The Federal Reserve released doves, and foreign investors "increased their positions against the trend"
Edited: Ye Feng
On December 14, boosted by the Fed's dovish signal, A-shares briefly rose after opening higher, and then fluctuated and fell. The Shanghai Composite Index closed down 0.33% at 2,958.99 points, the Shenzhen Component Index fell 0.62% to 9,417.97 points, and the ChiNext Index fell 0.63% to 1,860.51 points.
In terms of volume and capacity, the market shrank to trade, with a turnover of 757.95 billion yuan, while northbound funds "increased their positions against the trend", with an actual net purchase of 3.463 billion yuan, of which 1 billion yuan was net bought through Shanghai-Hong Kong Stock Connect and 2.462 billion yuan was net bought through Shenzhen-Hong Kong Stock Connect. On the disk, Hong Kong stocks and gold, which are sensitive to overseas liquidity, rose more, while coal, electricity and other sectors also rose by the cooling to boost heating demand.
Source: WIND
Overseas, at the Fed's December 2023 interest rate meeting, all FOMC officials unanimously voted to keep the target range for the federal funds rate at 5.25%-5.5%, which is the fourth pause in interest rate hikes since the July 2023 interest rate hike, which is in line with market expectations.
Overall, the Fed's dot plot and Powell's wording changes both showed a dovish attitude, exceeding market expectations to a certain extent, the US 10-year Treasury rate fell 18bp to 4.02%, and COMEX gold rose 2050 points intraday. On December 14, the gold fund ETF (518800) rose 1.59%.
Source: WIND
In terms of the Fed's statement, on the one hand, the December FOMC statement was more dovish, acknowledging that economic growth is slowing down and inflation is falling. On the other hand, Powell mentioned in his press conference that "the FOMC does not want to rule out the option of continuing any rate hikes", and the addition of the word "any" was interpreted by the market as a dovish attitude for the Fed to admit that interest rates are at (or near) peak. In addition, when asked whether it is reasonable for the market to start cutting interest rates in March next year, Powell did not directly deny it, but believed that the Fed will make the right decision based on data.
The median FOMC dot plot projections for December point to a 2024 pivot of 4.625% (5.125% in September), 3.625% in 2025 (3.875% in September), 2.875% in 2026 (2.875% in September), and a long-term pivot of 2.5%. However, the dot plot also shows a high degree of dispersion, suggesting that there may still be a large disagreement among officials.
Looking ahead, U.S. inflation continues to cool down, economic data shows a "rolling alternate decline" trend, the Federal Reserve rate hike peaked, although the timing of interest rate cuts needs to wait and further observe economic data, but the current U.S. Treasury yields and the U.S. dollar index are out of high, and the pressure on precious metals has weakened, which is good for gold prices.
Although the market is currently or partially pricing in the Federal Reserve to turn to expectations, there may be a certain rush, short-term gold prices may fluctuate at a high level, but in the long run, the overall trend of the global economic recession, the global central bank to buy gold demand, and the global trend of "de-dollarization" make gold is expected to become a new round of pricing anchor, these three factors make precious metals are expected to have upward momentum, you can continue to pay attention to the gold fund ETF (518800), consider the bargain layout.
The Fed's rising expectations of interest rate cuts and loosening overseas liquidity are also positive for Hong Kong stocks. On December 14, the Hang Seng Index closed up 1.07%, the Hong Kong Stock Technology ETF (513020) rose 1.15%, and the Hong Kong Stock Connect 50 ETF (159712) rose 1.02%.
The valuation of equity assets of Hong Kong stocks is mainly affected by the domestic economic expectations at the numerator end and the overseas liquidity at the denominator end. In 2023, due to the weak domestic economy, overseas Federal Reserve interest rate hikes and high interest rates, the Hong Kong stock market will pull back greatly. As of 2023/12/14, according to WIND data, the Hang Seng Index PE is valued at 7.93, which is at the historical quantile of 2.11% in the past decade. Looking ahead, the numerator and denominator have shown certain signs of improvement.
On the molecular side, although the recent economic data has fallen slightly, data such as manufacturing PMI have not broken through the previous low, and the overall upward trend remains unchanged. The Central Economic Work Conference set a positive tone, the medium-term economic recovery trend is upward, and with the gradual implementation of the three major projects such as the issuance of trillions of additional treasury bonds and affordable housing on the policy side, domestic demand is expected to further recover, bringing the internal vitality of the molecular end upward.
Source: WIND
The coal sector bucked the trend on December 14, with the coal ETF (515220) rising 0.68%.
Source: WIND
On the news side, the Central Meteorological Observatory upgraded and issued an orange warning for cold waves, which is the highest level of cold wave warning and the first orange warning for cold waves this winter. The low temperature boosted the demand for thermal coal, the daily consumption of terminal power plants gradually increased, and the recent tightening of security inspections in some production areas, the expectation of tighter supply and demand will continue to be positive for the coal sector.
From a fundamental point of view, the overall coal supply is still tight, the new production capacity is insufficient, the utilization rate of production capacity continues to be high, and the overall supply side is inelastic; on the demand side, the north has officially entered the heating season, the peak period of coal consumption in winter is coming, and the output of hydropower has also declined, and the pattern of tight supply and strong demand will support coal prices to continue to maintain a high position.
In addition, high dividends + high dividend yields make coal companies have a certain investment value. Debang Securities analysis pointed out that unlike the past high profit cycle, the asset-liability ratio of coal companies continued to decline after the current round of coal price increases, and the growth rate of capital expenditure in the industry was much lower than in the past. If you are interested, you can continue to pay attention to the coal ETF (515220).
Risk Warning:
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National Business Daily