Chinanews Client Beijing, March 13th (Xie Yiguan) "I have lived 89 years old and have not seen this scene." Warren Buffett, the "share god", said in a foreign media interview about the recent financial markets. This time is just as scary as the "Black Monday" in October 1987.

Data Map: Warren Buffett. Image source: CFP Vision China

What is the scene that the stock god has lived 89 years and has not seen?

That is, the global financial markets plummeted on March 9. On the same day, US stocks were rare, the Dow fell sharply by more than 2,000 points, crude oil futures fell by more than 30% and fell below $ 30, and the yield on 10-year U.S. Treasuries fell below 0.4%, a record low.

In Buffett's view, the new crown pneumonia epidemic and crude oil turbulence are like a combination of boxing punches that hammer the market.

On March 12, the scene reappeared. Global financial markets plummeted, the US and other 11 stock markets melted, crude oil futures continued to plummet, and precious metals, gold and silver, were not spared.

Global stock markets tumble, record low

Affected by the new crown pneumonia epidemic, global stock markets staged a "Black Thursday". According to incomplete statistics, on the 12th, the US stock market, the Brazilian stock market, the Canadian stock market, the Thai stock market, the Philippine stock market, the Pakistan stock market, the South Korean stock market, the Indonesian stock market, the Mexican stock market, the Colombian stock market, and the Sri Lanka stock market. ".

On March 12, the three major US stock indexes closed down more than 9.4%, falling into a technical bear market, and the largest one-day drop since October 1987.

Among them, the Dow closed down 2352.30 points, or 9.99%, down to 21,200.62 points; the Nasdaq closed down 750.25 points, or down 9.43%, to 7208.80 points; the S & P 500 closed down 2609.74 points, or 9.51%, to 2480.64 points. Since the beginning of the year, the Dow has fallen 25.71%; the Nasdaq has fallen 19.74%; the S & P 500 has fallen 23.22%.

The Americas and Asia Pacific markets closed on the 12th.

As for the European stock market, on the 12th, the European Stoxx 600 Index closed down 11%, the largest decline in history. The German DAX index fell 12.24%, the largest single-day drop since October 1989; the French CAC40 index fell 12.28%, the largest single-day drop in the index's history; the British FTSE 100 index fell 10.87%. Since the beginning of the year, the three major stock indexes have fallen by more than 30%.

In the Asia-Pacific stock market, the Nikkei 225 index fell 4.41% to 18559.63 points, the lowest level since late April 2017; the Korea Composite Index fell 3.87% to 1834.33 points, the lowest level since the end of August 2015. The Hang Seng Index fell 3.6%, setting a new low since April 2017. Since the beginning of this year, the Nikkei 225 Index has fallen 21.55%; the Korea Composite Index has fallen 16.53%; the Hang Seng Index has fallen 13.77%.

On the 11th, the World Health Organization (WHO) for the first time characterized a new coronavirus epidemic as a pandemic. Market analysts warn that there will be more shocks. "We are witnessing the end of a bull market."

On the 12th, the world indexes of all MSCI countries fell by 1.9% at one time, the lowest level since January 2019. The MSCI Index is currently the most widely used benchmark index for portfolio managers worldwide. According to wind statistics, dozens of stock market indexes worldwide have entered a "technical bear market."

Global stock markets have fallen by more than 20% from their 2020 highs.

Crude oil futures also fell across the board due to the plunge in oil prices. NYMEX crude oil futures closed down 6.03% at $ 30.99 / barrel, and Brent crude oil futures fell 8.47% at $ 32.76 / barrel.

Under the hedging sentiment, most of the US Treasury yields fell. The 2-year US Treasury yield fell 5.2 basis points to 0.485%, the 3-year Treasury yield fell 7.7 basis points to 0.571%, and the 5-year Treasury yield fell. 9.8 basis points were reported at 0.613%, 10-year US Treasury yields fell 5.5 basis points to 0.816%, and 30-year Treasury yields rose 4.8 basis points to 1.443%.

Former U.S. Treasury Secretary Somers said that as the yield on U.S. Treasuries fell to ultra-low levels, the U.S. economy was also at risk of stagnation like Japan.

However, the safe-haven demand of the precious metals gold and silver failed to reflect and fell sharply. COMEX gold futures closed down 4.04% at US $ 1575.9 per ounce, a new low in a month; COMEX silver futures closed down 5.73% at US $ 15.815 per ounce.

Multinational emergency measures to boost the economy and inject a boost to the stock market?

The Federal Reserve Bank of New York announced that it will carry out a $ 500 billion three-month repurchase operation on the afternoon of the 12th, and on the 13th will also carry out a $ 500 billion three-month repurchase operation and a $ 500 billion one-month repurchase operation.

The Wall Street Journal said that despite the Fed's announcement that it would inject at least $ 1.5 trillion in liquidity into the market that day, funds still fled the stock market out of fear of the global economic outlook.

On the evening of the 11th local time, US President Trump gave a national television speech explaining the government's specific measures to deal with the new crown epidemic, including restricting European travel to the United States and boosting the economy.

Data Map: Pedestrians pass outside the NASDAQ Stock Exchange in New York, USA.

Affected by the epidemic, the current economic growth targets of many countries have been reduced.

Goldman Sachs chief U.S. economist Jan Hatzius cut US GDP growth forecast from 1.4% to 1.2%. In addition, Goldman Sachs also lowered South Korea ’s GDP growth forecast from 1.6% to 1%; the Organization for Economic Cooperation and Development (OECD) cut Japan ’s 2020 growth forecast by 0.4 percentage points from the previous 0.6%.

In Europe, the British government lowered its GDP growth forecast for 2020 to 1.1%; Deutsche Bank lowered Germany's GDP growth forecast for the first quarter by 0.2 percentage points; Bank of France on the 9th cut France's first quarter economic growth forecast from 0.3% to 0.1 %; The European Central Bank expects GDP growth in the euro area to be 0.8% in 2020, compared to 1.1% in December last year.

With the spread of the new crown pneumonia epidemic and the "oil price war" rolling, boosting the economy has become a priority for many countries. Carding shows that, in addition to the United States, Britain, France, Germany, Italy, Canada, Japan, South Korea and other countries have introduced or plan to introduce economic measures to boost economic growth.

For example, the Bank of England cut interest rates by 50 basis points and cut the benchmark interest rate to 0.25%; Italy allocated 7.5 billion euros from the budget to boost the economy; the Bank of Japan is considering the current exchange-traded fund of about 6 trillion yen per year (ETF) on the basis of the purchase quota, increase the quota, if implemented, it will be 3 years and 8 months to increase the leniency again.

On the 12th, the European Central Bank announced the interest rate resolution for its March meeting, maintaining the main refinancing interest rate unchanged at 0%, the deposit mechanism interest rate unchanged at -0.5%, and the marginal lending rate unchanged at 0.25%. At the same time, the European Central Bank has stepped up quantitative easing and liquidity tools, announced new LTRO tools, and added an additional 120 billion euros in asset purchases.

Zhou Maohua, macro analyst of the Financial Market Department of China Everbright Bank, believes that there are two main reasons why the European Central Bank has not cut interest rates this time. The first is that the interest rate cut is not a symptom, and the Federal Reserve ’s interest rate cut effect has not eased the market panic; There is very limited room for rate cuts, and the negative effects of European negative interest rates on banks and other financial institutions have been criticized by the market.

In Zhou Maohua's view, the short-term market lacks liquidity, and almost no asset is the winner.

"The question now is whether the coronavirus outbreak was a supply, demand, or financial shock—or a combination of the three? Traditional economists believe that this is mainly a negative supply shock, which will Reduce growth rates and increase costs. Monetary policy is basically powerless to deal with these risks. "Financial Times analysis said.

Data Map: New York Stock Exchange.

Will the financial crisis repeat itself in 2008?

At present, there are opinions that under the dual impact of the epidemic and oil prices, the debt risk of American companies may be exposed, which will cause the risk of deleveraging and economic recession to rise. Some even worry that it may trigger a financial crisis like 2008.

Ren Zeping, chief economist of the Evergrande Group and president of the Evergrande Research Institute, said that we are on the verge of the global economic and financial crisis, and the global pandemic is the fuse, which is basically the vulnerability of the global economic, financial and social society.

State Street economist Will Kinlaw said that with the decline in U.S. stocks, the possibility of the United States falling into a recession rose to about 75%. If U.S. stocks give up all the gains of the past 12 months, the possibility of the U.S. economy falling into recession will Rose to 80%.

"From the perspective of the financial cycle, this may be a total liquidation. Since the 2008 international financial crisis, the United States and Europe have mainly relied on quantitative easing and ultra-low interest rates, leading to asset price bubbles, rising debt leverage, and widening wealth gaps among residents." Ren Zeping Say.

However, Buffett believes that the current market is volatile, but so far it is not as good as the 2008 (financial crisis) catastrophe. There are people trading in the market at all times, and it is normal for news to affect prices.

"The U.S. government will take steps to boost the economy to ensure 'this is not an economic crisis'." Trump said on the 11th.

Li Daxiao, director of the Institute of British Securities Research, also believes that, unlike the financial crisis of 2008, the crash of 1929, and the stock market disaster of 1987, this time the US stock market meltdown is just a market resonance.

Li Daxiao said that if the response is more timely, the stock market quake still has hope to save. With a 30% decline in the short term, central banks around the world will act instead of being indifferent. Before the Federal Reserve and the Bank of England both cut interest rates, and now it is time for emergency measures to be introduced. The rescue action is urgent. (Finish)