RMB Soars, US Stocks Plunge, 20% US Housing Dip Looms
In the past two days, the offshore exchange rate of the Chinese yuan against the US dollar has seen a stunning reversal. In the A-share market, northbound capital has been continuously buying for two consecutive days. In the US stock market, Chinese concept stocks have been sought after by foreign institutions, and Chinese yuan assets have been snapped up comprehensively.
However, last night, the US Nasdaq index fell sharply by 2%. At the same time, the US mortgage interest rate officially broke through 7%, which means that a decline of up to 20% may be expected next year.
In the all-round competition between China and the US in economy and finance, who will have the last laugh?
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During the day of the previous trading day, the offshore exchange rate of the Chinese yuan against the US dollar continued to fall, breaking through 7.37 at its lowest. But in the evening, the yuan began a strong rebound, and by the close, it returned to 7.3140, with a daily range increase of 600 points.
Yesterday, it also fell slightly during the day, reaching a low of 7.3412, but then it launched a stronger rebound, eventually closing near the highest point of the day, with a daily increase of 1500 points.
From the lowest 7.37 of the previous trading day to 7.18 yesterday, within two trading days, the offshore exchange rate of the Chinese yuan against the US dollar has risen by nearly 1900 points.
The yuan exchange rate may continue to rise today. From 7 a.m. to now, in just one hour, the yuan has experienced another round of lifting, and it has already broken through the 7.18 threshold, returning to the position of 7.1725.
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The continuous rise of the yuan itself means that the strength of buying yuan in the entire global financial market is increasing, and global capital is unanimously optimistic about Chinese assets.On the A-share market, there was a continuous net selling of northbound funds last week, but there has been a reversal in the past two days, with northbound funds returning again.
If we look at a longer time frame, we will find that although there are occasional outflows of funds from A-shares, most of the time this year has been dominated by inflows, and the cumulative total so far this year is also dominated by net purchases.
Data provided by large investment banks such as those in Europe and the United States all show that they are continuously increasing their positions in Chinese concept stocks.
RMB bonds are also popular. Some time ago, the central bank issued RMB bonds in Hong Kong and Macau, which were oversubscribed by foreign capital.
Now Shenzhen City and Hainan Province will also issue a total of 10 billion yuan of RMB government bonds in Hong Kong, and the current roadshow is going very smoothly, with expectations that the oversubscription multiple will also reach more than 2.5 times.
On the other hand, the situation in the United States seems not very good.
Last night, when the Nasdaq index opened, it fell by as much as 2.1%, then rebounded, approached flat, and then turned down again, closing down 2.04%.
The S&P 500 index and the Dow Jones index also followed a pattern of rising first and then falling. In the end, the S&P 500 index fell by 0.74%, and only the Dow managed to maintain a flat level.
Considering that Asian stocks generally rose yesterday, and European stocks also gained nearly 1% at the close, the performance of US stocks is very poor in comparison.Many tech giants saw a widespread decline last night, with significant drops: Google fell by 9%, Microsoft by 7.7%, Amazon by 4.1%, Meta by 4.2%, Apple by 2%, and Netflix by 2.6%.
After the market closed, Meta even fell further by nearly 20%.
Chinese concept stocks once again rose against the trend, with Alibaba up by 8.4%, JD.com up by 8.7%, Pinduoduo up by 11.7%, Baidu up by 3.7%, and NetEase up by 2.6%.
In the new energy vehicle sector, all three Chinese companies saw higher gains than Tesla's. Tesla only rose by 1% last night, but NIO increased by 1.7%, XPeng by 3.15%, and Li Auto by 2.3%.
A U.S. banking association released data last night showing that as of last week, the average 30-year mortgage rate in the U.S. has risen to 7.16%.
On the other hand, the number of new mortgage applications has continued to decrease by 1.7% compared to the previous week.
The data shows that as mortgage rates continue to rise, fewer people are willing to buy houses, but due to the increasing pressure of loan repayments, those who have already bought houses are starting to sell more and more.
With the Federal Reserve expected to raise interest rates by another 75 basis points next week, and the possibility of a further 50 basis point increase in December, U.S. mortgage rates are bound to rise further.
Bank of America predicts that U.S. housing prices could fall by 20% next year.China and the United States are becoming increasingly different in terms of economy and finance. Who will have the last laugh in their competition?