Macro exchange and Thinking: the devaluation of exchange rate should pay attention to prices
The exchange rate has depreciated and the export boost is limited. Recently, the RMB exchange rate has depreciated by a large margin. In our previous report, “the yen depreciates, will it be the RMB next?” In, he expressed concern about the follow-up trend of RMB exchange rate. During 20162020, when the US dollar index exceeds 100, the lowest spot exchange rate of RMB will also exceed 6.8. Does exchange rate depreciation help exports? Although it is possible in theory, in practice, the strength of exports will also affect the trend of exchange rate. From the perspective of macro dynamics, the improvement of export growth by exchange rate depreciation is relatively limited, especially under the impact of global supply chain, the price elasticity may decline.
Increase input pressure and guard against upward inflation. Special attention should be paid to the inflationary input pressure caused by exchange rate depreciation. According to our estimation, every 1 percentage point increase in the year-on-year growth rate of imported commodity prices will drive the growth rate of PPI up by about 0.5 percentage points, and the year-on-year growth rate of food prices in China and Africa in CPI up by about 0.07 percentage points. Even if the transmission of prices from outside to inside takes time, the upward risk of prices is still worthy of vigilance.
The impact of food prices is indirect, but it will also add fuel to the fire. The correlation between imported commodity prices and food prices in CPI is not strong, but in some Shenzhen Agricultural Products Group Co.Ltd(000061) areas, China has a high level of foreign dependence, the most typical of which is soybean. As one of the main ingredients of feed, the indirect impact of its price rise on food prices can not be ignored, and the rising cost will contribute to the fire.
The adjustment pressure of the bond market remains unchanged, and the stock market pays attention to the main line of benefits. The impact of exchange rate depreciation on the capital market is mainly in two ways: first, the behavior changes of foreign institutions are directly reflected in the capital flow, which has occurred when the expectation of exchange rate depreciation is formed; The second is to indirectly affect asset prices through monetary policy adjustment. We believe that the monetary easing represented by the reduction of reserve requirements and interest rates may have come to an end. On the one hand, the adjustment pressure of the bond market remains unchanged, and the only way to resist capital outflow may be to expand the interest rate gap between China and the United States as much as possible; On the other hand, for the equity market, the impact of depreciation is relatively weaker than that of the bond market. Due attention can be paid to the price rise caused by the rise of import prices and the profit improvement opportunities of some export industries.
One week scan:
Epidemic situation: the epidemic situation in China is still high, and the epidemic situation in the United States is on the rise. As of April 22nd, Chinese mainland and Hong Kong, Macao and Taiwan had over 21 thousand cases and 14 thousand cases newly diagnosed in a week. At present, the epidemic situation in Hebei, Jiangsu, Zhejiang, Anhui, Guangdong, Fujian, Liaoning and other provinces is generally stable. The epidemic situation in Jilin province continues to improve. Recently, the epidemic situation in Shanghai is still high, and the risk of community transmission is still high. In the last week, about 4.76 million newly confirmed cases of covid-19 pneumonia were recorded in the world, a decrease of 27.1% compared with the previous week. The epidemic in the United States is heating up rapidly. There were about 15000 new deaths from covid-19 pneumonia worldwide, down 25.3% from last week. New deaths in Germany fell sharply, while Thailand bucked the trend. A new variety of Omicron swept the United States. The vaccination rate of booster needle in China is more than half, and Pfizer booster needle may have a strong immune effect on young children.
Overseas: the Federal Reserve collectively “hawks”, and the European Central Bank may raise interest rates in July. The Fed beige book shows that economic activity has expanded at a moderate rate since mid February. This week, many officials of the Federal Reserve made hawkish remarks again. Williams and Meister, the voting Committee of the Federal Reserve, said that raising interest rates by 50 basis points at the next meeting was a reasonable choice. Brad and Huck, the Federal Reserve’s voting Committee, said that they did not rule out a 75 basis point increase in interest rates in the future. The Bank of Japan reiterated its firm commitment to ultra loose monetary policy. The European Central Bank may raise interest rates in July. European Central Bank President Lagarde said that the European Central Bank kept the three key interest rates unchanged. European Central Bank Vice President jindos and Management Committee Kazaks said that the European Central Bank could raise interest rates as soon as July. The EU has imposed new sanctions on Russia, and no new progress has been made in the Russia Ukraine negotiations. CPI growth in the eurozone hit a record high. US manufacturing PMI hit a new high in nearly seven months.
Prices: Shenzhen Agricultural Products Group Co.Ltd(000061) wholesale prices fell and international oil prices rose. This week, the Shenzhen Agricultural Products Group Co.Ltd(000061) wholesale price index of the Ministry of agriculture fell month on month, with the average price of 28 key monitored vegetables falling and 7 key monitored fruits rising. This week, the average price of Brent crude oil and WTI crude oil rose month on month, the average price of China Shipbuilding Industry Group Power Co.Ltd(600482) coal was stable, and the average price of rebar rose.
Liquidity: the capital interest rate is down, and the RMB is devalued significantly. This week, the capital interest rate decreased, the weekly mean value of dr001 decreased by 31.2bp month on month, and the weekly mean value of dr007 decreased by 16.6bp month on month; The weekly average of 3-month Shibor interest rate and 3-month certificate of deposit issuance interest rate decreased. The interest rate of bills declined, and the weekly average of 1-month, 6-month and 1-year rediscount interest rate of state-owned shares and silver bills fell. This week, the central bank conducted a total of 50 billion yuan of reverse repo in the open market, and a total of 60 billion yuan of reverse repo expired in the open market of the central bank this week; Next week, the central bank’s open market will have 50 billion yuan of reverse repo and 5 billion yuan of central note swap due. This week, the US dollar index rose and the RMB depreciated.
Performance of major categories of assets: A shares and Hong Kong stocks fell, and treasury bond yields rose. This week, some stock indexes in Asia rebounded slightly, while most other markets in the world fell, with A-Shares and Hong Kong shares mostly falling. Chinese stocks rose this week only in textiles and clothing, while other industries fell, while public utilities and beauty care fell slightly. This week, the weekly average yield of 10-year Treasury bonds rose by 6.1bp, and the weekly average yield of 10-year CDB bonds rose by 5.7bp.
Risk tip: policy changes, economic recovery is less than expected.
