Chapter 1069 [The lightning exchange reform is finally here]

There are 150 million shareholders in the two major A cities, and only more than 5 million people meet the entry threshold of the SGX, which can be said to be very rare.

However, such large millionaires, even 5 million people, can theoretically support a huge liquidity of 5 trillion yuan. Even if 2 million people open accounts on the SGX, they can fully support it.

What's more, in addition to stock investors, there are also Christian citizens. The number of Christian citizens in China is several times that of stock investors, and there are at least more than 300 million Christian citizens.

With Fang Hong’s current influence and appeal, the passive index fund investment products such as on-exchange ETFs and over-the-counter ETF feeder funds will definitely be highly sought after by the public, thus bringing huge profits to the SGX. fluidity.

There are also some active public and private equity funds on the SGX, some institutions that want to take advantage of Qunxing Capital, etc. It can be said that they have no worries about liquidity and financing capabilities.

…

In the next few days, Fang Hong stopped paying attention to the A-share market for the time being. Instead, he set his sights on the foreign exchange market and was concerned about another important matter.

On Wednesday, August 5, Luo Qingan found Fang Hong just because of the matter that he was concerned about.

At about 16:00 on Wednesday afternoon, the two met.

At this moment, Luo Qing'an handed a document he brought to Fang Hong and said: "Yangyang Bank has decided to further improve the central parity quotation of the RMB against the US dollar and enhance its marketization and benchmarking. It has been determined to be announced on the 11th of this month. "

Fang Hong briefly read the materials and then said in a pretense of surprise: "Is this... too sudden? A sudden implementation of exchange reform when the market is still in shock?"

The 811 exchange reform is finally here.

Another important thing that Fang Hong paid attention to during this period was this matter. Judging from Luo Qingan's statement, Yangyang Bank did not admit that this was an exchange reform, but instead improved the central parity rate quotation of the RMB against the US dollar.

In other words, after this measure was implemented, the central government no longer guided the setting of the central parity rate for the RMB exchange rate. Instead, it handed over the pricing power to the inter-bank foreign exchange market, and the market supply and demand determined the pricing of the RMB exchange rate.

According to Mundell's Impossible Triangle theory, it is impossible to have free flow of capital, independent monetary policy, and fixed exchange rates at the same time, and one of them must be abandoned.

The exchange rate reform measures mainly include two aspects: First, the policy of maintaining the stability of the RMB against the US dollar is revoked and the exchange rate is adjusted with reference to a basket of currencies; second, the exchange rate is allowed to float within a certain range. Free fluctuations within.

In other words, between the free flow of capital, independent monetary policy, and fixed exchange rates, exchange rate fixing is abandoned.

Seeing his surprised expression, Luo Qingan quickly added: "What do you think of this?"

Hearing this, Fang Hong wanted to say: It has been decided, how else can I see it? See with your eyes, of course.

However, Fang Hong also understands that when such major changes occur, he should tell himself about a week in advance. The underlying meaning is that your position must be stable. He knows that Qunxing Capital is very good at making money through gambling in the foreign exchange market. You can't do it for Making money here magnifies volatility, and it's best to help out when necessary.

For any institution, whether it is good news or bad news, as long as it can know the news in advance, it is a good thing. It can make targeted arrangements in advance and obtain huge benefits from it. It is nothing more than leaving little room for bad news and plenty of good news.

If you know the news in advance and ambush in advance, you can make money.

But it was obvious that Fang Hongbin was informed of this matter early, not because he wanted him to make money.

However, since he was asked what his opinion was, Fang Hong could not say anything, so he said: "My opinion, generally speaking, I agree. To promote the internationalization of the RMB, we cannot always anchor it to the US dollar."

At this point, Fang Hong immediately changed the topic. He looked at Luo Qing'an and said bluntly: "It's just that the timing of the introduction is questionable. The stock market panicked and plummeted last month, but now it has finally stabilized. If this measure is introduced in this time window, , is very likely to cause a linkage effect between stocks and foreign exchanges, causing financial markets to become turbulent again."

Fang Hong looked at the materials in his hand, paused for a moment and then said: "Secondly, this blitzkrieg operation method is a bit too radical. Volkswagen and many import and export companies may not be able to accept a one-time depreciation, especially in the current time window. If the market is moderate, The depreciation will have a much better effect; in addition, communication with the market should be maintained. If the communication is insufficient, the negative effects will be amplified and cause market panic."

"The Federal Reserve has been saying that it wants to raise interest rates for three quarters, but it has not yet raised interest rates. Other countries will also communicate with the market before carrying out reforms. Yangyang Bank's communication with the market this time is not enough. Of course, Yangyang Bank's actions must be It is understandable to worry that after communication, the market will go crazy buying foreign exchange. Reform always comes with some cost, but the cost of early communication should be less than such a sudden huge shock to the market."

Luo Qing'an nodded silently and said nothing, but he also heard what Fang Hong meant. Fang Hong agreed with the general direction of the matter, but he had different views on the specific implementation methods.

After a while, Fang Hong continued: "Another one is that the current exchange rate formation mechanism is relatively prone to depreciation and difficulty in appreciation. In the face of a strong U.S. dollar, the basket currency can certainly alleviate the depreciation pressure of the RMB against the U.S. dollar, but when When faced with other shocks, the RMB exchange rate against the US dollar and the RMB CFETF (Interbank Interbank Funding) basket currencies will increase depreciation pressure on each other. In the face of an uncleared foreign exchange market, the RMB CFETS basket currencies may be prone to depreciation. Li’s dilemma.”

"The last point is that Yangyang Bank's management of market expectations is also debatable. This exchange reform may make it difficult for people to form correct market expectations, and managing expectations should be Yangyang Bank's basic responsibility."

At this point, Fang Hong changed the topic again and added with a smile: "Of course, I can understand the difficulties of Yangyang Bank. Sometimes if the general direction of the exchange rate is too clear, the market can easily go crazy. Mainland investors are prone to follow the trend when prices rise or fall sharply. If expectations are not properly managed, once the herd effect occurs, systemic risks may arise."

At the end, Fang Hong sighed and said: "With the exchange rate reform, interest rate liberalization is also in progress, and the economic environment at home and abroad is also in a period of adjustment, I think many banks have no idea where the RMB exchange rate will go. Institutions, enterprises, and the public will all be confused. To be honest, I am quite confused now. I don’t know whether to use the exchange rate as the guideline? Or the interest rate as the guideline? We should proactively manage expectations. This may be the best solution. ."

When Luo Qing'an saw Fang Hong saying this, he said that he had finished explaining his views. The two chatted for a few more words and ended the interview.

Lao Luo was quite relaxed. After all, he played the role of a mouthpiece. He completed the task by conveying the words and reporting Fang Hong's views. As for other matters, which had nothing to do with him, there was no need to worry about it.

...(End of chapter)