On June 24th, Beijing time, the results of the Brexit referendum were announced, and the UK decided to leave the European Union. The 43-year-old alliance is about to end. In the context of the current world economy, the turmoil of the EU's huge economy will undoubtedly bring greater changes to the prospects for the global economy. So, how should investors allocate assets to avoid risks and increase profits? What should gold, crude oil, and pound sterling buy?
Preserved gold
The gold market is the biggest beneficiary of the Brexit event in the UK. On June 24, the international gold price hit an intraday high of $1,358, the highest increase of 8.2% in the day, setting a new record since 1982. The gold gains this year have largely been based on the safe-haven demand triggered by the increased uncertainty of risky assets.
Hai Tong Securities market 600837, BUY Jiang Chao, chief macroeconomic analyst bluntly, gold will be the preservation of choice. Jiang Chao’s point of view is: First, the Brexit pushes up risk aversion, funds will flow to low-risk assets, gold is an important hedging tool; second, the global economy is in a downturn, but the currency continues to be oversold, while gold The supply is limited. The average growth rate of production in the past 100 years is only about 2%, and the long-term appreciation of banknotes. Third, the Fed’s interest rate hike during the year is almost lost, and the short-term is also good for gold. Since the beginning of this year, gold, which is priced in dollars, has appreciated by 24%.
In addition, the violent turmoil in the global currency market and the stock market is not conducive to the stability and development of the global economy. In the future, the UK, which is independent of the EU, will face more uncertain risks. These risk stacks will cause market panic, which will promote risk aversion. It is undoubtedly the biggest substance in the gold market of the primary investment market for hedging. Good sex.
Short-term safe haven
Brexit has opened up the pandora's box of globalization, and the world will still face more uncertainty in the future. In Jiang Chao's view, the Spanish elections and the US elections at the end of the year are also attracting the attention of investors, and there is a big controversy. Political issues are likely to turn into financial market risks. In the context of the sharp increase in uncertainty, global risk aversion will continue to rise, and financial markets will also fluctuate sharply. Jiang Chao believes that “the national debt is also a short-term safe haven in the case of risk aversion.â€
Since June, global bond yields have plummeted. On the 14th, Germany’s 10-year bond yields turned negative for the first time in history. On the 16th, Swiss 30-year bond yields also fell below the zero mark for the first time; Japan, the United Kingdom, Australia and other countries’ national debts also recorded a low record in the month. point.
Strong dollar
Brexit caused investors to plunge into the dollar to hedge, and the dollar index hit a three-month high. On the other hand, current market data shows that the market expects not only to raise interest rates in July, September and November, but also a 4.8% chance to cut interest rates, and the possibility of a rate hike in December also fell to 22.7%.
All major brokerages believe that under the background of Brexit, central banks will be mainly loose, and tightening will be postponed. Central banks should have prepared for liquidity and emergency arrangements. The Fed sees that the euro pound plunged + risk aversion pushed up the dollar, and the rate hike was absent during the year.
The downward pressure on the euro
Due to debt, refugees, immigration and other issues, the EU itself is less stable.
Jiang Chao said that Brexit is equivalent to providing a bad "example", which is likely to trigger a domino effect and even lead to more member states withdrawing from the EU. The Netherlands, France and other people have already proposed to hold the referendum on the referendum. Coupled with the large differences between the EU countries, it is difficult to adjust the situation. If the EU does not handle it properly, there will be a risk of falling apart. After the results of the Brexit announcement, the euro has fallen sharply to 1.11 against the US dollar. In the future, as the situation is turbulent, there is even a risk of further exploration.
RMB depreciation pressure
After the Brexit was settled, the onshore renminbi rushed to 6.628 against the US dollar, offshore to 6.652, and the depreciation pressure increased sharply. However, the People's Bank of China has issued a statement saying that it has responded to the Brexit, indicating that the central bank may still intervene directly when the RMB depreciation is large.
Jiang Chao said that Brexit will not only push up the US dollar index, but also raise risk aversion, which will put pressure on the RMB exchange rate and may even have capital outflows.
According to estimates by Minsheng Securities, the maximum depreciation pressure of the RMB middle price theory fell by -2.53% to 6.74. In the worst case, the pound and the euro fell 30%, and the US dollar index rose to 114. If the CFETS remains unchanged, the RMB middle price theory has the greatest depreciation pressure. For the drop -7.5% to 7.0. However, considering that it is now the exchange rate logic between CFETS and the middle price two legs, the central bank can share the depreciation pressure of the middle price through a small appreciation of CFETS, and the pressure on both legs is better.
The downward pressure on international oil prices is relatively high
On June 24, Brent crude oil fell sharply by 5%. After the British referendum decided to leave the European Union, it triggered a large-scale safe-haven trade, and the security assets such as the US dollar rose sharply.
Some analysts believe that Brexit may end the three-month rebound in the global oil market. The biggest threat to the oil price of Brexit is the market risk willingness. If the event triggers a sharp increase in the global financial environment instability, the high demand for safe havens will weaken the proportion of investors' allocation of risk assets, thus affecting oil prices.
Minsheng Securities judged that the pricing factor of the appreciation of the US dollar suppressed + the economic shock of Brexit caused a decline in global demand + risk aversion = the downward pressure on crude oil prices.
The US stock tragedy began
On June 24th, on the day of Brexit, the global stock market fell. According to the British "Financial Times" news, on the day of the announcement of the referendum on Friday, the global stock market value evaporated more than 2 trillion US dollars, the worst performance since the Standard & Poor's Dow Jones index began tracking this data in 2007.
The market value of the US stock market decreased by 830 billion US dollars, of which the market value of the S&P 500 enterprises evaporated by 657 billion US dollars; the market value of the global financial sector fell by 400 billion US dollars; the performance of emerging markets was slightly better, the market value only disappeared 128 billion US dollars; the Shanghai stock index fell nearly 3% on the day. However, the closing decline narrowed to 1.3%.
It is worth noting that the incident may not be over. RebecCA Cheong, head of UBS's US equity derivatives business, said on June 25 that for the quantitative traders, after the UK decided to leave the European market, the US stocks suffered "Black Friday"; but this round of selling tragedy has just begun, next week's stock market The turmoil will continue, with stocks selling up to $150 billion.
Emerging market stocks remain attractive
In the opinion of analysts, Brexit will bring excellent investment opportunities to emerging markets. Louis Lau, portfolio manager of Brandes Investment Partners, said on June 24 that:
“We believe that if the market for Emerging Markets is oversold due to Brexit, this may be an investment opportunity.â€
Lau believes that stocks, especially undervalued stocks, may provide value to long-term investors. He pointed out that if the UK withdraws from the EU, emerging markets will certainly fall into chaos, but it is unlikely to fluctuate significantly. Lau said that Southeast Asia, especially Thai financial companies and Brazilian and Chilean stocks are good choices. He pointed out that copper prices continue to fall against Chile, but telecom companies and utility stocks appear to be profitable.
As for the Chinese market, Lau advises investors to maintain a high degree of caution, and pharmaceutical, semiconductor and wealth management are rational choices.
This article is excerpted from the 澎湃, the Golden Ten News slightly modified
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