The U.S. interest rate hike will end in the short term, allowing the U.S. dollar to stand alone, and holding U.S. dollar assets is still a relatively good choice.

(European News Agency)

■Shin Huihong

Since the beginning of this year, the global stock market has encountered headwinds, mainly due to the supply chain disruption caused by the epidemic and the lack of energy supply caused by the Ukraine-Russia war. These two independent events have pushed up global prices to the highest level of inflation since the 1970s; Leading the pack, the U.S. has limited measures to control inflation, especially from supply-side price pressures.

In the current international situation, the United States lacks the influence of one word: OPEC is not willing to increase production, and supply chain problems are more complicated, so the Federal Reserve (Fed) can only be reduced by means of shrinking its balance sheet and raising interest rates. , from the demand side to curb inflation.

Insufficient influence, the United States can only shrink its balance sheet and raise interest rates to curb inflation

The above two problems of pushing up inflation have not yet been completely resolved, and supply chain problems have gradually improved, but the main reason is that the demand for some commodities has been affected (such as consumer electronics), and some industries still have problems such as long and short materials and lack of labor. , and there is no sign of a ceasefire in the Ukrainian-Russian war. The Russian side intends to delay the war until this winter, so that the energy supply issue can gain more leverage for it, which makes the Fed more cautious in dealing with the inflation problem, and clearly declared : Fighting inflation is the top priority. Even if short-term economic growth momentum is sacrificed, it will continue to fight inflation until inflation falls back to the policy target range (2%). Investors should not be too optimistic and expect the Fed to change its policy in the short term. towards.

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In the process of raising interest rates, the market keeps guessing the Fed's intentions, and the gap and changes between the Fed's many talks and market expectations have caused drastic market volatility and brought risks to investors: this year Most of the stock markets in various countries have fallen significantly. As of the end of August this year, the US Dow Jones Industrial Average fell 13.29%, the S&P 500 fell 17.02%, the technology-based Nasdaq fell 24.47%, and the MSCI Europe Index fell 28.07% %, the MSCI World Index fell 17.47%, and the MSCI Emerging Markets Index also fell 17.23%.

Other countries follow the pace of US interest rate hikes, and the dollar continues to strengthen

In addition, when the United States is actively raising interest rates, other countries consider their own economic conditions, and follow up the pace of interest rate hikes in different ways. The relevant interest rate spread changes bring exchange rate fluctuations to various countries. The specific result is The U.S. dollar stands alone, and other countries depreciate sharply against the U.S. dollar, which brings another huge risk to international stock market investors.

Looking forward to the market outlook, the trend of US interest rate hikes has not ended in the short term, and the US dollar continues to trend strongly, so holding US dollar assets is still a relatively good choice; European countries are greatly affected by geopolitics, and energy problems continue to interfere, even in the short-term. Rebound, and it is not appropriate to intervene easily; China's economy has been affected by the strict zero-clearing policy, which has affected the performance of the real economy. The follow-up depends on whether the policy support is in place, but the long-term investment value is gradually emerging, and investors can pay attention. Emerging markets are affected by capital outflow, Under the influence of currency depreciation and weak raw material prices, we are conservative in the short term.

(The author is the fund manager of South China Yongchang Shiller US CAPE ETF portfolio)

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