1. Preface
From the recent US stock electric car giant, Tesla’s stock price trend after the spin-off has always been leadingDow JonesLike the NASDAQ or the S&P stock index, the overall US stock market has gradually shaken off the shadow of inflation, interest rate hikes and tightening monetary policy. The stock market is about to recover. Prophet, Musk has always been sensitive to stock prices, and he is very sensitive to advanced technology products, such as the “low-orbit satellites” that contributed to the Russian-Ukrainian war, aircraft that can go back and forth to Mars, and financial products “cryptocurrency”, the operation of NFT is also enjoyable, and it is not tired, and it has gained a lot. Musk’s operation of his own company’s stock TESLA is even more precise, selling at the highest price and publicly shouting at the lowest price. From the big sale of public declarations at the end of November 2021 to the close of $600 per share in June 2022, Musk thought backwards, deliberately tweeted on his personal Twitter, and asked the investing public, is he going to continue to sell stocks? Surely this is a reverse heuristic? Since then, Tesla’s stock price has faced the raging energy problem, Germany and Europe may fall into the “Dark Continent of Winter”, to survive the cold winter without Nord Stream II (Russia’s energy supply), and the hawks of the Federal Reserve. , resounding in the sky, and reaching the sky, but it is no longer weak; just in the middle of these bad news, Tesla’s stock price gradually got rid of the short entanglement from about 600 US dollars per share, and after the split on August 15, 2022, the stock price was re-raised from 300 US dollars / share as the basis, or continue to gradually climb up.
2. The period between June 16 and September 14 is the bottoming stage of the stock market!
This is also true of Taiwan stocks: different markets have the same development opportunities; 1. The US executive and legislative branches, with different parties, have begun to propose the “Taiwan Policy Act”, which will be reviewed by the US Congress, which will bring the two sides of the strait into the “Taiwan Policy Act”. Exercise and training” status. In the future, this bill will greatly enhance Taiwan’s political status in the United States and raise it to the level of quasi-sovereign independence, which may form a Taiwan policy of “one China, one Taiwan” on both sides of the strait, and Taiwan’s status is clarified. 2. This has made the situation in the Taiwan Strait heated up again. During the Mid-Autumn Festival, at least 43 sorties of the People’s Liberation Army aircraft came straight to the airspace of Taipei to “congratulate” the Republic of China on a happy Mid-Autumn Festival; and the Chinese Air Force fighter jets, together with American and Japanese military aircraft were also present. Over the Taiwan Strait, they “spend the festive season together”, warning and shouting at each other.
In addition to the above non-economic variables, it is worth noting that Taiwan’s financial industry is correct,US dollar indexClimb to more than 110 worried; fear that the appreciation of the dollar will turn into an “emerging country financial turmoil”. China’s economy seems to be slowing down sharply,RMBexchangeRMBThe devaluation has continued to depreciate recently, depreciating below 7 to 1 US dollar.However, after the Mid-Autumn Festival, Taiwan stocks obviously got rid of the bear pattern and rose step by step; the time to get up was slightly behind.Dow JonesStock index, some stocks are even as good as Tesla, andDow JonesThe point in time when the stock price index rose. This time, after the rebound from the past to the present, the bottoming project of W is launched.
Investors who read domestic financial news must find that the bears of Taiwan stocks focus on the three major known or continuing overall economic systems and industrial risks: 1.US dollar indexClimbing doubts and fears, since we wrote this article in 2011, we have found and published a “law of financial risk” that has almost formed after many experience comparisons and in-depth research; that isUS dollar indexSignificant impact on the financial securities market.The volatility range that is beneficial to U.S. stocks and global emerging markets isUS dollar indexBetween 95+ and 110. two,US dollar indexBelow 90, or even below 80, the US dollar is extremely weak, and it is easy to detonate the US dollar and the “financial risk” of the United States itself; for example, in 1987US dollar indexBelow 80, the U.S. stock market crashed.In 2008, the global “subprime mortgage default” storm triggered by the United States, at that timeUS dollar indexAlso below 80. The main reason is that the U.S. dollar and the market interest rates at that time are mostly in the same direction; when interest rates are low, Americans seem to invest in real estate and the stock market unscrupulously. , When interest rates are expected to rise: Selling pressure suddenly emerges, the selling trend is uninterrupted, and in just a few weeks, when all investors are one-sided, real estate and the stock market will fall like a “storm”.
Third, but this timeUS dollar indexSince 105 rapidly climbed above 110, the hot money of the US dollar in emerging countries will flow out, and the stability of the financial account will gradually be shaken; if it rises further, local foreign capital will sell marketable securities, or sell more quickly. Real Assets, which will trigger a financial turmoil.Famous cases in history, such as the 1970dollarsmelt storm, thenUS dollar indexIt once soared to more than 160; while in 1997 the Asian financial crisis,US dollar indexIt also rushes to more than 120; the higher the rush, the greater the storm. It can be seen that the Fed’s interest rate hike will have a negative impact on financial or asset prices: if interest rates rise indefinitely, foreign capital in emerging countries will be triggered, and collective expectations for dollar appreciation will be triggered; it may detonate asset bubbles in emerging countries, and foreign capital will sell stocks , or sell real assets, convert local currency to US dollars, and “run away from home.”
3. Features of the financial turmoil: Destruction, parabolic decline of exchange rate and stock market, domino effect!
1. But this kind of extreme risk, or “financial turmoil”US dollar indexand most of the characteristics belong to the “Rapid Rising” “Rampant”;US dollar indexA rapid rise in a few days or weeks in a short period of time will cause the foreign capital that has stayed in the country for a long time to withdraw quickly, and the local currency exchange rate will depreciate rapidly. This is a “financial turmoil”. Slow progress like this time, the lethality of half-swing, one step up, and one step down still needs to be paid attention to, but it is not a “financial turmoil”;
Second, this time the Fed is trying to control inflation and sing the song of an eagle, not to create a disaster of raising interest rates. In fact, the stock market in Taiwan and the United States stopped falling on June 16 this year. The main reason is that the Fed is so careful and avoids financial disasters; the Fed announced at that time that the FOMC target interest rate was about 3% to 5%, raising the “ceiling” of interest rates. “Speak out first, so as not to trigger a global financial panic.like currentlyUS dollar indexThe slowly rising scope of the storm will only ignite untapped or developing countries with unusually fragile foreign exchange reserves, whose stock markets and exchange rates have collapsed; there is, or will not be, a “domino effect” (i.e. Dr. Kluman’s Butterfly Effect).
3. Therefore, this article believes that this time, the most famous “Taiwanese media”US dollar index“Rising, bringing “financial risk” is not the core of systemic risk. The disaster should be caused by politics in mainland China, the 20th National Congress at the end of the year, the epidemic hindering the industrial supply chain, asset bubbles, and the “unfinished building” storm. Premier Li Keqiang control of the ruling team; especially now,RMBAs it depreciated to close to 7 against the US dollar. Under the asymmetric information, the Taiwanese media are confronted with “Zengzi murdered” media every day, and the anxiety of brainwashing is overwhelming. The theory of China’s economic “Hard Landing” has become the mainstream of Taiwan’s economic research on the mainland.
While the official white gloves on both sides of the strait are still “unread” on the other side, Taiwanese businessmen are concerned about the “superior policies” related to themselves, and they are already struggling; various mainland official epidemic prevention measures seem to hinder the world from the outside. Worst policy in the world’s factory. The “unfinished building incident” was even named as the “fire point” of the financial crisis in mainland China. We can only carefully observe and view China’s economy, as well as the evolution of various events and official response measures, under the limited and asymmetric Taiwanese public information. If the Taiwanese people go deep into Chinese industry research and are optimistic about China’s economic development, they will form strong contradictions and insanity with the PLA aircraft that report to the Taiwan sea and air every day to greet the Taiwanese people. If the economy of mainland China is accidentally hard-landed, it will not only affect Asia and neighboring countries with close economic and trade exchanges; China’s so-called “One Belt, One Road” countries; if China’s politics and economy are unfortunately caught up in internal and external rivalries, it will eventually spread to the United States and Europe, shaking the entire earth.
We objectively expect that these political and economic systemic risks in China are mostly unfavorable independent events for the time being; other industries are still operating smoothly, especially the electric vehicle industry, the US Tesla piloting in Shanghai, and the high-speed computing and The speed of AI technology development has also alerted the United States. The Central Committee of the Communist Party of China is doing a thankless “epidemic clearing” strategy. Because the Central Committee of the Communist Party of China said that if too many people died, there would be no need to talk about “powerful my country”, and all the infrastructure such as high-speed railways would not be patronized and become a vase; therefore, people’s health should be placed before material expansion. Taiwanese TV reports are full of those bizarre “counter-revolutionaries” who make high-pitched speeches to vent their dissatisfaction and the official fight, and no one analyzes them in a positive way. Persistently insisting on going one’s own way, so reckless, even though millions of people will go to me?
4. Conclusion: Although the exchange rate plummets, it is not in line with the characteristics of the financial turmoil, being caught off guard and being devastated!
US dollar indexIt is inevitable for Taiwan stocks to surge higher, which will bring worries to financial stability, but relativelyNew Taiwan DollarThe rate of depreciation and the price of the exchange rate are not actually likeJapanese YenSo exaggerated; Bank of Japan Governor Haruhiko Kuroda probably never raises rates, no matter how high the Fed raises rates,Japanese Yen The QE policy is still loose and loose,Japanese YenThe exchange rate against the US dollar has been depreciated to 144 to 1 Japanese Yen.while investorsKorean WonandJapanese YenThe sharp depreciation may immediately be associated with the Asian financial turmoil and the shadow of the bow and snake, but there is still no panic in today’s Korean industrial development; let alone the Japanese economy, althoughJapanese YenThe devaluation effect and the export trade are still very unhelpful, but the two countries are not so much that the stock market plummets. In particular, transaction suffocation and illiquidity have never occurred.we also understandKorean WonSharp depreciation, mostly because ofUS dollar indexrising, foreign investmentKorean WonWeakness, gradually sell stocks and assets in the Korean market, this is not a financial turmoil, it only affects the value of various assets within itself, and there is no continuous domino effect, collectively sell assets and securities in a short term. The most important thing this time is that, although the Fed is ruthless and does not let various economies continue to have expectations of rising prices, when it tightens monetary policy to raise the cost of using funds, it mentions an important target interest rate: 3% to 5% FOMC rate. This is the “fire line” that will not make global financial institutions panic in this interest rate hike cycle.
When the Fed implements loose monetary policy, marketable securities and asset prices have the driving force of external funds to push up; there are short-term speculation, and there are also long-term investments. When hot money enters, asset prices will rise. When external funds leave, it depends on the strength of local countries and enterprises. After the Fed’s interest rate hike continues to resonate with the annual growth rate of CPI, it is understandable for emerging countries to depreciate their respective currencies. As long as there is no collective and interrelated relationship, it can only be regarded as a marketable security, with its own cycle of ups and downs, and the rapid development of long and short trends. Although the exchange rate depreciates from time to time every day, it has not yet formed a financial turmoil circle; what will happen in the future? devaluation? How will the value increase in the future? Sunrise and sunset, cycle ups and downs, non-stop. If Taiwan stocks fell to this point. He also sings that the financial turmoil is about to happen; this article believes that it is frightening and threatening Noise Traders, creating another opportunity for capitalists to pick up bargains!
(Disclaimer: This article is a systematic risk description, which is a risk premium reward opportunity according to financial theory; however, it does not endorse any investor citing this article.)