17/7/2017-10

Hongli Huang Bairen: the market underestimated the US rate hike

US Federal Reserve Chairman Yelun attended the congressional hearing last week to release the dove’s speech, the market interpreted as the interest rate and then increase the space is limited, the global capital flows into the bond market and the stock market, both the debt and the stock price is good, this cover story interview Manulife Asset management fixed interest products executive director and senior portfolio manager Huang Bairen and Utopia asset partner Lu Zhiwei analysis of the latest situation. Huang Bairen that the market underestimated the Fed’s rate hike efforts, the material authorities will raise interest rates this year, the next one or more, the dollar will once again strengthen the Asian bond market in the second half of the performance is less than the first half; Lu Zhewei is convinced that the global (0388), Hang Seng H-share ETF (2828) and US technology stocks.

Huang Bairei predicted that the US Treasury Bureau of the normalization of interest rate determination firm, he estimated that the rest of the year at least the rate hike will be at least 1 times, and may even raise interest rates 2 times, water intensity is greater than market expectations, so the dollar Exchange rate material once again strengthened for the Asian bond market to bring short-term shocks, the second half of the debt default event also increased over the first half. Ming Pao reporter Ye Chuangcheng

Yale was attending a congressional hearing on Wednesday and Thursday for a two-day hearing on monetary policy. She said the US economic growth continued and the federal funds rate was close to the “neutral level”. The future rate hike The market will be interpreted as a dove speech, with the US stock market and bond market last week, both good, the Dow, the index and the Nasdaq recorded 1%, 1.4% and 2.6% increase in the United States The 10-year Treasury yield fell from 2.3856% to 2.3319%. Driven by the periphery, the Hang Seng Index also rose 1048 points or 4.1% last week, the largest increase in nearly 1 year, to close at 26389 points, is more than two years high.

Although the reader’s interest in the bond market may be less than the stock market, but Manulife Asset Management Huang Bairen was interviewed on the 2008 financial tsunami global funds into the Asian bond market impact of in-depth analysis, which can understand the market risk appetite Of the change, for the analysis of Hong Kong stocks also have some help back, worthy of attention.

US and European funds pushed up the Asian bond market

Huang Bairen recalled that during the fourth quarter of 2008 the financial tsunami, Chinese corporate bond prices had plummeted the yield, for example, Sinopec (0386) 5-year bond yield was as high as 18%, but with the The global central bank has launched a large amount of money (QE) to pay for debt, coupled with more and more active participation of mainland investors in the Asian bond market, the current market has been an extreme (pessimistic) from the tsunami, went to another extreme (optimistic) The US Federal Reserve has been the first to launch QE after the financial tsunami. At the beginning of QE, US investors were given priority to buying local bonds, and they were not particularly interested in Asian bonds, but when buying bonds bought US bond prices rose to yield The QE was originally started in the United States, but since 2010, after the outbreak of the European debt crisis for several years, the European Central Bank in 2015, the European Central Bank in 2015, the European Central Bank in the United States, Since the beginning to launch QE rescue, the result is to buy money into the euro zone bonds, to the European debt to buy can not buy, they also turn to invest in Asian bonds; In addition, Japan has maintained zero interest policy For years, the local government bonds face rate is basically zero, the yen continued to depreciate in recent years, the Japanese funds to go out to invest in Asian bonds, both earn and earn the exchange rate, which also increased the investment demand for Asian bonds; the last is China Factors, the current mainland banks, insurance companies and retail investors to large state-owned enterprises issued by foreign bonds a soft spot, and these North water is very eye-catching, and often sell foreign investment to make the debt down when the low absorption, the market sentiment improved foreign investment Chung In the case of the current investment in the Asian bond market not only to pay attention to the flow of foreign capital, the impact of the mainland funds also to the market, but also to invest in the market, Getting bigger “.

If the dollar is stronger than the second half of the dollar or shock

In the United States, Europe, Japan and China and other influx of funds, Huang Bai Ren said that the first half of this year, the Asian bond market recorded an average of about 5% return, did a good job, but entered the second half, he believes that investors underestimated the Federal Reserve Raising interest rates, worried that the dollar will rebound from the bottom of the dollar, so the second half of the performance of Asian bonds less than the first half, “I think the mainstream market views may not necessarily be correct, in November last year, Trump won the US president, everyone Worried about inflation to speed up the rate hike to strengthen the dollar, but the results of the first half of Trump is more than doing, inflation has remained low, so investors now believe that the Fed does not need the ability to raise interest rates significantly, but we believe that, The Federal Reserve’s determination to normalize interest rates is unwavering and it is expected that the authorities will raise interest rates at least once this year. If investors do not feel that they will raise interest rates again this year, it is overly optimistic. In this case, we believe that the dollar will appreciate moderately in the second half of the year, and the Asian currencies such as RMB and Korean won will be Devaluation of Asian bond investment opportunities mainly in Indonesia and the Indian market, the overall market is expected recorded a 1-4 percent return, not like the first half as good times. ”

Individual house debt in the second half or breach of contract

In addition, although the Asian overall bond market performed well in the first half of the year, there were still debt defaults such as Noble Group and Hong Kong Xinchang Group (0404) during the period. Huang Bairen analyzed the global market , So that some of the financial strength of the company can also issue bonds, the results of these companies eventually failed to pay interest on the bond or repay the principal, breach of contract; he warned that due to the second half of the market situation is less than the first half, expected to have more problems Bonds will “burst pot”, which is more likely to be the hardest hit, urging investors to be vigilant.

“In 7-8 years ago, the US dollar bonds issued in the house, the yield is generally as high as 10% or more, but due to abundant global liquidity, the world’s bond prices have increased, the dollar interest rate is also better, The yield has dropped to single digits, but you are now asking a question: “Is such a low yield to compensate for the risk of falling prices in the event of a credit problem in the case of an individual company’s operational problems? “I think the current market is too optimistic about the interior, investors see Kaisa industry (1638) a few years ago after the debt problem can eventually save the day, then think that will not happen later; but if there is a credit event in the future , The bond price is expected to fall off the gap (gapdown), such as the debt before the debt is 85 yuan, after the accident is the first price of 50 yuan, followed by more than 10 yuan, because no one wants to pick up the goods.

Bonds continued to wait and see

The mainland inter-bank bond market has always been dominated by local funds, with a foreign participation rate of only 2% (see figure). However, with the issuance of bonds on the 3rd of this month, foreign institutional investors can also buy and sell the market. However, the first day of bond turnover of about 7.038 billion yuan, after the low has been hovering, reflecting the slow foreign investment. Huang Bairen revealed that Manulife has been involved in the sale of bonds on the first day of the opening of the bond, but has not been a big attack; he estimated that to wait two factors clear, a few months after the foreign participation in the situation will be significantly improved.

Two risks: the debt fell down

He said: “First, the bond market launch time is short, foreign investment need to be familiar with how the system works in the bond before the introduction, Manulife has been qualified foreign investors (QFII) amount of investment in the mainland inter-bank bond market, the market More familiar with the first day of the bonds will be involved in the sale, but many foreign companies lack the experience, and the need for multiple approval departments to release after the first participation; second, because the rate of offshore corporate debt is higher than the shore enterprises , So foreign investors generally do not buy bonds on the bank corporate bonds, mainly to buy bonds, the four major state-owned commercial banks or policy banks issued bonds in the first half of the central part of the financial system to actively leverage, so that Treasury yields rise But the debt to the long road is long, the mainland debt rise, debt prices will fall in the long-term trend? In addition, if the dollar strengthened in the second half, Will the renminbi devalue again? These variables will affect the attractiveness of bonds to foreign investment. ”

Huang Bairen small file

● Executive Director and Senior Portfolio Manager, Asset Management, Hongli Asset Management, is responsible for the investment of Asian bonds in the bank. He is committed to investing in credit products in the region. He is responsible for the “Hongli Asia Total Return Fund”. Prior to joining Manulife in 2013, Executive director, led the bank’s credit research department; he worked as an accountant at KPMG in 1998. Bachelor of Business Administration (Accounting and Finance) from Hong Kong University, Master of Business Administration, Certified Public Accountant (CPA), Chartered Accountant (CPA) Financial Analyst (CFA)