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: He Jueyuan People's Bank of China (referred to as the "Central Bank") and the State Administration of Foreign Exchange (referred to as the "Foreign Exchange Bureau") officials have stated that gold reserves have always been an important part of the diversification of international reserves in various countries. Most central banks' international reserves contain gold, including China. Gold, as a special asset, has multiple attributes of finance and commodities. Along with other assets, it helps adjust and optimize the overall risk-return characteristics of international reserve portfolios.
Securities Times · Reporters from brokerages in China learned from relevant commercial banks that starting today (October 25), most existing housing loans will be batch-adjusted. Borrowers can check the results of the interest rate adjustment through the designated channels of the loan banks. Some small and medium banks may complete the adjustment slightly later, with an overall expectation to be completed by October 31.
In this round, the interest rate of eligible existing housing loans will be adjusted to a deduction of '30 basis points' on the basis of the Loan Prime Rate (LPR) in the loan market. It is estimated that the average interest rate of existing housing loans will drop by around 0.5 percentage points. Overall, borrowers are expected to save 150 billion yuan in interest expenses, benefiting 50 million households and 0.15 billion people. Experts believe that the implementation of the policy to reduce existing housing loan rates will have a series of positive impacts on the macro economy.
Significantly alleviating the burden of mortgage interest.
For a long time, high interest rates on existing housing loans have been one of society's focus issues, especially against the backdrop of slowing economic growth and household income. The high burden of mortgage payments has become a major source of pressure for many families. This policy adjustment is a positive response to the concerns of the public.
Specifically for individuals and families, a reduction in mortgage interest rates brings a real increase in income. For example, a borrower in Beijing with a 25-year equal principal and interest mortgage of 1 million yuan had an interest rate of 4.4%, which was adjusted to 3.55% after the rate adjustment. This would save 469 yuan in monthly repayments, totaling over 0.14 million yuan in interest savings. Considering the cumulative 0.6 percentage point decrease in the LPR over the past 5 years, after the mortgage interest rate is repriced following the LPR, the reduction could reach 1.45 percentage points, leading to even more interest savings.
Ms. Zhang lives outside the Fifth Ring Road in Beijing. She told the reporter that when she applied for a second mortgage, she caught the high interest rate, at LPR + 105 basis points. With the adjustment in the interest rate for existing housing loans, Ms. Zhang's second home loan rate can be adjusted from LPR + 105 basis points to LPR - 25 basis points, directly reducing from 5.25% to 3.95%. She saves about 970 yuan in monthly interest payments, totaling over 0.011 million yuan in savings per year. Ms. Zhang mentioned that she plans to use the saved money to buy new clothes during the November 11 shopping festival-related period.
With the reduction of repayment pressure, borrowers' disposable income increases, which can be used to meet a wider range of consumption needs. Especially for young families, it can alleviate expenditure pressure and enhance consumer confidence. For individual businesses, the lower cost of loans can also provide more abundant cash flow for operations, and the saved funds are beneficial for promoting the expansion of operation scale.
There are signs of the property market hitting a bottom and stabilizing.
On September 24, Pan Gongsheng, Governor of the People's Bank of China, announced relevant policies at a press conference of the State Council Information Office. On September 29, the People's Bank of China issued an announcement, and on the same day, the market interest rate pricing self-regulation mechanism issued a self-discipline initiative, guiding banks to collectively reduce the interest rates on existing home loans, with various commercial banks quickly issuing announcements and actively responding to the initiative requirements. On October 12, major commercial banks issued detailed implementation rules, clearly specifying the adjustment time and method. It is worth noting that at the critical moment when the policy of adjusting the interest rates on existing home loans is implemented, the capital markets have responded positively.
After the reduction of interest rates on existing home loans, the concern of homebuyers about the widening gap between interest rates on new and old home loans has eased, which helps to release rigid housing demand, support the stable and healthy development of the real estate market. With the introduction of policies such as lowering interest rates on existing home loans, recent viewing and transaction volumes of new and second-hand homes in first-tier cities such as Beijing have significantly increased.
According to information from a major bank, the early repayment of housing loans has decreased by 20% since October compared to September before the policy was introduced. Market participants believe that the recent combination of real estate support policies has boosted residents' expectations for home purchases, coupled with active implementation of differentiated policies by local governments, indicating a certain stabilization and rebound of the real estate market.
The interest rate self-discipline mechanism plays an important role.
Securities Times-China Securities Journal reporters noticed that the interest rate adjustments on existing home loans at the end of August last year were directly specified in the notice, including the rate reduction magnitude and implementation time. Whereas the rules for this adjustment were explicitly outlined through the market interest rate pricing self-regulation mechanism (referred to as the "interest rate self-discipline mechanism") initiative. It can be said that the interest rate self-discipline mechanism and the self-discipline initiative formed by it played an important role in this adjustment of existing home loan interest rates.
The interest rate self-discipline mechanism is a market pricing self-discipline and coordination mechanism composed of banking financial institutions and other market entities. By selecting financial institutions that meet macro-prudential management requirements, have strong pricing capabilities, and have relatively sound corporate governance, more market pricing rights are granted to them, establishing a fair competitive incentive and restraint mechanism, enhancing industry self-discipline, maintaining market competition order, and orderly promoting interest rate marketization reform.
By October 2024, there were a total of 1877 members in the interest rate self-regulatory mechanism, with all major commercial banks, joint-stock commercial banks, and the vast majority of urban commercial banks, rural commercial banks, rural credit cooperatives as member units. Among them, 15 systemically important banks are core members of the interest rate self-regulatory mechanism, such as $ICBC (01398.HK)$N/A.$ABC (01288.HK)$and$BANK OF CHINA (03988.HK)$Please use your Futubull account to access the feature.$CCB (00939.HK)$N/A.$PSBC (01658.HK)$etc.
In the previous period, the interest rate self-discipline mechanism played an important role in rectifying illegal manual interest supplementation, establishing a deposit bidding declaration mechanism, effectively maintaining market competition order, and enhancing the pricing ability of banks. On September 29, in response to the requirements of the Central Political Bureau meeting, the interest rate self-discipline mechanism issued the "Initiative on Bulk Adjustment of Existing Home Loan Rates" to promptly address public concerns. According to Securities Times · China Securities Journalists, the next step, under the guidance of the central bank, the interest rate self-discipline mechanism will coordinate the implementation of the self-discipline initiative and promote the orderly implementation of policies benefiting the people.
Editor/Rocky
