Lu Yuren – The currency circle explodes before the interest rate hike is over|Financial High Tea

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The U.S. Federal Reserve raised interest rates by 0.75% last week. Although this rate hike is not an eye-popping “black swan”, it is still a small probability event. After the interest rate hike, the market did not know how to react for a while. Investors speculated on the news without reason. After concentrating, they realized that a big interest rate hike may not be enough. The U.S. stock market turned around and fell sharply last Thursday, followed by virtual currencies, oil prices, and gold prices. . Last Friday, the Du Index was still unable to rebound after the previous day’s slump. The index closed at 10798 points, up 152 points.
Bitcoin plunges past 18,000 mark

Summarizing the performance of the week, the Dublin Index fell nearly 4.8%, the largest one-week decline since the end of October last year, the S&P 500 fell nearly 5.8%, the largest decline since late March of the previous year, and the Nasdaq fell nearly 4.8%. All three indexes fell for the third straight week. US stocks continued a perfect trend of lower waves than waves. Under the ebb of consumption, the old cosmetics company Revlon (Revlon) filed for bankruptcy protection. Later, it was reported that India’s Reliance Industries (Reliance Industries) was considering a merger, which stimulated Revlon’s stock price to close up 91% last Friday.

After the Fed was accused of raising interest rates softly enough to deal with inflation, it finally raised interest rates by 0.75% to restore market confidence. The interest rate was raised again by 0.75% at the monthly interest rate meeting. After July, the Fed can resume raising interest rates at a rate of 0.5% until the September meeting, until the high inflation problem in the United States is cooled down.

After the officials of the Reserve Bureau made ruthless moves and then released ruthless words, the global asset price was triggered, and the cryptocurrency plummeted. At 4:00 a.m. Hong Kong time on Sunday (June 19), Bitcoin fell below $18,000 and fell to $17,749. , Ether fell to $897. The two most popular cryptocurrencies have fallen more than 35 percent in the past week, mired in a deep bear market.

The currency circle fermented from a “currency crisis” (exhaustion of liquidity) to a “banking crisis” (the deposit and lending institution Celsius froze withdrawals), and then spread to the hedge fund explosion (one of the largest hedge funds in the cryptocurrency market, “Three Arrows”). Arrows Capital) was pursued and faced a financial crisis), and the currency circle is undergoing a Lehman-style financial crisis in 2008. It is unknown whether it will affect traditional financial institutions.

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Inflation has risen, and prices such as bitcoin have plummeted, punctuating the claim that virtual assets can preserve their value. In the past, this kind of currency without the support of state power has soared. The driving force behind it came from the government’s vigorous release of water and the flood of funds. A group of believers put hot money or spare money into the cryptocurrency market, which claims to have its own restrictions on issuance, resulting in a rapid price. Lift. Now the central banks led by the United States are collecting water, the funds are ebbing, and the virtual assets floating on the hot money are like jellyfish that have not been able to swim back to the sea, trapped on the beach and shrunk by the sun. When virtual assets plummeted, Tesla, an electric car company that once bought Dogecoin, immediately attracted attention. In the past few bubble bursts, it would cause financial crises for large companies, such as the subprime crisis in 2007. In the event of the Lehman incident, if there is an avalanche explosion of virtual currency, which affects traditional large companies and financial institutions, we must be careful that the crisis will repeat.
Oil price inserts 6.8%, three barrels of oil discount is big

In addition to virtual currency and gold prices, the oil market has also made waves. Last week, July crude oil futures closed down $8.03 at $109.56 a barrel, down 6.8%, the lowest closing level in the past five weeks, and ended a seven-week rally, down 9.2% for the week. Under the pressure of falling US stocks and falling oil prices, the ADR of Hong Kong stocks closed lower, equivalent to more than 200 points lower than the closing price of Hong Kong. Among them, oil and petrochemical stocks fell significantly. PetroChina (857) ADR closed at HK$3.71, 7% lower than the closing price in Hong Kong; Sinopec (386) ADR closed at HK$3.35, down 4%.

The rise in energy prices is the main reason for the rise in global inflation. If oil prices are high, inflation will not easily fall. Therefore, if oil prices are high, it will be difficult for the stock market to rise. Oil stocks made big profits last year because of oil prices. This year, oil prices are higher. All three barrels of oil have increased dividends. The stock price should challenge historical highs, but all are far away from historical highs. For upstream business CNOOC (883), historically high prices It was 20.75 yuan in 2011, 13 yuan before the outbreak of the new crown epidemic in 2020, and closed at 10.5 yuan last week, which is not proportional to the high oil price. The stock price is getting more and more “buy”.

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Three barrels of oil has continued to expand its energy policy in accordance with national policies, and the state has also given support in policies such as return to A. It has developed in a roundabout way in the past ten years, and its performance has been quite outstanding. The dividends are also attractive, and the basic factors have gradually improved. However, the Russian-Ukrainian war is bound to accelerate the development of new energy sources, which may make its valuation discounts persist for a long time. In addition, energy prices are the key to global economic development. High oil prices are not conducive to recovery, which will eventually weaken demand. Three barrels of oil can be bought, but it is only suitable for low absorption. It has a high interest rate as a moat, but if it rises, it can be considered to take back. It can not only invest in long-term, but also take into account short-term speculation.

The U.S. interest rate hike has thrown a shocking bomb on the global financial market, triggering chain effects, one of which is to widen the interest rate gap between Hong Kong and the United States and weaken the exchange rate of the Hong Kong dollar. At the end of the New York trading session last Friday, the Hong Kong dollar hit the weak-side exchange level of 7.85 again. The HKMA undertook a sell order of 12.8 billion Hong Kong dollars. The balance of Hong Kong’s banking system will fall to HK$267.8 billion after June 22.
The central valley economy has not stopped

The U.S. rate hike this time is relatively large, and local capital will flow faster under the linked exchange system. If the Hong Kong interest rate is officially raised, it cannot be ruled out that there will be a second wave of impact on Hong Kong stocks. Last Friday, the Hang Seng Index benefited from reports that the leaders of China and the United States may talk again this summer, and may even hold a physical meeting during the G20 meeting in winter. Led by technology stocks, it turned from losses to gains. The Hang Seng Index closed at 21,075 points, up 229 points, and fell 731 points for the week. The China Enterprises Index closed at 7367 points; the KSE Index closed at 4653 points.

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The central government’s efforts to urge the valley economy have not stopped. Five departments including the Ministry of Industry and Information Technology issued the “Guiding Opinions on Promoting the High-quality Development of Light Industry”, encouraging places where conditions permit to carry out green and smart home appliances to the countryside and trade-in actions. Skyworth (751) rose 3% last Friday. It closed at 3.76 yuan; Haier Zhijia (6690) rose nearly 4% to close at 26.35 yuan; VESYNC (2148) rose 2% to close at 5.18 yuan. Home appliances to the countryside has been a trick to boost the economy in the past, because promoting consumption can improve rural living standards and stimulate production. In the past, policies had a great effect on stimulating such stocks. With the current increase in the market value of home appliance stocks and a large base, the effect of policy stimulus will be diluted. However, there is always policy support. If the stock price pulls back, it can still be considered as a rebound object.

In addition, New Oriental Online (1797), which has been speculating for many days, plunged 13% last Friday to close at 25 yuan; New Oriental (9901) fell 6% to close at 16.46 yuan. If you haven’t made any money in the stocks of this type of crazy speculation concept, there is no point in going to the last bus.
Macau outbreak hits gambling

Finally, we must also pay attention to the epidemic situation in Macau. At least 12 positive cases of the new coronavirus were found in Macau, and the Macau government immediately decided to conduct nationwide testing and quarantine. The authorities announced that from 12 noon yesterday, nationwide nucleic acid testing will be carried out until noon on Tuesday. Macau Secretary for Social Affairs and Culture Ouyang Yu said that the epidemic is spreading rapidly and is more severe than before. She appealed that all places open to the outside world, except supermarkets and markets, were closed. She hoped that restaurants would only provide takeaways and no dine-in. In non-emergency situations, she urged citizens to stay home and avoid going out.

With the outbreak of the epidemic in Macau, casinos are closed, and of course mainland tourists will also stop entering the venues. I am afraid that gambling stocks will all fall.
Hitoshi Rikuha

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