Should admit that interest rates affect the stock market has become a big uncertainty, this factor also may lead to stock market volatility. However, as interest rates itself is not terrible, so after the big bang, the market for its “immunity” would be to increase. In other words, the future market for some time to sort by, and gradually stabilized, the phenomenon remains a high probability. Run trend in the stock market, not because the emergence of the big bang and turn.
Interest rate is expected to lead to stock market volatility
For the stock market in a substantial shock on Tuesday, many people interpreted as the rate hike is expected to increase domestic investors, concerned. It should be said that makes sense. Serious due to inflation, household savings in China has emerged more than a month negative interest rate situation. Even in October this year, a central bank to raise interest rates, but 2.5% of the one-year deposit interest rate, obviously not with the current month’s CPI rose 4.4% compared to the speed. Therefore, from the elimination of negative interest rates, maintaining the fundamental interests of the depositors the perspective of interest rates is an inevitable choice.
However, a period of years, people have expectations for interest rates is not very strong. Why? As a foreign hot money is now eyeing to trying to enter China, the rate hike will increase the flow when the pressure; second to the need to curb the rise in CPI, with the effective way to raise interest rates more slowly, much less with more direct administrative control. So, in November the central bank to raise reserve ratio again, many people began to believe that interest rates down the possibility of being dropped.
Thus, although that does exist is the need to raise interest rates, but investors are mentally prepared to raise interest rates enough. However, in these days, people suddenly feel the pressure to raise interest rates suddenly seem larger. Central bankers use the number of position means not only shrink the money supply, but also means the price, which directly prompt a rate hike may increase; and the central voting issue the recent rise in interest rates, especially in bank savings interest rates with the same upside down, then is to give people a strong will raise interest rates. It can be said is this expected to continue to be strengthened, and the wide range of fermentation in the market circumstances, the stock market began a wave of sharp decline.
Low probability of unilateral decreased
But here we might as well turn think that if really want to raise rates again, then this is a very terrible thing? Of course, interest rates increase the cost of capital means that, for relying on “Money begets money” is the stock market have a negative impact; and interest rates also increase the burden on businesses, making the creation of the profits to be reduced, affecting the earnings of listed companies. However, relative to the benchmark interest rate now is 2.5%, even a 50 basis point rate hike, it is still negative interest rates, but also is low interest rates.
In other words, changes in interest rates to guide the flow of funds and compressed the role of corporate profits is limited. Because of this, at least in the current conditions, interest rates may not be more terrible. In fact, on the specific circumstances of the current Chinese society, the interest rates in the role of monetary tightening, even less relevant to window guidance. Objectively, the impact of more or psychological level. Because people do not want to believe that the previous rate hikes immediately, resulting in pressure on interest rates seems to be increased when the naturally nervous and panic. The subject of a number of small market like shares, already up more because of the need to adjust, the adjustment this time will increase efforts to weak market will glance.
In fact, if investors can be more rational to treat interest rates, which are fully prepared, rather than holding a fantasy, then the rate hike expectations should be strengthened Bu Zhiyu appear so when the panic, as well as prices fall once.
It should be said, it is quite rational investors. When the stock market crash, or a prior period adjustment was found more adequate coal, nonferrous metal plate showing the investment value. After all, these are all basic commodities, interest rates will not affect too much of their valuation and, therefore, have in the stock market crash, when prices are contrarian. Its greatest significance lies in rising to remind people: the current market decline did not occur unilateral basis, even if there is such a bad rate hike may happen, but it would not form a one-sided pattern. Moreover, when people from the fear of higher interest rates after the blind, will realize that, in fact, raise interest rates at this stage is not too terrible. It will disrupt the operation of the market and even change the rhythm, but the market trend will not reverse.
In this sense, the adjustment arising from the stock market nowadays, more rate hikes expected to heat up or because the result of a mandatory order. This order is mainly manifested in the profit-digest, so it would be more fierce look oncoming force, but does not form a pattern of unilateral fall, and will encounter strong resistance. Tuesday, the Shanghai and Shenzhen stock markets have had a great fall, but later declines were significantly narrowed, Shanghai stock market has recovered 2,800 points, also illustrates this point.
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