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, according to the Nikkei News, Bank of Japan Governor Kazuo Ueda stated that as inflation and economic trends evolve in line with the central bank's forecasts, interest rate hikes are approaching. It is noteworthy that before the next interest rate meeting of the Bank of Japan on December 18-19, bond issuers have evidently accelerated their borrowing plans significantly. This seems to indicate that bond issuers want to secure funding at lower costs before the interest rate hikes.

As a result, the Japanese stock market quickly plummeted after initially rising. Subsequently, the market rapidly surged again, with the Nikkei 225 index just breaking through the 38,500.00 level, now reported at 38,500.84, up 0.77% intraday. In previous trading days, the yen had continued to rise sharply against the dollar, reaching around the 150 level. In the early morning session today, the yield on Japan's 2-year government bonds rose to 0.625%, the highest since 2008.

So, what does the Bank of Japan's interest rate hike mean for the global market?

Unexpectedly from the Bank of Japan.

According to the latest report from the Nikkei News, Bank of Japan Governor Kazuo Ueda stated that as inflation and economic trends evolve in line with the central bank's forecasts, interest rate hikes are approaching. In fact, on November 18, Ueda also released a similar message during a speech at the financial economic symposium held in Nagoya City. He explicitly stated, "If the economic and price expectations are realized, the policy interest rate will continue to be raised, and the degree of monetary easing will be continuously adjusted."

SMBC Nikko Securities stated that the message conveyed by Bank of Japan Governor Ueda Kazuo in an interview with the Nikkei should be viewed as a measure to avoid market turmoil during future rate hikes. This may be because the Bank of Japan has consistently emphasized the importance of communication during the rate hike process, and Ueda's interview could be interpreted as a signal suggesting a rate hike in December, potentially leading foreign investors to increase the selling of Japanese government bond futures. Although the interview did contain elements that triggered market expectations for an earlier rate hike, it also emphasized the importance of proceeding with caution during such hikes.

Speculations regarding the Bank of Japan further raising interest rates at the monetary policy decision meeting on December 18-19 have intensified. The overnight index swap (OIS, which swaps floating rates for fixed rates) market expected the probability of a rate hike to reach 66% on November 27. Earlier in November, this probability was less than 40%, and just a week ago it was slightly over 50%.

Additionally, a survey showed that more than half of the economists surveyed believe that the Bank of Japan will raise interest rates again in December; about 90% think that rates will rise to 0.5% by the end of March next year; among them, 96% believe that Trump's return to the White House is one of the factors prompting the Bank of Japan to raise rates.

As market sentiment grows regarding the possibility of another interest rate hike by the Bank of Japan in December, Japanese corporate borrowers are issuing and selling bonds at a faster pace, striving to sell corporate bonds at lower issuance costs before the Bank of Japan officially raises rates.

According to Daiwa Securities, one of Japan's major underwriters, KDDI Corp., one of Japan's largest telecom companies, sold up to 210 billion yen (approximately 1.4 billion USD) in short-term corporate bonds in four batches last Friday. Daiwa Securities and traditional Japanese industrial giant Panasonic Corp. were also among the eight major bond issuers that chose to sell bonds in large quantities last Friday.

Impact of the rate hike.

Previously, the Bank of Japan's rate hike triggered a massive shock in the global market. This time, Ueda's advance 'precaution' is also a way to manage market expectations. However, after the news was released, the Japanese stock market still experienced a plunge. Subsequently, the Japanese stock market quickly rebounded, with the nikkei 225 index just breaking the 38,500.00 mark, latest at 38,500.84, up 0.77% for the day.

Previously, the yen exchange rates had been rising for several consecutive days. On November 27, in the New York market, the yen against the dollar rose to 150.5 yen per dollar at one point, reaching its highest level in about a month. The yen depreciation that occurred after Trump confirmed victory in the U.S. presidential election has been partially offset.

In December, important events occurred in both the japan and usa central banks, leading the market to realize the differences in monetary policy directions between the two countries. Related chart data also indicated signs of yen appreciation. On November 28, the tokyo market continued the trend of yen appreciation and dollar depreciation observed on the November 27 new york market, with the yen to dollar exchange rate reaching between 150.5 and 150.9 yen per dollar at one point. Compared to the previous day at 5 PM, it appreciated by about 1 yen. Over the two days, the yen appreciated and the dollar depreciated by about 3 yen. On November 29, the yen strengthened significantly again, reaching above 149.5. This round of yen had previously dropped to over 156 levels. Changes were also noted in the japan bond market. The yield on japan's 2-year government bonds rose to 0.625%, the highest since 2008.

Currently, japan's price trends and economic situation are undergoing profound changes. The core consumer price index (CPI), which excludes fluctuations in fresh food prices, has remained above the policy target of 2% since April 2022, leading the market to generally believe that japan has emerged from a long-term deflationary quagmire.

Analysts believe that, on one hand, japan's economy may experience a period of positive momentum; on the other hand, in the context of the federal reserve's interest rate cuts, coupled with improvements in japan's economy, the yen may appreciate; and as the trend of yen appreciation stabilizes, the currency carry trade function of the yen may decline, which also means that the momentum for the global market to utilize yen carry trades will weaken, and global liquidity will depend on the dollar or other currencies.

The cm bank research believes that as high-interest currencies represented by the dollar enter a rate-cutting cycle, and monetary policy normalization leads to rising financing costs for the yen as a low-interest currency and currency appreciation, the profit space for yen carry trades will significantly narrow or even reverse, potentially impacting the stability of the global financial market.

Editor/Jeffy