Global interest rate hikes are resurrection. How can I choose Asian assets under the wind?

21st Century Business Herald reporter Hu Tianzheng and Jia Junhui Shenzhen Report

The latest tightening of global liquidity has ended this week, and the central banks of various countries have risked risks that have triggered economic recession to continue to curb the rising prices. The Federal Reserve took the lead in raising 75 basis points on Wednesday, continuing the most radical tightening action since 1981; the Swiss Central Bank got more radical interest rate hikes in the next day. , For the seventh consecutive.

Indonesia, the Philippines, South Africa, and the Norwegian central bank also followed suit. The oversupply increase rate of interest rates has helped the global turn to tighten the monetary policy.

Metropolitan makers' commitments to lower inflation at all costs have caused more and more concerns, that is, its radical measures will cause global recession.

In the uncertain period, the US dollar, which is usually stronger, continues to rise in the near future. On September 24, the US dollar index exceeded 113, which continued to reach a new high since 2002.

The strengthening of the dollar has a connection effect. For emerging economies, it has aggravated debt burden on US dollars and promotes capital outflows. IMF data shows that about 20 emerging market debt transactions are at a bad level. According to the World Bank, emerging and development economies are facing a perfect storm with weak growth, high interest rates, and extremely challenging external environments.

However, the impact of more direct, short -term and reality comes from emerging markets in Asia. Assets in the region are facing triple negative factor: the slowdown in global economic growth, the continued strengthening of the US dollar, and the return of investment portfolios to the US dollar assets.

Tightening and reservation of various economies

The central banks of various countries are trying to deal with the crisis of public confidence, and racing the inflation that is still high in improving interest rate suppression.

The Fed's moves are the most concerned, and most of the central banks are increasingly following the same or more interest rate hike strategies as the former. On September 21, local time, the Federal Reserve raised 75 basis points to 3.0%-3.25%of the federal fund interest rates, and significantly increased the expected path rate of the fund interest rate in the next few years. The final interest rate in 2023 was expected to be adjusted to 4.6%.

The Swiss Central Bank announced on September 22 that 75 basis points raised their interest rates, raising the policy interest rate from -0.25%to 0.5%, ending the 8-year negative interest rate policy, and an end to the last test of negative interest rates in Europe. Earlier this week, 100 basis points raised interest rates, the maximum tightening of the past 30 years. The central bank also expected that the interest rate will be further interest rate hikes in the next six months, and the interest rate will rise to 2.5%next year.

Faced with the worst inflation in 40 years, the Bank of England avoided the market expectations of a larger interest rate hike option. On September 22, the central bank announced the interest rate hike 50 basis points, which was the seventh rate hike since December last year. The benchmark interest rate was adjusted to 2.25%to the highest position since the 2008 international financial crisis.

The British Central Bank's trade -offs of inflation and economy are particularly obvious. Of the nine members of the British Central Bank Monetary Policy Commission, 5 people voted in favor of raising interest rates by 50 basis points to 2.25%, and 3 people voted in favor of raising interest rates by 25 basis points, while another person advocated that the interest rate was raised by 25 basis points.

During the same period, the Norwegian central bank raised interest rate hikes 50 basis points, and the South African Central Bank and Qatar Central Bank chose to raise interest rates 75 basis points.

Emerging markets in Asia are particularly strong in the Fed's tightening, and the financial markets in the region have continued to be affected by strong dollars. In the next day, the Federal Reserve raised interest rates, the Philippine Central Bank, the Central Bank of Vietnam, and the Indonesian central bank raised interest rates 50, 100 and 50 basis points respectively.

Even an emerging Asian economy that has not been adjusted in interest rates has taken other measures to relieve continuous inflation and US dollar pressure.

For example, the Bank of Japan, which insists on the control of the yield curve, stated on September 22 that it will continue its super loose monetary policy. For a long time, the central bank has been arguing that the fundamental demand of the Japanese economy is still weak. For exchange rates.

However, under the new lows of the yen exchange rate to 24 years, the Ministry of Finance of Japan announced on the same day to intervene in the foreign exchange market, that is, buying the yen and selling US dollars to prevent the yen from further depreciating. For the first time since the month, the foreign exchange market.

The steps of the above -mentioned central bank show that the Fed still dominates the financial market this week. Ellen GASKE, chief economist of Pauder Fixed Income G10, and Robert Tipp, chief investment strategist of global bonds, said that considering the results of the eagle, market response can foresee: short -term interest rates rise, stock prices fall, credit interest differences expand. However, the Fed may be close to the end of the interest rate hike cycle, and the long -term interest rate may also be close to the peak of this round of cycle.

The two said that the Fed issued a clear information at the meeting, that is, interest rates will rise for a long time. However, with the latest CPI reports did not alleviate inflation, the Federal Reserve has also promoted its overall tightening policy. It is expected that the remaining two conferences this year will further raise interest rates to 125 basis points. "This is a measure that is more eagle than expected, which will make interest rates reach 4.4%by the end of 2022." Its supplements can only be described as either in the air or half full, depending on how inflation develops.

Ellen Gaske and Robert Tipp believe that the Fed's lagging effect of tightening monetary policy at a rate of 75 base points is being formed, which may lead to excessive contraction. In view of the stronger position of the Federal Reserve, the risk of economic recession may have risen, and if inflation will not show more signs of slowing down in the next few months, the Fed may further tighten, thereby further increasing the risk of recession. Goldman Sachs has lowered the year -end expectations of the S & P 500 Index to 3600 points; Citi Team said that the Fed has almost promised that the United States will fall into recession.

In an interview with the 21st Century Business Herald, BOC Hong Kong Chief Economist, said that the Federal Reserve can also raise interest rates of 125 basis points in the remaining two conferences this year. As the Federal Reserve raises further interest rates, the short -term US Treasury bond yields that are most sensitive to policy interest rates will rise, reflecting the long -term US Treasury yields that reflect economic prospects may decline due to recession expectations.

From the perspective of Zhao Yaoting, a global market strategist in Jingshun Asia Pacific (except Japan), the yield of US debt is unlikely to be at a lower level of trading interval, and the ten -year US debt will be close to 5%. Zhao Yaoting said that it is worth mentioning that before the global financial crisis in 2008, the ten -year US debt remained at 5.1%for 15 consecutive years, while the average CPI average at that time was about 2.7%.

Super match Asian stocks and high -quality government bonds

Concerns about economic recession and tough Fed have continued to promote the strengthening of the US dollar to other companions. So far this year, the US dollar index has risen by more than 14%.

E Zhihuan said that the US dollar will remain strong in the near future, but may be in the near future. If the price of international commodities has declined, or it has become a turning point for the fall of inflation rates in the United States, the Fed will slow down the rate of interest rate hikes at a certain time in the future, and there is limited room for the US dollar to rise.

However, Zhao Yaoting believes that there will be room for appreciation in the future. "The current line diagram shows the situation of the US dollar." It said that the current trend has changed, but in general, even if the inflation is high, the US economy performance is relatively good. It is expected that the next quarter Okay, there is still room for rise in the dollar.

The US dollar exacerbates the market's concerns about the slowdown of the economy's economic economy. The latter may be difficult to repay debts for US dollars, thereby threatening the international income and expenditure crisis.

However, financial assets are more direct and shorter. Under the strong dollar, global funds continue to flow to the US dollar, and long -term large -scale capital outflow has led to the depreciation of the currency in most emerging Asian countries.

Since this year, the exchange rate of the yen against the US dollar has fallen by 20%. The actual effective exchange rate of the former has reached the lowest level since 1970; 15%, becoming the worst Asian emerging currency in the same period; offshore RMB has now fallen to the lowest level since 2020; Thai baht fell 0.6%to 16 years.

Asian currencies are softening wider, and MSCI Emerging-Markets Currency INDEX has fallen by approximately 7.5%this year, and it is expected to reach the largest decline since 2008.

"The impact of the US interest rate hike process on the Asian market is getting closer." E Zhiyuan said that the US interest rate hike drove major economies except Japan to enter the period of monetary policy tightening and triggered severe adjustments to international capital.

In September 2022, the stock market in Asian emerging countries except China cumulatively exported about $ 64 billion, which was higher than the scale of funds from 2021. As of September 16, foreign investment has flowed out of the Asian emerging stock market except in China for a month, with total capital outflows as high as US $ 423 million.

E Zhihuan pointed out that although the foreign exchange reserves and policies in response to the Fed's tightening in emerging countries in Asia have improved, the total capital outflow of the major Asian economy in the second quarter of 2022 still exceeds the majority of major major capital outflows since 2007. crisis.

It says that emerging stocks and bonds outside China may be under pressure. "China's financial markets are more tough and flexible than other Asian economies." E Zhihuan explained that the differences between the Sino -US monetary policy are reflected in the direction and the degree of continuous deepening. At present, it has a certain impact on the domestic capital market, but the foreign investment in China's stock market and the bond market depends more on foreign investors' judgment on China's economic fundamentals and financial market risks.

In Jingshun's model asset allocation, the institution is over -equipped with government bonds in Europe and the United States, government bonds, stocks in emerging markets, especially Chinese stocks; relatively low -allocation of commodities and high -yield bonds.

Zhao Yaoting told the 21st Century Business Herald that government bonds in the Asia -Pacific region are still worth investing. Because the region's economy has strong cushioning ability on external impact, and its financial strength is also good.

At the same time, Jingshun Chao Asia Pacific/Asia stocks, the latter's valuation is very attractive. "Considering the seasonal factors in Southeast Asia, the tourism industry may be prosperous in the future." Zhao Yaoting explained that it is expected that Thailand, Singapore, Indonesia and Malaysia are the biggest beneficiaries, and their economic and stock market performance will also increase.

In the Asian economy currency, Jingshun is more optimistic about North Asia. In the long run, currencies in mainland China, South Korea and Japan have the potential to appreciate. "At present, the semiconductor industry has basically bottomed out. With the recovery of the supply chain, the currencies of these economies will also benefit." The current valuation of the Chinese A -share market is obvious, but long -term observation and rebound can continue. From the industry, Jingshun is more optimistic about the government's support industry, especially renewable energy, wind energy, solar energy, electric vehicles, and high -tech manufacturing.

Zhao Yaoting said that major central banks such as the European Bank of China, the Bank of the United Kingdom, and the Bank of Canada all followed the Federal Reserve's policies to raise interest rates. In the short term, it brought great pressure on global stocks. The duration of the downlink mainly depends on the pace of interest rate hikes of the Fed.

"The volatility of U.S. stocks may continue, and there is a certain degree of downward pressure in the near future." Zhao Yaoting said that the market is still trying to try to try the direction of the Fed's monetary policy. In the future, monetary policy may continue to tighten more radically. He explained that this means that the 10 -year US debt yield may reach 5%, which will have a great impact on the discount rate of stocks.

In the environment of economic slowdown, Jingshun believes that the conversion of defensive industries and defensive stocks will continue. In addition, the slowdown of the US economy is likely to be relatively short. In the second half of 2023, a strong rebound will occur. At that time, technology stocks should perform well.

PIMCO believes that investors should start to take the initiative to seize the opportunities of the open market, and even consider transferring some assets from the private equity strategy to the area where lag and obvious lag, but investors should also prepare for the medium and long -term opportunities and use them extensively Opportunities for corporate credit mismatch. At the same time, the agency is optimistic about the high -quality Chinese credit of the balance sheet and the strong business model.

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