Category: Money Tips Date: 2005-12-28
â—?short-term interest rates will help control the excessive growth of fixed asset investment growth, but it will not change the overall trend of sustained rapid growth.
â—?the management of a small interest rate increase that market-based instruments to re-start the fine-tuning the economy, but we do not believe that entering a new cycle of raising interest rates a sustained, moderate contraction in liquidity and widen the yuan trading band against the U.S. dollar may be the follow-up co-ordination of policy instruments .
â—?interest rate spreads resulting from the expansion will directly benefit from the bank stocks. However, interest rates on fixed-asset-dependent industries such as building materials, machinery and have some negative impact, while interest rates will make the industry a high debt ratio: special equipment, delivery of equipment, finance costs rose.
â—?Loan interest rates will indirectly raise the level of market interest rates and lead to the appreciation is expected to further increase, which will have the financial and real estate industries have a positive impact.
â—?interest rates make the market risk-free rate of return rise, corporate finance costs, market liquidity, short-term reduction in order to adjust the pressure generated on capital, the market may take some time to digest the resulting uncertainty.
â—?round Quotes mainly due to appreciation of the renminbi and the sustained rapid growth of China's macro-driven, raising interest rates is more important is smooth China's economic growth cycle does not change the pace of sustained growth and long term, and the interest rate to a certain degree of appreciation is expected to strengthen the , while the round Quotes is an important reason for that is the trigger to bring the appreciation of the value of the overall market revaluation, revaluation is expected to strengthen to a certain extent, to the market support. For this reason, we believe that this rate hike will not change the bullish tone of capital markets, the core high-quality assets are still worthy of long-term holding.
â—?We recommend that investors overweight banking stocks, while a moderate to avoid building materials, machinery industry, a high debt ratio of listed companies.
The proposed investment strategy
The impact of interest rates on the market mainly through three channels: interest rates will affect the market risk-free rate of return will affect the stock market valuation of center, although the increase in lending rates will not directly affect the market risk-free rate, but conduction through the interest rate market mechanisms to money market interest rates, resulting in an increase in risk-free rate of return, have a certain negative impact on the valuation; raising interest rates will increase the enterprise's financial costs, thereby reducing the corporate earnings per share; the same time, interest rates would also increase the formation of a certain contraction of market liquidity , thereby increasing the market adjustment pressures. Historically, China's stock market when interest rates are in Canada there is a certain adjustment pressures.
We believe that the interest rate adjustment of the core of the stock market because of China's stock market has always been to promote capital markets, interest rates led to the contraction of liquidity tightening of funds led to the stock market fell.
But this time the background has the same interest rate increase on previous occasions are not the same, mainly yuan began the real managed floating exchange rate system, this hike can be to a certain extent although the contraction in market liquidity, but also will certainly enhance the role of the formation of market interest rates, thereby enhancing the appreciation of the renminbi is expected to attract more capital inflows, hedge against liquidity contraction.
And through our calculations, interest rate increase earnings per share of listed companies have little effect, while the lending rates by 0.27 percentage point rise in market interest rates will be transmitted to the smaller.
As the current round of Quotes is mainly due to appreciation of the renminbi and the sustained rapid growth of China's macro-driven, as we analyzed earlier, as interest rate smoothing is more important is China's economic growth cycle does not change the pace of sustained growth and long term, but also hike to a certain degree of appreciation is expected to strengthen, while the current round of Quotes is an important reason for that is the trigger to bring the appreciation of the value of the overall market revaluation, revaluation is expected to strengthen to a certain extent, to the market support. For this reason, we believe that this rate hike will not change the bullish tone of capital markets, the core high-quality assets are still worthy of long-term holding.
But, after all, means that the central bank began raising interest rates to re-adopt a market-oriented measures to control the economy, the market may take some time to digest the resulting uncertainty.
We recommend that investors overweight banking stocks, while a moderate to avoid building materials, machinery industry, a high debt ratio of listed companies.
