power, but not the world's number one financial power. Therefore, many companies work hard to sell products and finally make tens of billions, but as soon as they go to the financial market, their assets evaporate immediately. In such an environment, the huge income earned by China through foreign trade has been unable to return to China to form economic benefits.

The reason is very simple. Suppose you are a foreign trade company and you made 10 billion yuan through export business last year. How would you deal with this money? I know some people would say take it back and invest it in China. Okay, no problem. I will follow your suggestion and take this 10 billion yuan back to China to invest. Then we saw a jaw-dropping situation.

If you buy stocks, the stock market will plummet. If you buy houses, the housing prices will plummet. If you buy bonds and deposit them in the bank, you will find that the interest rate is very low. So after thinking about it, you will find that the best solution is to keep the money and let it float abroad and wait for other things. In fact, this is the crux of the Chinese economy. It is not that Chinese companies are not making money. China's foreign trade is very powerful. In the first eight months of this year, it has continuously broken historical records. We have made a lot of money from foreigners, but this money has not come back. Some institutions have estimated that the funds floating abroad are at least 2 trillion US dollars, which is an astronomical figure. Why is it that foreign trade is booming, but the country has fallen into deflation? The real reason is here.

You will understand why the central bank is supporting the stock market, because the current Chinese financial market has seriously hindered the Chinese economy. Not only has it failed to raise funds for enterprises and create wealth for ordinary people, but it has also evaporated a large amount of wealth, causing a large amount of international funds to be afraid to invest in China. If the Chinese economy wants to fully recover, the first thing to do is to solve the sluggish financial market. So the central bank invested 800 billion yuan directly in the stock market.

This is essentially the central bank replacing the balance sheet of financial institutions with its own balance sheet. Just like the Federal Reserve backing up the bankrupt banks in the United States, the principle is to use the national credit to revive China's financial market. Americans have used this trick a long time ago. They transferred all the debts and bad debts to the US government and kept the assets in the US market, which resolved the crisis time and time again. Otherwise, the United States would not have survived the subprime mortgage crisis in 2008 and the epidemic crisis in 2020. The so-called unlimited QE is essentially the same. After understanding this, you should be clear about the future crisis of the Chinese stock market. As long as the United States is here to support the bottom, the temporary rise and fall will not affect the overall situation at all, because the first drop has been dragged down. If you don't believe it, just look at the US stock market and it will be clear in an instant, and this is only the first step of our financial counterattack.

Everyone knows that we have three major problems now. One is that the financial market is not strong, which affects corporate profits. Now we have taken action. Another is that ordinary people are under great debt pressure, so the country has begun to reduce mortgages, issue consumer coupons, exchange old for new, and upgrade industries. These things are all to find ways to increase everyone's income and reduce some burdens. The last one is that local finances are tight. From the experience of the United States, the next step is that we will most likely have the central finance replace the local finance balance sheet, that is, use the national credit to support it. Only in this way can all regions be lightly equipped and revitalized. Otherwise, it would be incredible. Otherwise, how do you think Americans deal with the 35 trillion US dollars of debt?

In fact, it is transferred to the national credit. As long as the US credit does not collapse, the debt crisis will never come. If Americans can use it, then naturally all other countries in the world can use it. The same is true for Japan next door. If you don’t believe it, go check it out. Japan’s debt ratio ranks first in the world, and nothing has happened. If you check it out, you will know that the ways of playing in various countries will definitely surprise you.

Let's get back to the point. That is to say, as long as we can exert efforts in the three areas of financial markets, residents and local debt at the same time, the Chinese economy will immediately get out of the most difficult period. We can even say without hesitation that the darkest period of the Chinese economy has passed, and what awaits us is the great counterattack of the Chinese economy. This time, the loosening of funds is definitely the real heavy policy of Taipei, and I believe it will be more in the future.

The reason why we didn’t release all the big moves this time is that the US Federal Reserve started to cut interest rates on September 19, but its domestic economy is still falling. Cutting interest rates means that we cannot rule out the possibility that the Americans will suddenly cut interest rates in the middle of the process and cut our interest rates. Because if we cut interest rates too much at one time, and the Americans go to raise interest rates, the interest rate gap between China and the United States will widen, causing asset outflows again. So this time our loosening policy is very restrained, and we are waiting for the Federal Reserve to further cut interest rates.

If we lower interest rates to 4% or 3% negative in the future, there is no doubt that our mortgage rates will definitely drop. At that time, domestic homebuyers can save hundreds of thousands of RMB without doing anything. Moreover, with the return of trillions of dollars of funds from overseas, our investment will also begin to recover. The layoffs and salary cuts that everyone is most concerned about will also be greatly alleviated. In short, the really difficult time has passed, and the light before dawn has appeared before our eyes. #A股