Exchange Rate Devaluation Panic Subsided Further, And Market Rebounded Obviously.

At the beginning of the stock market crash in late June, we emphasized in the relevant reports, such as the newspaper and so on, that the fair value of the market may be between 3000-3500.

At present, as the deleveraging draws to a close and the devaluation and panic tide ebb, the market looks likely to shake up in the vicinity of this area.

Within the medium term, due to the differences in the economic cycle and cross-border capital flows, the RMB may still face some devaluation pressure, and the current risk comes from the changes in the interest rate policy of the Federal Reserve.

At present, the real economy is still weak and fiscal expenditure is generally positive.

Considering that external demand is temporarily difficult to improve, overcapacity in traditional industries continues to inhibit investment in manufacturing industry. Sales of commercial housing rebounded and investment in development is not smooth. Sales rebound is not sustainable in itself, and economic growth is still under adjustment pressure.

In terms of inflation, the price of grain descends, the prices of live pigs fall, the labor market is slack, and the prices of family services and processing and maintenance services in CPI gradually descend, which leads to a general risk of deflation.

Recent bond yields are generally downwards, subject to

Factor support.

But a large amount of financial capital is pferred to the bond market, and the rate of return is increased by means of mismatch and leverage.

With the diversification of Listed Companies in China's capital market and the persistence of mergers and acquisitions promoted by the issuance control and economic pformation, the impact of macro-economic and cyclical industries on the market is gradually weakening and weakening.

However, some policies adopted by the previous government rescues have not yet completely withdrawn. There are still variables in the Fed's interest rate raising and RMB exchange rate trend. It will take some time to improve the fundamentals of the economy. Taking the Hongkong market as the benchmark, the premium of the A share market is still relatively high. Some of the leveraged users suffered huge losses in the early stage of the market decline, which also changed the structure of the market participants to a certain extent, all of which affected the market trend.

Entering the October, the A share market rebounded more than 10%, during which the financing balance increased by about 65 billion.

Since the end of June, the adjustment of the stock market has been closely related to the pressure of its own bubble. However, the widespread use and subsequent liquidation of leverage and the panic and capital flight triggered by the fluctuation of RMB exchange rate in August are very important background conditions for this adjustment.

At present,

The liquidation of the RMB exchange rate should have come to an end. The panic of RMB exchange rate depreciation has temporarily subsided. Under this background, the market has obviously rebounded.

Since October, the market's panic over the devaluation of the renminbi may be further subsiding, which has been strongly intervened by people to stabilize market expectations, as well as the global backdrop of the Fed's interest rate hike.

China's 5 year dollar sovereign debt CDS rate has declined rapidly.

The long term devaluation of the renminbi is expected to ease, indicating that the market's panic is gradually subsiding.

Domestic bond, money management, monetary fund and other fixed income products yield is down, suggesting that the pressure of capital outflow has been reduced.

The exchange rate index of emerging economies rebounded by around 3% in October, and the collective rebound in the stock markets of developed and emerging economies showed that the Fed's interest rate hike had an impact on the global market.

In late June, we put forward in a ten day report that from the perspective of intrinsic value, the fair level of the market may be between 3000-3500.

In the context of the recent end of the deleveraging and the ebb and flow of the devaluation, we believe that the market may focus on fair value shocks.