Bull Market Interest Rates Are Usually Accompanied With The Line
25, the central bank announced interest rate a little surprised the market by surprise
. Mainly the last rate hike is not long (Oct. 20), and 6 times this year, the central bank has raised bank reserve ratio, the most recent raise the deposit reserve rate is implemented in the December 20, many analysts believe that , the reserve ratio increase, which means the central bank will again raise interest rates during the year. Unexpected is that only increased the reserve ratio at the time of the
Gucci outlet week, the central bank raised interest rates again.
For the capital markets, whether it is raising the reserve ratio or interest rates are no doubt a bad, mainly this will increase the cost of capital in the market.
However, in the long run, history tells us that the stock market and afraid to raise interest rates, stock market bull market and interest rates are often accompanied by the
Gucci sunglasses line. For example, in 2006-2007 this wave of super bull market in which the rate hikes cycle is started. The main reason is that interest rates must be implemented under two conditions:
One is the macro into the growth cycle, and is growing too fast, which is the so-called "economic overheating", the central bank in order to cool the economy and to raise interest rates in the control means. Since the international financial crisis, China's strongest economic recovery in the world economy, this year's GDP growth may reach 9.5% or more, signs of overheating economy.
The second is excess liquidity on the market, since 2007, in response to the international financial crisis, the Chinese government introduced a 4 trillion yuan economic stimulus plan and industry revitalization plan, the central bank to the market in recent years into a huge amount of
Gucci shoes money, and this year Since the rapid rise of inflation in China, the annual CPI exceeded 3% of the central government's bottom line scheduled a foregone conclusion.
On the other hand, the central bank in order to implement the central government's economic policy next year, also need to raise interest rates. The recently concluded Central Economic Work Conference has identified the focus of economic work in 2011 is inflation and the adjustment of economic structure, the central bank's monetary policy next year, from "liberal" to "stable", and therefore gradually shrink the money supply should be the central bank next year focus of the work.
From a practical point of view, the central bank raised interest rates, bank deposit interest rates are still unable to change the negative interest rate situation, therefore, can be expected, the central bank will continue to be introduced in 2011 the policy of raising interest rates, and the next rate hike will be before the Spring Festival.
For the capital market, the central bank to raise interest rates in fact that two points, one is no problem of macroeconomic growth; the other is the market is not lack of liquidity. Economic growth, there is no problem, that is, the performance of listed companies with good growth environment, the overall growth performance of listed companies have a certain degree of protection. The market is not lack of liquidity; the market will be able to maintain a certain level of activity. Therefore, the capital market is actually no reason to fear a rate hike.
Conversely, if the central bank rate cut will have any effect on the stock market? From a historical experience, the stock market bull market central banks will cut interest rates do not necessarily start in the cycle. Because the central bank cut interest rates, usually in this context: macroeconomic austerity, economic growth, weak or even decline; the same time, the market was the shortage of funds. Only in this context, the central bank will cut interest rates. Although the central bank cut the cost of capital markets will decline, but the sluggish macro-economic situation, the overall performance of listed companies would not be optimistic about growth prospects, in such circumstances, the big stock market is difficult.
Through the above analysis, the author's conclusion: the central bank to raise interest rates will not change the market trend and direction of the operation will not lead to decline in the stock market trend.
by: Guccioutlet1
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