On December 5, with the continuous optimization of domestic epidemic prevention and control policies, the RMB exchange rate continued to rise.$USD/CNH (USDCNH.FX)$It broke through the key mark of 7.00 and consolidated the mark at 6.95, rising nearly 700 points in the day, setting a new high since September 13.

At the 2022 global annual meeting of the International Financial Forum (IFF) last weekend, Gao Shanwen, chief economist of Anxin Securities, said that there is not much suspense about the RMB exchange rate "breaking 7" in the opposite direction, but should be a high probability event.

The reasons for the devaluation of RMB this year include the slowdown in domestic economic growth.、The strength of the US dollar and so on, and these factors have been significantly weakened or are improving.

And Mingming, chief economist of CITIC, also believes that the current low of the spot exchange rate of RMB against the US dollar may have been confirmed, and the probability of maintaining a wide volatility of the RMB exchange rate in the short term is relatively high.In the long run, the future performance of RMB exchange rate valuation will gradually be dominated by the fundamentals of steady domestic economic growth.

In addition, Guotai Junan believes that from a more macro point of view, the stability of the financial system is the top priority. Past experience shows that there is a significant transmission effect between financial markets. For example, the sharp devaluation of the RMB in April this year led to a reduction in foreign holdings of Chinese government bonds (figure 2), and both A-shares and H-shares were under strong selling pressure.

This time, since October 31, with the continuous rise of the RMB exchange rate, Hong Kong stocks$Hang Seng Index (800000.HK)$Increase by more than 30%$Hang Seng TECH Index (800700.HK)$Up nearly 50%, the recovery of the market is very obvious.

On the other hand, from the perspective of the dollar$USD (USDindex.FX)$It has also given up more than half of the increase so far this year, the strong dollar has fallen, and non-US currencies have shown a certain trend of appreciation.CurrentMarket expectations that the Fed will slow the pace of interest rate hikes也It's heating up day by day.

The current rise in the dollar index has narrowed to about 7 per cent, after rising about 16 per cent at one point, according to the data.

Shao Xiang and Tao Chuan, analysts at Soochow Securities, believe that the peaking of the US dollar will be an important trading theme next year. Historically, government bonds (including emerging market sovereign bonds) and investment grade bonds have the highest success rates, butEmerging market stock markets, crude oil and industrial metals (such as copper) are more attractive in terms of elasticity。

In addition, there may be more room for gold than the chart shows, because with the risk of recession, the gold market will start earlier, corresponding to emerging market gold stocks are also expected to usher in some opportunities.

In terms of equity, information technology, raw materials, optional consumption, banking, finance and industrial stocks are among the top earners, but it is doubtful whether information technology can still take the lead because of the low probability of a rapid shift in Fed monetary policy.