Original title: After the blowout, the international market is still on the verge of crisis

When the global market experienced a slump on March 9, the market quickly came to a "big face" on March 10.

The Chinese market first started to rebound. As of the close of the 10th, the Shanghai Composite Index rebounded 1.82%, approaching the 3,000 mark. The move has spurred a rebound in the market after U.S. President Donald Trump demanded Congress lower the payroll tax rate and said it would announce "major" economic measures on Tuesday. Before Tuesday's session, U.S. stock index futures rebounded sharply, with the Dow rising nearly 1,000 points, which is expected to recover nearly half of Monday's decline. US stocks rebounded from the opening. As of 10:00 pm Beijing time, the S & P 500 Index rose nearly 3%.

Looking back on March 9, the global market was swept by a "perfect storm"-after two weeks of cumulative declines of more than 12%, U.S. stocks plunged on the opening day, and the S & P 500 index fell 7%, triggering a first-level fuse mechanism. Earlier, the price of oil plummeted by 30%. The collapse of this series of dominoes can not help but make the market feel as if the financial crisis in 2008 has repeated itself. The market changed its face very quickly. Risk assets rose sharply on March 10, but the safe-haven assets melted out. In addition to the rebound in the Chinese market, U.S. stock futures also turned up. The previously rising U.S. debt fell, and U.S. debt futures once fell to a daily limit. .

Discussions on the "crisis" in the market are becoming more intense. Is the crisis at hand? Compared with the 2008 financial crisis, how is the current situation different? Where should I look for safe-haven assets? Sun Mingchun, chief economist of Haitong International, said in an exclusive interview with CBN that from the perspective of the performance of the financial market, it has been considered a crisis, but it is at an early stage. As for 2008, whether it will affect the follow-up To financial institutions and businesses.

Sun Mingchun also said that within one to two quarters, the epidemic is likely to push many economies that were on the verge of recession into the recession quickly. Based on the judgment of the current situation, the US debt has fallen into the negative interest rate determination, as fast as within 3 months, and as slow as within 2020.

However, there are also more optimistic views. "There is still no need to be very panicked. The situation during the 2008 financial crisis is different from the current one." Yang Jing, general manager of the financial markets department of Standard Chartered Bank (China) Co., Ltd., told First Financial, "The trigger point is the epidemic. Rather than subprime mortgages, the key is to observe the subsequent changes in the epidemic. Unlike the financial crisis in 2008, this time it was mainly a crude oil plunge. The main reason was the price war between Russia and Saudi Arabia. In addition, the spread of the epidemic has weakened the global economy and weakened demand for crude oil. worry."

In response to the international oil prices that caused the plunge, Saudi Energy Minister Prince Abdul Aziz Bin Salman said in a statement on the 9th local time that all crude oil producing countries need to maintain or even increase their market share. The turmoil in the oil market is far from over.

Not currently "recurrence of crisis 2008"

Sun Mingchun said that the financial tsunami in 2008 was many twists and turns, first in the subprime mortgage crisis in June 2007, and then by the end of 2007, some investment banks suffered huge losses. Then in 2008, Bellstone was merged by JP Morgan and Lehman Brothers went bankrupt. After that, there were rescues from financial institutions such as American International Group (AIG) and Washington Mutual Bank. It took a year and a half, the market fluctuated greatly, and it was impossible to imagine what it looked like at first, so it was not a night market. Performance can judge whether it is a crisis or not. Crisis is a process.

In retrospect, when the financial crisis struck in 2008, the entire Wall Street was stunned.

Until March 9, 2009, the S & P 500 index fell to a minimum of 666 points, and this day is the starting point of the 11-year bull market for US stocks. "Never against the central bank" has become the golden rule in the industry. The seemingly prosperous U.S. stocks are actually driven by the central bank's liquidity and company stock repurchases over the past decade. Profit growth has slowed in the past two years. The US stock market value has more than quadrupled (+ 300%) from the 9 trillion US dollars at the lowest point of the financial tsunami in early 2009.

"During the 2008 crisis, the stock market, crude oil, industrial metals, and precious metals all fell sharply in the second half of the year. The S & P 500 fell by more than 30%, Brent crude oil fell 55%, and the" economic vane "London copper fell by nearly 64%. The risk asset gold fell more than 8%. "Yang Jing said, but this time the situation is not the same, this time the plunge in oil prices has not affected the trend of the metal disk to a large extent.

At the same time, US government bond yields and its US dollar swap rates did not follow the plunge of global stock markets on the evening of the 9th, and there was a signal of a temporary bottom. At present, it is necessary to wait until the Federal Reserve ’s next monetary policy and statement.

In fact, in addition to the epidemic, the catalyst for worries about the “financial crisis” is the collapse of oil. Although the epidemic will impact the economy and the demand side and may hit oil prices, the main factor is still the “price war”.

Tan Huimin, chief investment strategist at BNP Paribas Wealth Management Hong Kong, told reporters that the “OPEC +” National Energy Ministers ’meeting in Vienna last Friday could not reach a consensus on a proposal to further reduce the daily oil supply by 1.5 million barrels. The OPEC proposal was conditional on Russia's consent to participate, but after Russia rejected it, Saudi Arabia immediately announced that it would no longer be bound by the previous agreement and would start increasing oil production. For the US shale oil industry, this is indeed bad news. Last year, the industry was in a difficult position, and the US stock market and the US dollar high-yield bond market will bear the brunt. But if oil prices remain low, the beneficiary countries will be importing countries such as India, China and the euro area. Lower oil prices have the same effect as tax cuts, which is unexpectedly good news.

"Current geopolitical factors should be taken into consideration. By attacking US shale oil in such a price war, Russia may be putting pressure on the United States to obtain concessions elsewhere." Tan Huimin said, therefore, various possibilities for the future development of the situation Both exist, if the political agreement cannot be reached as soon as possible, the adjustment of the supply and demand side of crude oil will be very difficult, especially for oil producers hoping for high oil prices, which will cause considerable damage.

U.S. Treasury futures meltdown, "turbulent market" will continue

Even if the short-term market eases, given the uncertainty of the epidemic development and its possible impact on the economy, it is still difficult to predict, so market volatility is likely to continue for some time to come.

In fact, the extreme uncertainty of the market is also reflected in the turns of the safe-haven assets and risk assets.

At 4:00 pm on March 9, Beijing time, the risk aversion caused the US 10-year active bond bond to rise sharply, and the yield fell to around 0.31%. On February 20, the yield was still around 1.5%. The rally has been dramatic for weeks.

However, at 13:00 on March 10, the yield on 10-year US Treasury bonds rebounded to around 0.65%. At around 13:30, the 10-year U.S. Treasury futures turned to a daily limit, triggering a fusing mechanism.

In this regard, the agency believes that market risk aversion has been excessive. "We don't think 10-year U.S. Treasury yields will continue to fall sharply, and risk-reward shows that it is time to wait and see," Standard Chartered macro strategy director Eric Robertsen told reporters.

"The panic about the spread of the epidemic and the collapse of oil prices have exacerbated deflationary concerns in the market. On March 2, the Fed cut interest rates by 50bp (basis point), and the currency market believes that there will be another 25bp interest rate cut at the March 19 meeting. The current market is almost zero Pricing, but we do n’t think 10-year U.S. Treasury bonds will continue to fall further. ”Robertson said,“ If you want to ask if yields will fall further? Of course it is possible, but we think the Fed needs to take further action to push interest rates to negative Interval, but it is not yet possible. "

Standard Chartered believes that there may be policy factors that will cause bilateral fluctuations in U.S. debt, so it needs to be cautious to go long. For example, global policy makers may introduce more aggressive policies, including fiscal policies, which will exacerbate bilateral fluctuations in U.S. bond prices (for example, rising fiscal spending will increase bond supply and may cause bond prices to fall), leading to long-term holdings of government bonds. The risk-reward decline.

Another issue is also of concern: could US Treasury yields skyrocket? Robertson believes that this is unlikely to happen, and based on the judgment of the global economic low growth and low inflation expectations, bond yields will remain low. In addition, the Fed may aggressively purchase assets by controlling the yield curve (YCC), which may suppress the rise in long-end bond yields. After the crisis in 2008 that year, the Fed conducted "distortion operations", that is, buying long-end bonds and selling short-end bonds to reduce long-term financing costs and stimulate the economy.

Focus on more monetary and fiscal stimulus policies

For the market, it is necessary to pay close attention to monetary and fiscal policies that may be sacrificed in the future.

On March 10, Trump's potential stimulus spurred a rebound in the market. He said the U.S. government will discuss several measures with Congress to mitigate the economic impact of the new crown pneumonia epidemic, including possible cuts in payroll taxes and bailouts for time workers. Trump said government officials plan to meet with Republicans in Congress on the proposal on Tuesday and said a press conference will be held on Tuesday afternoon to explain the proposal in more detail. Trump said: "The measures will be very strong."

At a White House meeting on Monday evening, Trump told reporters: "We will also discuss getting time workers to help them never get paid." He also said that the government is considering "for small businesses Create a loan. "

But everything remains variable. Whether it's a broad stimulus or a smaller one, senior Republican senators have poured cold water on the possibility of a quick rollout, warning that it is too early because it is difficult to assess the extent to which the epidemic has damaged the economy. "A month or three weeks later, let's look at the situation again. It's too early, and I think people should be as calm as possible," said the Senate Appropriations Committee chairman and Alabama Republican senator on Monday.

For now, BNP Paribas believes that the leading indicators of major economies are performing well overall. Especially in the United States last week, a strong employment report was released, while China's early leading indicators (such as daily coal consumption) slowly rebounded from a low base. Regarding the new crown virus, the number of newly diagnosed patients in China and South Korea continues to decline; although this has not happened in Europe or the United States, the situation will improve in the next few weeks or months. However, in the most affected countries (Italy and Germany), there may be a technical recession (negative economic growth for two consecutive quarters).

The main cause of the overall recession may be the so-called "credit crunch." In this case, due to the temporary decline in economic activity (American energy producers are affected by the sharp decline in oil prices), the company will face short-term liquidity depletion, but its medium-term solvency is still good. If such companies are unable to obtain short-term financing, they will face bankruptcy risks and may trigger a snowball effect.

However, at that time, global central banks will further launch stimulus policies. "We believe that central banks and governments of all countries will make every effort to avoid this negative result." Tan Huimin told reporters that the above problems are the main reason for the panic decline in financial markets. Through strong and joint policy actions of governments Ease market sentiment.

At present, all circles are expected that the European Central Bank will announce some targeted measures on March 12 (even in advance) to provide liquidity for troubled companies and reduce their deposit interest rate to -0.60% (down 10bp) to curb the appreciation of the euro ; The Federal Reserve will cut interest rates by 25 to 50bp at the monetary policy meeting (March 19). In the next few months, the US benchmark interest rate is likely to return to 0 to 0.25% during the 2008 financial crisis. Institutions are also expected to Many emerging countries are cutting rates.

Author: 4. Alina Cho (CBN reporter Duan Yu contributed to this)