Hot spot information

RMB appreciation resonates with foreign capital inflows. Exchange rate rebounded by more than 2,000 points in two months.

On August 5, the spot exchange rate of RMB against the US dollar rose above 6.94 in intraday trading, reaching a new high in nearly five months. Since the low point, the RMB exchange rate has rebounded by more than 2,000 points in the past two months.

Industry insiders believe that the recent relative strength of the RMB exchange rate, in addition to the steady recovery of China's economy and the pullback of the US dollar, the increase in cross-border capital inflows also has a certain impact. Under the background of the continuous expansion and opening up of the financial industry, it is a general trend for overseas funds to enter the Chinese market, and the appreciation of RMB is expected to form a phased resonance with the inflow of foreign capital.

Central bank signal: countercyclical adjustment in the second half of the year is not necessary for the time being

The central bank announced that the total liquidity of the banking system is currently at a reasonable and adequate level, and no reverse repurchase operation will be carried out on August 6. Wind data show that today's open market has 50 billion yuan of reverse repurchase due, the central bank's open market so far this week a net withdrawal of 260 billion yuan.

On August 5, Ma Jun, member of the Monetary Policy Committee of the people's Bank of China and director of the Financial and Development Research Center of Tsinghua University, said that the current counter-cyclical adjustment of monetary policy is not small and should be maintained, and there is no need to increase it. CITIC believes that combined with the recent risk prevention, the gradual release of tight credit signals and the accelerated return to normal of monetary policy, he believes that the subsequent credit expansion will slow down, and countercyclical adjustment will gradually return to neutrality.

The US ADP employment data in July fell far short of expectations, and the employment situation deteriorated again.

The ADP employment report released on Wednesday recorded only 167000 new jobs, well below expectations of 1.5 million, with the previous figure sharply revised up from 2.369 million to 4.314 million. Employment growth has slowed sharply, suggesting that the increase in COVID-19 infection is putting the brakes on the job market and economic recovery.

American ADP employment data are called "small non-farmers" by the market, which is the advance forecast of American non-farm payrolls. The sharp slowdown in employment growth is in line with other data. These data show that the job market rebounded in the months after the lifting of the blockade, but is now in danger of going backwards. Two days later, the Labor Department will release closely watched non-farm payrolls, and disillusioned ADP data cast a shadow over the non-farm outlook.

Us Treasury Department Announces record $112 billion Quarterly Bond issuance Plan

The U.S. Treasury has expanded its long-term bond issuance program in the coming months. Previously, the Treasury relied mainly on short-term debt financing to support the federal government's record spending growth in the fight against the Covid-19 crisis.

The Treasury said on Wednesday that it would issue a record $112 billion in so-called quarterly refinancing operations for maturing government bonds next week. In the three months to October, the total value of "nominal coupon issuance" will increase by $132 billion compared with the previous quarter.

Strategists JPMorgan Chase & Co recently calculated that the average maturity of US Treasuries has fallen to its lowest level since 2011.

Federal Reserve Mestre: us GDP is expected to shrink by 6% in 2020

The Federal Reserve Mestre expects US GDP to shrink by 6 per cent in 2020, with high uncertainty; unemployment is expected to remain high at around 9 per cent by the end of 2020.

Federal Reserve Vice Chairman Clarida said in an interview on Wednesday that although U.S. economic growth slowed in July, the U.S. economy could pick up in the third quarter and reach pre-health levels by the end of next year.

Clarida says his personal forecasts for the economy have not changed because of the recent resurgence of health time in the United States. He pointed out that the economic momentum from May to early July is stronger than he expected, and the economy will receive more support from the new fiscal plan.

Daxing looks at the market

Morgan Stanley: a large amount of money to rescue the market to maintain employment may contribute to market inflation!

Morgan Stanley said in a research report published on Sunday that there is a big difference between the current economic downturn caused by the coronavirus and the 2008 global financial crisis, which may push up consumer prices in ways that most investors do not expect. The U. S. government invests a lot of money to keep people working and support the unemployed, which may fuel inflation.

Morgan Stanley said: "the US government is now in the dominant position in terms of the money supply of its fiscal plan. This could push inflation beyond the appreciation of the dollar, which means back-end interest rates are likely to rise. Few portfolios are currently prepared for such an outcome, but such surprises are likely to happen quickly. "

Goldman Sachs Group: the US dollar is likely to continue to decline in the coming months.

Goldman Sachs Group released a research report saying that the negative correlation between the decline in real yields and the performance of the stock market makes the dollar likely to fall further in the coming months.

Goldman Sachs Group analysts said that the decline in real yields and the rise in risky assets have become the dominant factor in the market in the past few months, as well as an important reason for the decline of the dollar. Both gold and risk-averse currencies performed strongly. For now, the performance of the foreign exchange market since the end of May is consistent with the historical beta coefficient as a whole.

Goldman Sachs Group analysts added that the negative correlation between real returns and the stock market is expected to continue temporarily, so investors are likely to maintain their current practices and diversify their dollar shorting strategies.

Citigroup: with the withdrawal of government bailout measures, the rally of US stocks is at risk

Citigroup Inc said that with the withdrawal of stimulus measures by US policy makers, the US stock market is likely to decline. The current stimulus measures allow companies to pass on labor costs to the government and boost profits that are stronger than expected.

In addition, the Citi report also said, "in the absence of stimulus measures in the second quarter of 2020, we have to worry that higher-than-expected profits may not happen again, but the share price is still not aware of the gap." "

Citi estimates that the weekly stimulus check added as much as $200 billion to the US economy last quarter, and strategists said, "either it continues, or it could be a material drag on consumer spending." however, future benefits are unlikely to be so generous. "

CITIC: both credit and countercyclical regulation will gradually return to neutrality.

Combined with a series of recent policy signals, CITIC believes that credit + countercyclical adjustment will slow down at the margin in the third quarter, in the process of returning to neutrality. As the pace of credit expansion slows, credit inflection points are expected to occur in the third quarter, and the pace of economic repair is likely to slow marginally.

As for interest rates, there may be more concerns about the supply of government bonds because of the large surplus of both government bonds and local government debt. Judging from the current operation thinking of the central bank, there is not much room for short-end interest rates to go down and up, and long-end interest rates are expected to remain volatile, and the yield on 10-year government bonds may fluctuate in the range of 2.8% and 3.0%.

Haitong: the market has entered the three-wave outbreak period of the bull market, and the net inflow of funds for the whole year is expected to exceed 1.5 trillion.

Haitong strategy team released a research report that, drawing lessons from history, the bull market incubation period funds into the market less, burst period funds into the market accelerated, until the bubble period. At present, the market has entered a bull market burst period, that is, three waves rise. The largest source of incremental funds this year is residents, the trend of asset allocation towards equity is strong, and the proportion of buying bases has increased significantly and exceeded stock purchases. The pattern of loose macro liquidity remained unchanged in the second half of the year, micro funds continued to enter the market, and the net inflow of funds for the whole year is expected to exceed 1.5 trillion.

Viewpoint of institutional asset allocation

Li Xunlei of Zhongtai Securities: the A-share structural bull market is still continuing the traditional industries to choose the leader.

Most of the traditional industries are in a historically low position, such as financial real estate, iron and steel, non-ferrous materials, chemical industry and so on. This shows that our A-share market also reflects the differentiation of the economy. China's economy is undergoing the transformation of new and old momentum, the proportion of new momentum is gradually increasing, and the proportion of traditional industries is gradually declining.

As far as asset allocation is concerned, traditional industries should choose leading enterprises and leaders, while emerging industries should look at the content of science and technology. The disclosure of the semiannual report of funds in the first half of the year actually reflects this: the top 400 stocks by market capitalization account for more than 90% of the allocation ratio of public funds.

$Castrol China A-share Research Select (USD) (HK0000186335.HK) $

$Yi Fangda (Hong Kong) dividend on Chinese shares (HK $) (HK0000252152.HK) $

$Fullgoal small and medium size growth in China (USD) (LU1171460220.HK) $