Source: Brokerage China Author: Qu Hongyan Recently, China Yangtze Power hit a historical high and once again showed the slow bull stock trend of "tripling in ten years". The slow bull market has left behind many passers-by and brought good returns to the steadfast investors. It is "rare for those who triple in one year to be like carp jumping over the dragon gate, while those who double in three years are few and far between." On the other end of the investment world, however, violent collapses are also deafening, with many financial products suspected of "Ponzi schemes" ceasing payments, leaving investors with no hope of recovering their investments. Both positive and negative cases illustrate the importance of forming a suitable mentality towards money in one's lifetime; otherwise, sooner or later, you will divorce yourself from your money. "I call this the money mind, a person's IQ can reach 120, 140, or even higher levels, and perhaps some people's minds are good at doing one thing, while others are good at doing another. They can do things that most ordinary people can't do. But I know some very smart people who make very foolish decisions because they lack the money mind." Buffett once said so. The so-called money mind refers to believing in common sense, believing in compound interest, being cautious and rational, thinking independently, prioritizing security over return, not dealing with people with questionable character, not easily guaranteeing for others, not believing in windfall profits, and not trying to cross legal norms for extra benefits. In today's world of ubiquitous information, everyone's wealth may become the "prey" of those with ulterior motives. Only with the money mind, can one form good behavior habits and shield oneself from separating from one's wealth. Do not entrust your wealth easily. Wealth is easy to lose but hard to accumulate, and trust is a vital reason leading to the rapid loss of wealth. "Do not allow anyone else to manage your business unless you can watch their every move closely and understand their behavior; or you have strong reasons to believe in their character and ability. For investors, this criterion determines when you can let someone else make investment decisions for you." Graham's criterion written eighty years ago is so clear. Almost all the investors who lost their wealth in the financial products have violated the above two criteria. They did not have the ability to closely supervise the whereabouts of their funds, nor did they have sufficient reasons to believe in the character of the product issuers. They easily invested their own wealth solely based on others' glib tongue and a piece of commitment paper. They did not act as gatekeepers of their own wealth and ended up with nothing left even if the government punished the wrongdoers. "An ounce of prevention is worth a pound of cure." This is a phrase Munger often says. Destiny must be in one's own hands, and investors with a suitable money mind will try their best to find suspicious points in their investments to protect the safety of their principal. For example, whether the manager is trustworthy, whether the underlying assets are profitable, whether oneself can timely monitor the risks in the investment process, and whether the sales staff is obtaining large commissions. As long as any unreliable signs are found, these investors firmly will not invest their money. Do not desire to get rich quick. As in the capital market and anywhere else, making money is not easy, and desiring to get rich quick will lead to quick loss of wealth. In the capital market, the desire to get rich quickly often leads to investors over-allocating specific stocks, industries, or assets at the worst time. For example, buying high-risk stocks that can gain huge returns once an adventure succeeds, but the chance of success is very small, also known as "whispering stocks" by legendary fund manager Peter Lynch. "They often tell investors a story with explosive effects. These 'whispering stocks' have a hypnotic effect on people, and it is easy for you to believe that the story the company tells has an emotional appeal that can easily confuse you." This is like hearing a very tempting "sizzling" sound, making you salivate, but you did not notice that there is no steak on the grill. In the eyes of investors who lack the money mind, stable yield provided by blue chips such as China Yangtze Power cannot meet their demands. However, historical experience clearly shows that buying stocks lacking in safety solely based on imagined high yields is unwise. The long-term average investment return of general stocks is 9%-10%, which is also the average investment return of stock indexes in history, a benchmark to measure one's investment performance and the benchmark to measure fund investment performance.
Author: Shi Qian. Will this be the arrival of the "real wolf"? The consumption tax rumors suddenly spread in various investment groups yesterday after the close of trading. There are reports that a trillion-level consumption tax reform will be approaching, and luxury goods and high-end services may be the first to test. As of the close of trading this morning, consumer stocks suddenly rebounded collectively, and retail and duty-free areas led the rise. Among them,
This morning, CNBC had a commentary on the market, saying that "most Asian markets are falling, while the Chinese stock market is experiencing a rebound hope." Recently, the views of foreign funds on Chinese assets have quietly changed.
Reflected in the market, although equity performance is not strong, the exchange rate has made significant progress. Offshore RMB against the US dollar was reported at 7.1190 yuan at 04:59 Beijing time, up 103 points from the New York session on Wednesday, with overall trading ranging from 7.1330 yuan to 7.1172 yuan. In early trading today, the RMB soared over 100 points again.
There are reasons behind the US dollar's fall and the rise of Asia-Pacific currencies, as well as internal factors. After yesterday's closing, a heavy piece of information was once again circulated in the market: China will cut more than $5 trillion in stock housing loan interest rates as early as this month, aiming to stimulate consumption by reducing the borrowing costs of millions of households.
The pace of changes is extremely fast
Recently, the pace of changes in the external market, especially in the foreign exchange market, has been very fast. The yen exchange rate, which fell sharply yesterday, turned higher again today, with the USD/JPY exchange rate falling by as much as 0.5% intraday to 141.11. At the same time, Japanese stocks, which surged yesterday, fell today against the backdrop of a sharp rise in US stocks last night.
It is worth mentioning the trend of the RMB. Offshore RMB against the US dollar was reported at 7.1190 yuan at 04:59 Beijing time, up 103 points from the end of the New York session on Wednesday. In early trading today, the RMB once again rose sharply, with the amplitude expanding to more than 140 points, and breaking through 7.11.
This morning, the middle price of RMB against USD was reported as 7.1030, an increase of 184 points; the middle price of the previous trading day was 7.1214, and the official closing price of the previous trading day was 7.1236.
In addition, it can also be seen that recently Hong Kong stocks have been significantly stronger than A shares, and the trend of stocks such as [stock name] in Hong Kong stocks is also significantly stronger than A-share blue chips. $BABA-W (09988.HK)$Please use your Futubull account to access the feature.$MEITUAN-W (03690.HK)$ After the market opened this morning, $Hang Seng Index (800000.HK)$Please use your Futubull account to access the feature.$Hang Seng China Enterprises Index (800100.HK)$ All rose rapidly again.
Analysts believe that there are two main reasons behind this:
From an external perspective, the USD decline has lifted the exchange rate levels of major currencies in the Asia-Pacific region. The recent frequent linkage between the RMB and the Japanese Yen is also due to this reason.
Internally, there is an enhanced expectation of the economic transition both domestically and abroad, with continuous heavy rumors. After the close of trading yesterday, the market once again spread a major piece of news: China is set to cut over 5 trillion USD in outstanding housing loan interest rates as early as this month, aimed at stimulating consumption by reducing the borrowing costs of millions of households.
Previously, this information had been widely circulated, and relevant parties are considering a plan to allow borrowers to renegotiate terms with their current lending institutions before January. The proposed interest rate cut may be implemented in two steps, totaling about 80 basis points. A reporter from China's brokerage firm has also learned that there is a possibility of implementing this plan, but there is also some pressure at the banking level.
It is worth noting that recent foreign investment seems to have shifted its macroeconomic expectations in China and some optimistic indications have emerged. Morgan Stanley believes that the worst period for China's macroeconomic environment may have passed, but the recovery is still primarily driven by policy and is moderate. There have been reports in the market of some bullish information from Morgan Stanley's investment strategy in China, pertaining to strengthening and improving the social security welfare system, boosting consumer confidence, and using the central government's balance sheet to promote consumption and ease the pressure on real estate inventory.
Sergio Ermotti, CEO of UBS Group, stated on Thursday that UBS has had a history in China for over 50 years, and we will still be there for 100, 200 years. Overall, the two true opportunities and growth engines are still the USA and Asia, with China being a major driving force.
How big will the impact be?
So, if the bullishness in the real estate market is truly realized, what kind of impact will it bring?
The expectation for the adjustment of existing home loan interest rates may be based on the gradual increase in the difference between existing home loan interest rates and new home loan interest rates, the continued increase in the phenomenon of "early repayment", and the pressure of credit loss, among other real-life situations. Data shows that the current average interest rate for existing home loans is around 4.21%, and the interest rate for new home loans in the second quarter of 2024 is 3.45%. The difference between the two is about 76 basis points. Among them, 35 basis points are the "temporary interest differential" (the 5-year LPR has accumulated a 35 basis point interest rate cut this year), and the remaining 41 basis points can be considered as the "additional interest differential" after the policy interest rate is adjusted in early 2025, which represents the largest potential for further interest rate cuts.
Tianfeng Securities believes that considering the need to protect banks' net interest margin, it is more likely to lower the interest rate by 10-20 basis points. Theoretically, reducing the interest rate on existing home loans directly reduces the interest expenses of existing home loan customers, increases disposable income for residents, and the interest savings may slow down residents' early repayment and provide a certain boost to consumption. However, in the absence of high-yield assets, whether lowering the interest rate on existing home loans can prevent residents from early repayment still needs to be observed.
According to calculations by Crediting Research, the weighted average interest rate of existing housing loans is about 4.19%; in July 2024, the weighted average interest rate for newly issued housing loans is 3.40%, with a difference of 79 basis points between the two. On average, the downward adjustment space for the markup range of existing home loans may be around 70-80 basis points, with an impact on banks' asset yield of 8-9 basis points.
Minsheng Securities stated that currently, the market is concerned about the downward adjustment of existing home loan interest rates. If the policy is implemented, on the one hand, it will reduce the interest burden on residents, alleviate the phenomenon of "early repayment", and have a sustained boosting effect on consumption, gradually benefiting the overall economic running. However, with the continued weak demand for physical financing, the trend of deposit long-termization and termification still exists, which to some extent impacts the downward space of the cost of the liability side. With the two rounds of interest rate cuts experienced by the 5-year LPR rate this year, there is still downward pressure on asset yield. Currently, the overall pressure for net interest margin to stabilize is still considerable.
Editor/Rocky
