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“stock and economy”
2015-09-09 20:34:21

For the past months, such problems as the fluctuation of exchange rate, the trend of stock market and the raised interest rate of U.S. dollars have affected our life one after another. People seem to have never been more concerned with the financial and economic information. What the masses are concerned about is whether the stock market will hit bottom and whether there exists a mere wisp of hope in the stock market while the enterprises are worried about the breakdown of exchange rate as well as the rise of interest rate of U.S .dollars. On 9th, Li Taokui, director of Su Shilan Scholar Project of Tsinghua University gave explanations to every single question. His optimistic analysis not only brought hope to shareholders but also inspired the enterprises greatly.

About the stock market

With the overdone adjustment in stock market, there is a sign that enterprises will grow stable in the first quarter of next year. Does the stock market dive demonstrate there is something wrong with our entity economy? The fluctuation of stock market surely has an influence on the emotion of investors but is not that directly associated with entity economy. In reality, different from the western stock market, Chinese stock market is not directly related to entity economy. “You may find that whereas the economy develops quite well, the stock market is the bear market. This situation is true of many years in China when economy gains expressive momentum, such as the years from 2009 to 2013.” said Li taokui. Therefore, from June to the early July, there existed a fluctuation of emotion with radical response. However, the stock market dive in August discouraged all the investors greatly.

Li Taokui: with the overdone adjustment in stock market, there is a sign that enterprises will grow stable in the first quarter of next year.

Will bull market appear once again?

Li Taokui holds that people will see hope of the stock market in the second half of this year and enterprises will grow stable gradually in the first quarter of next year, because we have seen the investment in fixed assets rise gradually and especially the developing capability of real estate has reached the bottom line at a rate of 4% -5%, which plays a great role in supporting the rise of the whole economy.

How can Chinese stock market guarantee a relatively smooth and steady level?

Li Taokui employed the NBA game to describe the status quo of Chinese stock market. An exciting NBA game requires two points: firstly, the basketball players are star players that are high-caliber and in order; secondly, the viewers are well-behaved and don’t tend to disturb the game order when in excited motion. But the two aspects are just what is absent in Chinese stock market. For one thing, the “players” in the stock market are not good enough and frankly speaking, the listed companies all need to play with profits. For another, our viewers, the investors, tend to respond overly. Li Taokui said all that we need to do is make the investors calm down.

Has the stock market hit bottom?

Li Taokui expressed that the stock market had its own logic. The current stock market is overly adjusted. The PE ratio of Chinese stock market almost levels that of American stock market. However, the stock market valuation of China, as a growing economy, should be slightly higher than that of American stock market, in general. Therefore, something valuable still exists in the stock market that is worth seeking by the investors.

About the exchange rate of RMB

Will exchange rate break down?

Li Taokui gave a negative answer, holding that the exchange rate is basically stable and offering the following analysis: we’ve got so much foreign exchange reserve that the trade surplus is not only on the rise but also reaches a record high this year, probably mounting 600 billion U.S. dollar; the investment return of foreign exchange reserve should be fairly good. This is about the inward money. As for the outward money, the capital and entity economies concerning “one belt, one road” are going global and the operation of foreign exchange market needs a certain amount of money, therefore, there isn’t much room for the rise of RMB rate to which we should have an optimistic attitude for a short term. In addition, the proper decline of foreign exchange reserve is our long-cherished dream. We have noticed that when the foreign exchange rate drops, it just circulates within the country, which is beneficial to our economy. Furthermore, whether you like it or not, the exchange rate of RMB has become an international topic. Though incomparable with U.S. dollar, pounds and Euros and unable to be called a standard international currency, RMB is indeed a would-be international currency. Currently, the fluctuation of RMB exchange rate will draw attention of the international community and its adjustment will drive the surrounding trade partners to adjust as well.

Li Taokui expressed that under this condition, there won’t be much room for the adjustment of the exchange rate of RMB because RMB is a benchmark currency. On the contrary, chances are that the exchange rate policy of RMB will make adjustment. Under the influence of the major structure in which the currency policy of the U.S. dollar will surely raise its interest rate, our policy should be independent of other policies. Only by doing so, can China demonstrate its tough stance to the whole world. He believed one more international currency is better than one fewer. Previously, there was only one international currency, U.S. dollar and once its policy is tightened, the international community will be heavily influenced, which drives RMB to assume its responsibility. Therefore, if our currency policy is properly loose and flexible, it will greatly support the global economy and financial market, thus demonstrating the vital role of RMB. If you want to be an international currency, you should figure prominently among the currencies. With the whole world’s eyes on China and our currency policy, it is a historic opportunity to make RMB independent. We will not only issue timely policies but also provide sufficient reasons to create a new image in the international community. On August 11th, the adjustment of RMB exchange rate became a worldwide concern and made the whole world follow us, which gave a best explanation to the international currency.

About U.S. dollar

U.S. dollar may postpone raising its interest rate.

Will U.S. dollar raise its interest rate in September?

Li Taokui said the officials of the Federal Reserve never admitted this orally, but instead always claimed that the currency policy of U.S. dollar should serve the American economy. There are strong opposing voices against the rise of interest rate domestically in America. Some non-government organizations and young people began to protest, requiring the policies of the Federal Reserve to focus more on the employment and salaries, not the inflation, more on the quality of economic growth, not the pure figures. Currently, the rise of U.S. dollar interest rates are suffering from increasing opposing voices from within and without. Even now, the president of the world bank expressed his stance: U.S. dollar shouldn’t raise its interest rate and should take into account its worldwide influence. Considering all these factors, Li Taokui’s got the feeling that the interest rate of U.S. dollars is not likely to rise in September and may be postponed.