Key points:
The current surge in global energy prices is unlikely to trigger super inflation in the 1970s.
The driving factors of inflation under this round of energy crisis:
1) Covid-19 epidemic affects the interruption of global supply chain, and the long-term bottleneck of supply chain promotes inflation;
2) Stimulated by the easing of demand in major economies led by the United States, consumer demand rose against the trend;
3) Under the supply-demand gap, the shipping capacity is insufficient, the port is congested, and the freight rate soars;
4) Impact of ESG on long-term energy structure;
The final solution to this round of inflation still depends on the monetary tightening of the Federal Reserve. The market is gradually pricing in the risks related to interest rate increase. The risk lies in the possibility and response of interest rate increase in advance. Nominally, the rhythm of the Fed's interest rate increase depends on the progress of inflation. The maximum weight of inflation is the crude oil price. The supply side of oil price is determined by the game between OPEC + and US shale oil and geopolitical factors. The demand side depends on the degree of global economic recovery under the influence of the epidemic trend and the marginal change of additional demand stimulated by the Fed's loose monetary policy.
The Fed's interest rate hike cycle will trigger an emerging market debt crisis.
The high-risk areas of emerging market debt crisis in 2022 are still the traditional Latin America, Eastern Europe and Central Asia. The higher the debt risk, the greater the pressure of exchange rate depreciation. Among the major emerging market economies, the Argentine Peso with the worst debt health has continued to depreciate significantly against the US dollar.
Under the long-term appreciation trend of the RMB exchange rate against the US dollar, it faces depreciation pressure in the short term.
After the Federal Reserve starts to raise interest rates in 2022, the Central Bank of China will not follow up immediately. The interest rate gap between China and the United States has narrowed periodically, and there is devaluation pressure on the RMB against the US dollar in the short term. However, the fundamentals that China's long-term economic prospects are better than those of the United States will not change, the pattern of China's long-term trade surplus with the United States will continue, and the long-term appreciation trend of RMB against the US dollar will not change.
Investment suggestions on international market in 2022.
Under the background of higher real interest rate, shift of monetary policy, tightening of global financing environment and rising risk of emerging market debt crisis, risky assets will face phased adjustment pressure in 2022.
In terms of asset allocation, In 2022, it is recommended to allocate standard equity assets as the bottom position (holding as many equity assets as possible for a long time is the best choice, and the proportion can be adjusted periodically to cope with market fluctuations); in the first half of the year, it is appropriate to over allocate the risk averse assets represented by gold, and clear the gold position after raising interest rates in the second half of the year (inflation rises, real interest rates fall, and the logic of gold rise will enter the final stage of the first half of 2022). Increase the proportion of cash assets (short-term US bonds and cash) to cope with possible large fluctuations in risk assets. After the risk assets are adjusted to a reasonable valuation area (under the current price level, the adjustment space of US stocks is larger than that of Hong Kong stocks, and it is recommended to appropriately over allocate Hong Kong stocks), and transfer the hedging assets back to the risky assets.
Risk statement
Protracted epidemic situation; Global liquidity margin tightening; The Fed raised interest rates in advance.
