Retaliation use for quarantine relief ↑… The emigration of rich people is also gaining momentum
The stock market raised expectations… China’s inflation is slowing
KB review “Insignificant rise in raw material prices, little impact on inflation”
[헤럴드경제=권제인 기자] The rise in stock markets around the world at the beginning of the year is based on expectations of a change in the monetary policy stance of the United States Federal Reserve System (Fed). The reason behind this is the possibility that the Fed will stop raising interest rates in line with the slowing rate of inflation.
However, as China lifts its zero-corona policy, there are observations that the accumulated astronomical liquidity will spill over the world. Currently, the excess savings of Chinese households amount to 900 trillion won. If this money is spread around the world due to foreign travel, it will act as an upward pressure on inflation, and can in turn act as a factor in financial tightening, raising tensions among market participants.
As of the 27th, the KOSPI has risen 11.07% this year. The won/dollar exchange rate also fell steadily, falling from 1260 won at the end of last year to 1230 won. It was market optimism that led to such a rise in the KOSPI and appreciation of the gain. The market is highly expecting the Fed to reduce its base rate hike to 0.25 percentage points at next week’s Federal Open Market Committee (FOMC) meeting and switch to a rate cut in the second half of the year.
However, there are concerns that consumption, which has been suspended due to China’s reopening (economic restart), could explode, leading to a rise in prices. The reason for this is that slowing inflation is the main condition for the Fed’s ‘pivot’, so the tightening stance may last longer than expected.
According to a Bloomberg newsletter on the 21st, economists at Nomura Securities estimated that the excess savings of Chinese households reached $7,200. It is about 891 trillion won. If the accumulated savings are released to the market due to the relaxation of quarantine policies and coincide with the monetary easing of the Chinese central bank, global inflation could intensify.
Christine Lagarde, president of the European Central Bank, said at the Davos Forum on the 20th that strong demand would be welcomed, but the normalization of China’s economic life would “put inflationary pressure on many of us”.
As China’s foreign travel restrictions are lifted, some predict that $150 billion (about 185 trillion won) will be released worldwide. This is because the rich, who felt threatened by the “shared wealth” proposed by Chinese President Xi Jinping, are exploring the possibility of moving abroad.
Alicia García Herrero, the chief economist of the French investment bank Natixis, said that even before the pandemic, outflows of Chinese abroad reached $ 150 billion a year, and this year the scale is likely to increase.
Information analysis company New World Wealth said the number of wealthy Chinese who migrated abroad last year was 10,800, the highest since 2019, and that the overseas migration of wealthy Chinese has already begun.
Some point out that even if it is not the overseas migration of the rich, if Chinese overseas travel, which has been suspended for the past three years, were to resume this year, tens of billions of dollars could be withdrawn abroad. but because of foreign cost. travel. Zhiu Chen, a chair professor at the University of Hong Kong, predicted that the outflow of money due to Chinese overseas travel could reach 100 to 200 billion dollars (about 123 to 246 trillion won) this year.
However, some predict that the impact of the reopening in China will not be as great as expected. Kim Hyo-jin, a researcher at KB Securities, said, “In some industries, such as travel, the lifting of China’s embargo is expected to have a clear impact on demand growth, and there is a high possibility that prices will rise, such as fuel jet.” A rise in raw material prices is unlikely to reverse the course of inflation.”
eyre@heraldcorp.com
