On February 24, due to the escalation of the situation in Russia and Ukraine, the global capital market was turbulent. So how will China’s capital market deduce? How should investors in the A-share market respond? Pang Ming, chief economist and chief strategic analyst of Huaxing securities (Hong Kong), said in an exclusive interview with the reporter of Securities Daily that the decline of peripheral stock markets will also reduce the risk appetite of domestic investors and A-share market. However, compared with other major markets, the correlation between A-Shares and overseas markets and international geopolitical conflicts is relatively low, and RMB assets still have considerable investment value and allocation significance for overseas investors. Foreign investors will pay more attention to the independent market, sector logic and long-term allocation value of the A-share market, and continue to pay close attention to the spillover impact of the Russian Ukrainian crisis on China’s economy, macro policies, market liquidity and the profit growth of A-share listed companies.
Pang Ming said that geopolitical conflicts will have a certain impact on the global stock market, and the short-term performance of safe haven assets such as gold, US debt, US dollar and Japanese yen may be relatively strong. Ukraine’s wheat, natural gas and bulk commodities supplied to Europe are affected by logistics interruption. Russia’s crude oil, natural gas, industrial metals and other commodities cannot be supplied to the international market in the short term, and the prices of relevant bulk commodities will continue to rise due to the impact of the supply side.
It must be noted that the global capital market has certain expectations and preparations for the conflict between Russia and Ukraine. Previously, asset pricing has also reflected the estimation and response to the rise of risk. In the case that the Russian Ukrainian crisis has not further escalated or will not deteriorate for a long time, and Ukraine is not a major financial center in the world, its impact on the A-share market is still limited.
However, the current surge in inflationary pressure in Europe and the United States may force major central banks in Europe and the United States to accelerate and increase the pace of monetary policy tightening and interest rate hikes. The judgment of the Fed’s monetary tightening pace and the adjustment of the bubble market will bring revaluation and anticipated adjustment to the global equity assets including A shares.
Pang Ming believes that for investors in the A-share market, geopolitical risks superimposed on the sporadic outbreak of the epidemic, weak consumption, the expectation of the Federal Reserve to raise interest rates, uncertainty in peripheral markets and other factors will have a certain impact on the emotional rebound and capital trend of the A-share market. The confidence of some investors may weaken, the emotional recovery may be slower than expected, and they are more sensitive to various negative information. On the other hand, some investors may be worried that many factors, such as the US European sanctions, the risk of European economic recession, the rise of commodity prices and the listing of global risk aversion, may disturb the pace of China’s economic recovery, the flow of foreign capital and the profit growth of the A-share market.
Various high-frequency data show that in general, China’s economic activities have reached the bottom, reached the bottom and built the bottom. The cross cyclical regulation of macro policies and support for the real economy have increased steadily. The national economy has continued to recover and develop. The effects of various policies such as reform, opening up and innovation, industrial upgrading and development, manufacturing relief support and people’s livelihood security have gradually emerged, Especially with the steady development of infrastructure investment and the marginal improvement of real estate regulation policies, the real economy continues to strengthen and positive changes gradually increase.
As the global central banks continue to release hawkish signals, Pang Ming predicts that the people’s Bank of China will continue to pay close attention to the effectiveness of monetary policy and the form and pace of economic recovery, carefully grasp and make good use of the window period before other major economies start substantive contraction policies, the total support policies will continue to be reasonable and appropriate, and social financing and credit will continue to expand, Monetary policy should take the initiative and move forward to provide reasonable and sufficient liquidity for steady growth.
\u3000\u3000 “Taking into account the effectiveness of various macro support policies such as finance, currency, industry and employment, the active promotion of high-quality development, the sustained and stable recovery of the economy, the rapid growth of enterprise profits and the steady improvement of profitability, there will be more positive factors in the profit growth, emotional repair and liquidity support of the A-share market, which is conducive to the A-share market to continue to go out of the independent market.” Pang Ming said.
