Global inflation is heating up sharply, triggering financial market shocks. After all, long-term ultra-low interest rates and unlimited quantitative easing, has been seriously overdrawn economic recovery, and the asset bubble to the extreme, inflation exceeds expectations to raise interest rates worry, is the music of this game of musical chairs to stop, and the consequences of bursting the stock market bubble will to some extent offset the effectiveness of bailout measures around the world, meaning that the global economy will become more rugged road to recovery after the epidemic!
At the beginning of this year, the global stock market adjusted from the high level, but at that time, funds from the new economy stocks back to the traditional economy stocks longing to benefit from the post-epidemic recovery, so the stock market trading can still be maintained. By the end of the first quarter, funds continue to reduce holdings of new economy stocks, and by the traditional economy stocks to reflationary concept stocks, so that the stock market turnover fell, the index volatility narrowed.
Into the second quarter, available for speculation on the subject of stocks to buy less to see less, and see many large listed companies to grasp the last train opportunity to raise capital in the stock market to “pump”. To recent weeks, global precious metals, agricultural products and other commodity futures prices have broken the top, coupled with the global chip shortage, soaring transportation costs and other phenomena are unlikely to have obvious signs of relief in one or two quarters, the market for prices tend to rise in anticipation of increasingly strong, and ultimately may turn into a trigger for the bursting of the stock market bubble fuse.
Hong Kong stocks plunged yesterday, the new economy stocks collectively “plunge”, before the hot second listed Chinese stocks have broken the bottom; traditional economic stocks were not spared, banks, domestic demand, energy and resources stocks under pressure. Although the HSI fell 2% in the level, but more than half of the stocks closed low as a result, strong stocks have lost momentum, the more vulnerable stocks see low disability, are the signs of the stock market to scrape up a big storm.
The U.S. continues to issue more money and launch large-scale economic stimulus measures, economic overheating caused by inflation exceeds expectations, the U.S. dollar devaluation chances. The Hong Kong dollar is pegged to the U.S. dollar, and Hong Kong dollar assets are facing imaginable selling pressure. In addition, the stock market bubble burst, the high valuation of technology stocks to continue to squeeze out the water, Chinese technology stocks have lost their aura, in recent years to maintain the prosperity of the Hong Kong stock market is also very difficult to face!
The stock market in the second quarter there is a large unilateral decline in the market or bring 3 major impact. The first is to cause a negative wealth effect, the evaporation of stockholders’ wealth, unfavorable consumption and investment confidence. The second is the difficulty of corporate financing through the stock market, the new stock market is cold, funds will continue to flow out of emerging markets, Hong Kong is no exception. Finally, in recent years, Hong Kong’s financial sector has been ahead of other industries, the epidemic under the sole support of the economy, but the future of this pillar is about to fall, the economy again stalls, the effectiveness of bailout measures diminishing at the same time, inflation continues to heat up, the next “black swan” is a great chance of killing more “stagflation “!
With the introduction of vaccines, there is hope for global economic recovery this year. But so far, many economies are still facing the threat of a variant of the virus, the full economic restart recovery schedule has been repeatedly postponed, the stock market fundamentals are already fragile. Even the virtual currency speculation, which has no intrinsic value, has intensified in the recent quarter, indicating that asset bubbles have reached a critical point. Investors should fasten their seat belts and be prepared for the coming stock market storm!
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