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: Chang Liu

With the upcoming interest rate cuts by the Federal Reserve, stock indexes in multiple countries are hitting new highs.

Currently, the market is speculating on whether the Federal Reserve will cut interest rates by 25 or 50 basis points, and the scale of funds flowing into risk assets is significantly expanding. On the 17th, Australian S&P/ASX 200 Index, Indian Mumbai SENSEX30 Index, Singapore Straits Times Index, and other indices rose, hitting record highs.

At the same time, the market expects that the Hong Kong Interbank Offered Rate (HIBOR) will continue to decline, and the Hong Kong real estate and technology sectors will benefit significantly. On the 17th,$Hang Seng Index (800000.HK)$it rose by 1.37%, and the real estate and technology sectors continued to rise. Last week, the net inflow of funds through the Hong Kong Stock Connect increased by nearly 50% compared to the previous week, indicating a clear embrace of the technology sector.

With the Federal Reserve about to cut interest rates, stock indices in multiple countries are hitting record highs.

The Federal Reserve's interest rate cut in September is almost certain, and it may officially announce the start of an interest rate cutting cycle on September 19 (Thursday) Beijing time. However, there is still uncertainty about the magnitude of the first interest rate cut, and the market continues to speculate on whether it will be a 25 basis point or 50 basis point cut.

On September 17th, due to expectations of a large-scale interest rate cut by the Federal Reserve, the Australian stock market reached a historic high, with the S&P/ASX 200 index briefly surpassing 8150 points, hitting a new high. The Straits Times Index in Singapore reached its highest level in 6 years, and the SENSEX30 index in Mumbai, India, hit a new all-time high.

Currently, traders are continuing to increase their bets on a 50 basis point interest rate cut by the Federal Reserve. According to the CME's FedWatch Tool, the market currently expects a 62% chance of a 50 basis point rate cut, up from 50% last Friday. Refinitiv data from LSEG shows that the market now believes the probability of a 50 basis point rate cut by the Federal Reserve is close to 70%.

Mohamed El-Erian, Chief Economic Advisor of Allianz Group, said: "Market expectations for a 50 basis point rate cut by the Federal Reserve this week have increased and have become the most likely outcome in the eyes of traders, surpassing expectations of a 25 basis point cut."

Yi Gang, Chief Economist of Huatai Securities, believes that the recent speeches by Powell and Brainard have clearly conveyed the Fed's desire to prevent a rapid downturn in growth and the job market. This means that the Fed's interest rate decision may not deviate too much from market expectations to prevent a market sell-off and a negative feedback loop of "financial tightening -> economic slowdown." "Considering that there is a 60% probability in the current market pricing for a 50 basis point rate cut, we believe there is a relatively high probability of the Fed's first rate cut being 50 basis points. However, if the Fed chooses a 25 basis point cut in September, Powell may give a more dovish forward guidance to ease market sentiment."

Inflow of funds into Hong Kong stocks reaches a new high.

On September 17th, the three major indices of the Hong Kong stock market opened lower and closed higher. At the close, the Hang Seng Index rose by 1.37% to 17,660.02 points.$Hang Seng TECH Index (800700.HK)$Rose 1.12%,$Hang Seng China Enterprises Index (800100.HK)$Rose 1.41%.

The shift in the Federal Reserve's monetary policy has also led to continued inflow of market funds, including southbound funds, into the Hong Kong stock market. Coupled with the widespread buyback bullishness of Hong Kong-listed companies, it has continued to drive the bullish trend in Hong Kong stocks. The real estate and technology sectors have seen particularly significant increases. According to Wind data, as of August 30, net inflow of southbound funds has reached 461.258 billion Hong Kong dollars this year, setting a new high for the same period in history.

The adjustment of the Hong Kong Stock Connect will take effect on September 10th, $BABA-W (09988.HK)$ Finally, it will be officially included in the Hong Kong Stock Connect as a dual primary listing. It has been among the top ten active stocks in the southbound market for four consecutive trading days, with net purchases of Alibaba reaching 16.42 billion Hong Kong dollars last week. In the holdings of the Hang Seng Internet ETF (513330), which has the largest fund size, Alibaba's holdings have reached 11.3%.

From a fundamental perspective, the constituent stocks of the Hang Seng Tech Index and Hang Seng Internet Index have performed well. Internet giants and tech companies have consistently exceeded expectations in terms of performance, and these tech giants have also been buying back their own stocks. Since the beginning of 2024, there have been 237 stocks in the Hong Kong stock market conducting buybacks, an increase of 92 compared to the same period last year. Among them, 52 stocks have accumulated buyback amounts exceeding 0.1 billion Hong Kong dollars. The total buyback amount is 201.2 billion Hong Kong dollars, a year-on-year increase of 172%. The number and scale of buybacks have reached a historical high for the same period.

JPMorgan Bank expects that the Hong Kong Interbank Offered Rate (HIBOR) will drop to 2.75% in the next month, and the actual mortgage rate under the most favorable interest rate will drop to 3.25%. The bank believes that compared to retail and office buildings, the residential market in Hong Kong will benefit more from the US interest rate cut. It is expected that Hong Kong's residential property prices will rebound by 5% next year, while this year it will decline by 8%, a 30% drop from the peak. The bank estimates that for every 100 basis point drop in the Hong Kong Interbank Offered Rate, it can increase the average profit of Hong Kong real estate developers by 5%.

The research department of Tianfeng Securities believes that the degree and sustainability of US dollar liquidity support for Hong Kong stocks will still depend on the magnitude and continuity of interest rate cuts. One necessary condition for the expansion of China Hong Kong Bank's overall surplus is the rapid narrowing or even positive reversal of the Hong Kong-US interest rate differential. As Hibor is influenced by both the Linked Exchange Rate System and local financing demand, the main focus of liquidity in the next stage will be the speed of the US Federal Reserve's interest rate cuts and the economic recovery in China Hong Kong.

Editor / jayden