We still need to analyze the current market under the framework of epidemic situation, Russia Ukraine conflict and US dollar interest rate hike!
First of all, judging from the situation in Russia and Ukraine, after the test firing of intercontinental missiles in Russia, a source from an emergency agency said on the 21st local time that a fire broke out at the air and Space Force Research Institute affiliated to the Russian Ministry of defense in teville, which has killed 7 people and injured at least 25 people. Subsequently, a fire broke out in Russia's dmitryevsky chemical plant. The reason is unclear. Nearly 150 workers in the plant were evacuated.
Secondly, from the perspective of the epidemic situation, according to the deployment of the Shanghai municipal Party committee and government, Shanghai will carry out nine major actions to eliminate social problems from April 22, and strive to achieve social elimination in the whole city as soon as possible. This is good news.
Third, from the perspective of US dollar interest rate hike, US Federal Reserve Chairman Powell suddenly released an eagle overnight and expected to raise interest rates by 50 basis points in May.
Recently, the foreign exchange market of stocks and bonds also fluctuated abnormally. After the continuous decline of Japanese foreign exchange bonds, it was the turn of the Chinese market. In the last four trading days, the offshore exchange rate of RMB fell 1200 points against the US dollar. However, it was surprising that when the RMB fell below 6.5 today, foreign capital poured into A-Shares and finally closed with a net purchase amount of nearly 6.8 billion yuan. So, what are the considerations of foreign investors?
Russia fires twice
According to Russia's Tass news agency, on the 21st local time, a source from an emergency organization said that a fire at the air and space Army Research Institute under the Russian Ministry of defense in teville has killed 7 people and injured at least 25, and the number of casualties may continue to increase. Smoke billowed at the scene, and someone jumped out of the window to escape.
After the incident, the Russian army dispatched mi-8 helicopters to put out the fire. At present, the fire has been basically put out. The fire area exceeded 2500 square meters. The preliminary report said that the fire was caused by short circuit of wires. According to Reuters, according to the introduction of the Russian Ministry of defense, the Institute is mainly engaged in research in the field of aerospace, including the development of air defense systems.
Another media reported that according to the preliminary investigation, the fire point is located on the second floor, and the cause of the fire may be the old wires. The agency specializes in developing new space and weapon systems, including Iskander missiles used in the Ukrainian war.
Subsequently, dmitrievsky chemical plant, the country's largest manufacturer of chemical solvents in kineshma, was also caught in a fire, with black smoke billowing into the sky. Relevant films were wildly spread on the Internet, but officials have not disclosed the casualties and damage.
A fire broke out in dmitrievsky chemical plant, source: Twitter
"Dmitryevsky chemical plant" is located in Ivanovo oblast and about 250 miles (about 400 kilometers) east of Moscow. It claims to be one of the largest chemical solvent manufacturers in Russia and Eastern Europe on its official website. The factory produces chemical and petrochemical products, which are widely used in paint, rubber, leather and food processing industries, and are sold all over the world. However, the cause of the fire is unclear.
Shanghai epidemic and Powell's expected Management
The market is not only concerned about the conflict between Russia and Ukraine, but also observing the Shanghai epidemic and the Fed's interest rate hike.
According to Xinhua news agency, according to the deployment of the Shanghai municipal Party committee and government, Shanghai will carry out nine major actions to eliminate social problems from April 22, and strive to achieve social elimination in the whole city as soon as possible.
According to the general thinking of "unified command, classification and policy implementation, and focus on tackling difficulties", we should take a time to take measures such as "global static management, full staff screening, comprehensive flow survey, disinfection and sterilization by the whole people, and the whole process of checking and compensating for deficiencies".
According to the deployment of the nine operations, community control actions will be carried out to minimize personnel mobility and aggregation. Strictly implement the requirements of "stay at home and provide door-to-door service" in the sealed control area; The control area strictly implements the requirements of "people can't leave the community (unit) and take things at different peak"; The requirements of "personal protection, no gathering" shall be strictly implemented in the prevention area, and personnel shall not flow to the sealing and control area and control area. Increase street patrol for floating personnel. For isolated objects at home, door-to-door magnetism and other methods are adopted to restrict personnel from going out, and the health code is given a red code.
it can be said that the dynamic clearing of Shanghai as soon as possible is a great benefit to the market. Now, the strength is increasing and the speed is expected to increase
On the other hand, it may exacerbate the volatility of assets. On the 21st local time, Jerome Powell, chairman of the Federal Reserve, began to manage the market expectations. According to China Central Television News, Powell said that the Federal Reserve is expected to raise interest rates by 0.5 percentage points in May to curb inflation. He said a similar interest rate increase may be needed thereafter.
Powell said the Fed's main focus is to reduce inflation. "Without price stability, the economy cannot function," he said According to the data released by the U.S. Department of Commerce, as of March, the prices of other core commodities except food and energy rose by 5.3% in a year. Other data showed that house prices in the United States rose by an average of 15% in March, a record high.
RMB fell, but foreign capital copied the bottom
Judging from the price trend of Chinese assets, the RMB has indeed depreciated to a certain extent recently. It has fallen nearly 1200 points in the last four days. On April 22, the US dollar broke through the 6.5 mark against the RMB.
However, today, foreign investors are actively copying the bottom. Following yesterday's long position, northbound funds continued to flow in unilaterally today, and accelerated to enter the market in the afternoon, with a net purchase of 6.765 billion yuan throughout the day, of which more than 1billion yuan was raised through late call auction; As of the closing, the net purchase of Shanghai Stock connect was 3.611 billion yuan and that of Shenzhen Stock connect was 3.154 billion yuan, which was relatively balanced. This week, northbound funds were traded for 4 days, with a slight net purchase of 445 million yuan.
So, what are the advantages to stimulate foreign capital to enter against the current? On the afternoon of April 22, the official wechat of the CSRC released a message: Yi Huiman, Secretary of the Party committee and chairman of the CSRC, presided over the Party committee (expanded) meeting, conveyed and studied the deployment of the special meeting of the financial committee of the State Council on the morning of April 22 on implementing the spirit of the recent important meeting of the CPC Central Committee on economic and social work, analyzed the key and sensitive issues concerned by the current market, and studied the response measures and policy reserves, Re implement and promote the recent arrangements of the financial commission of the State Council. The meeting stressed the need to respond to market concerns in a timely manner, guide market expectations, stimulate market vitality and potential, further improve market resilience and promote the stable and healthy operation of the capital market.
Judging from the news content, today, the State Council should hold a special meeting of the Finance Committee. On March 16, when the market fell sharply, a meeting of the financial committee was also held, which was interpreted by the market as a heavy positive. On that day, the Shanghai index closed up more than 106 points.
in addition, Jiasheng group told the Chinese reporter of the securities firm that after the record capital outflow in China's domestic bond market from February to March this year, the demand for profit taking or redemption of ETFs and active funds may have been met, and the capital outflow is not expected to continue to accelerate, because most institutions holding RMB bonds are long-term investors, such as the central bank, sovereign wealth funds and passive funds tracking the index. Meanwhile, since the FTSE Russell wgbi index is included in RMB bonds, it will attract US $10 billion into China's bond market every quarter as of the fourth quarter of 2024
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