RMB as global hedge currency international institution continues to allocate Chinese assets

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Changes in the epidemic have led to large fluctuations in the prices of major international assets. Last week, European and American stock markets, the US dollar index, gold and crude oil prices all fell. A-shares were the first stocks to emerge from the global crisis. The three major stock indexes closed up more than 3% yesterday, and the industry index showed red across the board. At the same time, the RMB exchange rate rose strongly for two consecutive trading days. At 16:30 yesterday, the onshore renminbi closed at 6.9578 against the US dollar, up 318 basis points. On the one hand, the global market is volatile; on the other hand, the Chinese market has a unique landscape. Morgan Stanley upgraded China and Singapore stocks to "overweight." Chinese assets appear to play the role of global safe-haven assets. In addition, CITIC Securities (Hong Kong Stock 06030) predicts that A shares will enter a quiet period in March, and the market will still be in a "well-off" state, which is an excellent allocation opportunity for the whole year. Due to the gradual emergence of the RMB's risk aversion, the global market anxiety has further spread, and the VIX panic index has reached a new high since February 2018. The three major U.S. stock indexes each fell more than 10% last week, and the Dow Jones Industrial Average fell 3853 points last week, the largest weekly decline in the history of the US stock market. An International Monetary Fund (IMF) spokesman said that due to the emerging pneumonia epidemic, the IMF may lower its expectations for global economic growth in its next global economic outlook. Various factors have exacerbated concerns in the financial market, and market expectations for the Federal Reserve ’s monthly and April interest rate cuts have also begun to rise. Treasuries as safe-haven assets continue to be sought after, and 10-year Treasury yields have fallen below 1.2% This is the first time in history. However, other traditional hedge assets have been overshadowed. On Friday, international gold prices fell by about 5%, while the US dollar index fell sharply below 98. Fortune of Standard Chartered Bank Management said that investors may try to profit in the gold overbought market, causing the price of gold to fall and triggering stop losses, which can be used to make up for some losses in the stock market. The RMB exchange rate returned to 7 last week due to the reversal of the US dollar index. 0 or more. Li Liuyang, chief foreign exchange analyst at China Merchants Bank (Hong Kong Stock 03968), believes that technically speaking, the RMB has got rid of the depreciation trend and returned to a neutral state. Hugh Wei, chief macro researcher of Kunlun Health Insurance Asset Management, said that for investors, safe-haven asset gold has fallen, and investors urgently need to transfer funds to financial assets with strong certainty, which is the characteristic of current RMB assets. . As the global impact of the epidemic escalated, the yuan began to take risks. Wen Bin (Hong Kong Stock 01988), chief researcher of Minsheng Bank, said that first of all, China's epidemic prevention and control measures have achieved remarkable results. The restoration work and production are properly coordinated to ensure the normal operation of the economy, enhance market confidence, and provide exchange rate support. Second, the "entry" of Chinese government bonds into Moldova and their possible inclusion in the FTSE Russell index in March suggest that international investors remain optimistic about China's capital markets. A spread of 150 basis points above US Treasuries has attracted capital inflows and strengthened the "buffer" of the RMB exchange rate. Wen Bin believes that if the renminbi is to become a safe-haven currency, three factors are still needed. First, the economy needs to be large enough to run smoothly. This is a solid foundation. "China is the second largest economy in the world, with foreign exchange reserves exceeding US $ 3 trillion. Although economic development is facing certain downward pressure, it has great development potential, strong resilience, and large policy space." He said. Second, financial markets need to remain open, especially capital markets. The third is to improve the RMB exchange rate formation mechanism. The exchange rate of RMB against the US dollar and RMB against a basket of currencies needs to remain stable. China's stock market is expected to take the lead in rebounding profits. "In the context of the global epidemic, China is showing a trend of improvement. There is a significant difference between domestic and overseas expectations. Therefore, RMB assets are sought after in the short term, and international investors will necessarily hold RMB positions, which is also driving up the RMB exchange rate. The core factor. "Lu said. under such circumstances First, the economy needs to be large enough to run smoothly. This is a solid foundation. "China is the second largest economy in the world, with foreign exchange reserves exceeding US $ 3 trillion. Although economic development is facing certain downward pressure, it has great development potential, strong resilience, and large policy space." He said. Second, financial markets need to remain open, especially capital markets. The third is to improve the RMB exchange rate formation mechanism. The exchange rate of RMB against the US dollar and RMB against a basket of currencies needs to remain stable. China's stock market is expected to take the lead in rebounding profits. "In the context of the global epidemic, China is showing a trend of improvement. There is a significant difference between domestic and overseas expectations. Therefore, RMB assets are sought after in the short term, and international investors will necessarily hold RMB positions. The core factor. "Lu said. under such circumstances First, the economy needs to be large enough to run smoothly. This is a solid foundation. "China is the second largest economy in the world, with foreign exchange reserves exceeding US $ 3 trillion. Although economic development is facing certain downward pressure, it has great development potential, strong resilience, and large policy space." He said. Second, financial markets need to remain open, especially capital markets. The third is to improve the RMB exchange rate formation mechanism. The exchange rate of RMB against the US dollar and RMB against a basket of currencies needs to remain stable. China's stock market is expected to take the lead in rebounding profits. "In the context of the global epidemic, China is showing a trend of improvement. There is a significant difference between domestic and overseas expectations. Therefore, RMB assets are sought after in the short term, and international investors will necessarily hold RMB positions, which is also driving up the RMB exchange rate. The core factor. "Lu said. under such circumstances First, the economy needs to be large enough to run smoothly. This is a solid foundation. "China is the second largest economy in the world, with foreign exchange reserves exceeding US $ 3 trillion. Although economic development is facing certain downward pressure, it has great development potential, strong resilience, and large policy space." He said. Second, financial markets need to remain open, especially capital markets. The third is to improve the RMB exchange rate formation mechanism. The exchange rate of RMB against the US dollar and RMB against a basket of currencies needs to remain stable. China's stock market is expected to take the lead in rebounding profits. "In the context of the global epidemic, China is showing a trend of improvement. There is a significant difference between domestic and overseas expectations. Therefore, RMB assets are sought after in the short term, and international investors will necessarily hold RMB positions, which is also driving up the RMB exchange rate. The core factor. "Lu said. under such circumstances First, the economy needs to be large enough to run smoothly. This is a solid foundation. "China is the second largest economy in the world, with foreign exchange reserves exceeding US $ 3 trillion. Although economic development is facing certain downward pressure, it has great development potential, strong resilience, and large policy space." He said. Second, financial markets need to remain open, especially capital markets. The third is to improve the RMB exchange rate formation mechanism. The exchange rate of RMB against the US dollar and RMB against a basket of currencies needs to remain stable. China's stock market is expected to take the lead in rebounding profits. "In the context of the global epidemic, China is showing a trend of improvement. There is a significant difference between domestic and overseas expectations. Therefore, RMB assets are sought after in the short term, and international investors will necessarily hold RMB positions, which will also push up the RMB exchange rate The core factor. "Lu said. under such circumstances

In the bond market, Liu Min, a Forti China market analyst, said that "Chinese bonds entering Moldova" indicates that international financial institutions are affirming China's economy and the value of the yuan, and it is expected to bring more incremental funds. The Bloomberg Barclays Global Composite Bond Index was included in the Chinese bond market in April 2019 and has launched more than $ 100 billion in index tracking funds. Standard Chartered Bank estimates that as of November 2020, passive monthly capital inflows will reach $ 6 billion. JPMorgan Chase ’s Global Emerging Markets Diversified Bond Index will gradually include Chinese government bonds within 10 months, and Standard Chartered Bank expects inflows of $ 2 billion to $ 3 billion per month. The FTSE Russell Global Government Bond Index is expected to include the Chinese bond market in its index in March. The market estimates that if the index is included, it will introduce about $ 150 billion in index tracking funds for the Chinese bond market.