Yang Delong: The Federal Reserve has paused interest rate hikes twice in a row, which is good for the rebound of global capital markets

From October 30 to 31, the Central Financial Work Conference held in Beijing attracted wide attention from the market. At the current point in time, the convening of the Central Financial Work Conference is of great significance. This year, the economy has seen a weak recovery, while the capital market has fallen sharply, and the Shanghai Composite Index once fell below the 3,000-point integer mark. After a week of Jedi counterattack, the market has returned to above 3,000 points, but the market money-making effect is still relatively poor, and market confidence needs to be improved.

The Central Financial Work Conference raised finance to a strategic level, emphasizing that finance is the blood of the national economy and an important part of the country's core competitiveness, and vigorously developing finance is a strategic decision. The capital market is a very important part of the financial sector, and it is also an important aspect of supporting the real economy and economic transformation. Therefore, vigorously developing the capital market is an important key to solving the current sluggish consumption growth rate and weak economic growth, and the tone of strong support for the capital market has boosted market confidence.

On July 24, the Politburo meeting of the Central Committee first proposed to activate the capital market and boost investor confidence, and then a number of departments issued a package of policies to stabilize economic growth to boost investors' expectations for economic recovery. The China Securities Regulatory Commission (CSRC) has also introduced measures to promote capital market reform, including the Four Arrows, and the impact of these measures on the market may be far-reaching, but in the short term, the market trend is still relatively weak.

At a time when the market is around 3,000 points, the convening of the Central Financial Work Conference and the speech of the relevant person in charge of the China Securities Regulatory Commission at the preparatory press conference of the Financial Street Forum have released a positive signal to a certain extent. It is very important to vigorously develop the capital market, expand opening up through deepening reform, and attract long-term funds, including foreign capital, to enter the market.

Recently, the Social Security Foundation held a symposium of managers, and the participating managers unanimously said that the current market has been in the investable range, which is a good time for long-term funds to reverse the layout. The China Securities Regulatory Commission has also convened institutional investors, including insurance companies, to advocate long-term investment and value investment, and dare to counter-cyclical layout, which is conducive to stabilizing market confidence.

From the perspective of valuation, the current capital market has a number of bottom characteristics, including the CSI 300 price-earnings ratio has fallen to about ten times, fund issuance is very difficult, many new fund issuance failures, investors' willingness to enter the market is sluggish, and the trading volume of the two markets has shrunk, which are the characteristics of the bottom of the market. Therefore, with confidence and patience in the moment, the market may have a chance to rebound in anticipation of possible policy amplification. In 2024, as the expectation of economic recovery increases, a round of advantageous market may begin.

Since the beginning of this year, the style of the A-share market has been relatively biased, and the traditional white horse stocks with excellent performance have fallen sharply, while the AI sector has flourished, driven by the emergence of ChatGPT, and the AI sector has performed eye-catching many times this year. Artificial intelligence will change the way we work and live, and the development of artificial intelligence in the future will also determine the level of science and technology in a country. The development of artificial intelligence will drive the development of many industries, including a series of scientific and technological advances such as chip semiconductors, big data, software and hardware. As a result, countries are stepping up their efforts to develop artificial intelligence.

In the process of artificial intelligence development, there will be survival of the fittest, with core technology can achieve technological breakthroughs, artificial intelligence companies with better applications may become bigger and stronger, but there are also some pure concept companies, pay attention to screening when investing.

The development of artificial intelligence brings opportunities to mankind, but also brings certain challenges and threats. Previously, more than 100 scientists in the field of AI, including Musk, jointly signed a call for a moratorium on the research and upgrading of artificial intelligence above the level of ChatGPT4, and a halt for at least half a year to assess the dangers that the development of artificial intelligence may bring. In May of this year, I went to Omaha for the fifth time to attend Warren Buffett's shareholder meeting, and Buffett talked about Bill Gates showing him how to use ChatGPT and asking him for his thoughts on artificial intelligence. Warren Buffett humorously said that his first question was, "When are you going to wipe out humanity?" ChatGPT gave an answer, but Buffett said he ultimately chose to unplug it before acting. This shows that while we are developing artificial intelligence, we also need to guard against the risks it brings.

At present, countries have signed agreements through artificial intelligence conferences and other means, which can not only make AI serve humans, but also avoid possible risks. Therefore, we pay positive attention to this industry, but we cannot blindly pursue the subject matter and the pursuit of concepts.

The Politburo meeting of the Central Committee pointed out that it is necessary to recognize the new situation of the property market, and adjust the real estate regulation and control policies in a timely manner according to the city's policies. Subsequently, the Ministry of Housing and Urban-Rural Development issued a policy of "recognising housing but not recognising loans", which released the demand of some people for improved housing. First-tier cities such as Beijing, Shanghai, Guangzhou and Shenzhen have also introduced the recognition of housing without loans, and have taken some measures in reducing the proportion of down payments and reducing the interest rate of existing loans. However, at present, the effect of these measures is not obvious, and the transaction volume of the property market is still low, making it difficult for some developers to withdraw funds, facing the risk of capital chain rupture or even bankruptcy. At present, second- and third-tier cities have lifted purchase and loan restrictions, but first-tier cities have not yet followed up, but the demand for housing in first-tier cities may be greater. Therefore, in the future, if the property market is enlarged, it should be to cancel measures such as purchase restrictions and loan restrictions in first-tier cities to release some rigid demand to meet the housing needs of home buyers.

Many people who buy multiple houses are actually an asset allocation, not necessarily a house flip. If the property market can enlarge the moves, promote the increase in transaction volume, and also bring opportunities for developers to withdraw funds, so as to gradually resolve the property market risks. As a pillar industry of the national economy, real estate affects the whole body, and for many industries, saving the property market is to save themselves. Therefore, in the future, whether in terms of credit or real estate control policies, there may be major adjustments to effectively resolve the risk of the property market.

The Federal Reserve announced another pause in interest rate hikes at the interest rate meeting that ended on November 2, maintaining an interest rate range of 5.25%~5.5%, which is also in line with previous market expectations. Because the signs of a slowdown in the U.S. economy are already obvious, if interest rates continue to rise sharply, it may further raise U.S. Treasury yields, thereby impacting U.S. economic growth.

Powell's statement remains hawkish, and he believes that a rate cut is not considered yet. December 12-13 will be the last interest rate meeting of the year, and it seems that the probability of a rate hike at this meeting is not very high, because the current signs of a slowdown in the US economy are relatively obvious. The Fed's suspension of interest rate hikes will play a supporting role in the rebound of the A-share market, and will also play a certain role in supporting the recovery of the RMB exchange rate. At present, A-shares have gradually partially possessed the characteristics of the bottom, which can maintain confidence, and the market will still have rebound momentum before the end of the year. Therefore, when the current market already has a number of bottom characteristics, and many high-quality companies have been mistakenly killed, investors can seize the opportunity of the current layout and lay out the market in 2024. (The views are for reference, investment needs to be cautious, source: Internet)