The risk of a “hard landing†for the Chinese economy and the possibility of a renminbi appreciation in place have made the renminbi’s short-selling power increasingly strong. When the funds of various funds bet on the continued appreciation of the renminbi, some minority parties chose the opposite direction. “We are indeed shorting the renminbi.†Cullen Thompson, chief investment officer of New York-based investment firm Bienville Capital Management LLC, told Caixin’s “New Century†that the possibility of a depreciation of the renminbi against the US dollar is at least as expected by the market. Be bigger. Recently, the price of short-term RMB options in overseas markets has risen slightly, indicating that transactions in short-selling RMB are increasing. Although the mainstream opinion in the market is still bullish, there has not been a long-term turning point, but the emergence of a few short-selling transactions means that the overwhelming consensus of the appreciation of the renminbi against the US dollar has been divided. This is because the renminbi has been rising since the exchange rate reform, and on the other hand, the market's worries about the Chinese economy are increasing. China's economic growth rate, structural adjustment success, local government debt risk, current account balance, capital account opening prospects, inflation risks and other economic fundamentals will affect the exchange rate of the RMB against the US dollar. Bet on "foreseen surprises" "We did this a few months ago." Thompson told Caixin "New Century" reporter that the Chinese economy is heading for a "soft landing" or "hard landing" despite the extent and timing of the decline. Not sure. As early as April this year, Thompson said at a meeting of investors that “it has been tried to prudently reduce any significant leverage risk that depends on the high growth rate of China’s economy.†Thompson emphasized that “the RMB depreciation is not necessarily considered as a baseline situation. ". But he believes that the Chinese economy does have some problems. Considering the seriousness of the potential risks, anything can happen. The North American state wealth management company Broyhill Family Office is also shorting the yuan. Christopher Pavese, the company's chief investment officer, wrote on the company's website on June 30 that he couldn't be sure that the yuan would depreciate, but dare to say that it is much more likely than Mr. Market believes. . “At the time of this writing, the author is selling the renminbi through traditional and derivative instruments, even though the positions are changing at any time.†The article ends with a statement. The more influential team is the California-based hedge fund Corriente Advisors LLC. The company is well-known, its chief investment officer Mark Hart established the US subprime crisis fund in 2006, and launched the European sovereign debt crisis fund in 2007, all of which were successful short-selling. “Market participants are complacent about China and are terrible similar to the US subprime crisis and the situation before the European sovereign debt crisis.†Hart told investors in November last year. He set up the China Opportunity Master Fund to try to profit from the slowdown of the Chinese economy. A US asset management company who understands Corriente Advisors' investment strategy told Caixin "New Century" reporter that the company is gambling on the market to underestimate the probability of a financial event, and the gambling can make a big profit. "They don't think the risk of the renminbi is rising." Instead, the market believes that the risk of the renminbi is significantly underestimated.†Pavezel believes that China’s debt-driven speculative bubble may cause the devaluation of the renminbi to become a “foreseeable accidentâ€. What he calls "foreseeable accidents" has three characteristics: at least some people realize that there are problems; they become more serious over time; eventually they will form a crisis with great impact. “The timing of predicting such things is challenging and frustrating, but doubts at the time do not mean that risks can be ignored.†Paweize said that every investor is looking for investment opportunities in China and they think China will maintain its current growth rate, so what happens when these people are wrong? “At least it is worthwhile to take some insurance measures in the portfolio to hedge the above assumptions are the wrong risks.†More importantly, “taking insurance measures to hedge risks is almost free,†said Pavezel. Low cost is also one of Thompson's considerations. “Short options are really cheap.†One of the main tools for investment companies and hedge funds to short the yuan is to buy yuan short-selling options, mostly for one year. A foreign exchange trader of a European bank in Hong Kong said that there are two indicators to judge the extent of overseas short-term renminbi behavior. The first is how much the hedge fund bought, “this is hard to findâ€; the second is the price of the option. At the beginning of July, after the purchase of a dollar in the market, the exchange rate of the US dollar against the RMB was 1:7.0, and the option for each $1 million denomination was paid $2,200. But four or six months ago, you only need to pay between $500 and $600. A US hedge fund person who is shorting RMB also told Caixin’s “New Century†reporter that the price of RMB short-selling options is almost twice that of a year ago. The price of such options is rising in the past few weeks, but there are still attractive. Moreover, he believes that the price rise is precisely the signal that more people are beginning to pay attention to China's volatility. The above-mentioned foreign exchange traders said that in the past, the RMB depreciation in the foreign exchange market has been disregarded by overseas investors, but the situation is changing now. The attractiveness of RMB short-selling options is that they can hedge against the risk of RMB depreciation and profit. The above-mentioned American hedge fund people introduced that there are two ways to make profits. The first is to hold options and wait for the RMB to depreciate. The second is to sell options at higher prices in market fluctuations. The liquidity of the options market is insufficient." Two short-selling logic new "new century" reporters found that shorting the renminbi is mainly based on two logics, one is the crisis theory, that is, the Chinese economy may be due to risks such as real estate bubbles and local government debt. The "hard landing", the central government will adopt a stimulus policy, the devaluation of the renminbi is one of them; the second is the appreciation of the position, that is, considering China's high inflation and high housing prices, as well as the narrowing of the trade surplus, the renminbi against the US dollar will soon be in place or even in place. If the central bank does not intervene, market forces may depreciate. "Flies don't lick seamless eggs." Hedge funds short the currency of a country, mostly because of the expected economic fundamentals. Paveze is very worried about China's government debt risk. According to local government debt data released by the National Audit Office on June 27, the proportion of local government debt to GDP has increased from 17% to 27% in the past three years, and more than 60% has invested in infrastructure, and nearly one-quarter of debt repayment depends. Land income. Seeing the above data, Pavez is worried that in the case of tighter monetary conditions and a more fragile global economy, once the credit is slowed down and the economy is substantially constrained, local debt default will grow rapidly. Bienville Capital Management has been paying attention to the Chinese economy and the renminbi for more than 18 months. In an interview with Caixin's "New Century" reporter, Thompson said that shorting the renminbi is only one of the measures taken to prevent China's potential "hard landing" or "soft landing" risks. The problem of China's economy, "In the short term is inflation, China's inflation is not only cyclical, it will restrict policy flexibility; in the medium term, credit problems may arise, and its scale and severity will exceed the problems that have occurred before. He stressed that the Chinese economy benefits from cheap loans, and once a large amount of liquidity disappears, the problem will appear and have a negative impact on the already fragile global economy. Hart began to look at the yuan since last year. At a meeting of investors last November, he pointed out that China's inappropriate low interest rates and artificially suppressed exchange rates have created a dangerous bubble in many areas such as real estate and bank credit. However, some people believe that the logic of the Chinese economic crisis leading to the depreciation of the renminbi may not make sense. "This logic does not understand China's policy characteristics. Even if the economy really hits hard, it will not necessarily depreciate the renminbi." Wang Zhihao, research director of Standard Chartered Bank Greater China, said in an interview with Caixin's "New Century" reporter, 2008 In response to the crisis, the central government stimulated the economy through a large number of investment projects and increased export tax rebates. It did not use the RMB depreciation tool, but only linked the RMB to the US dollar. The above-mentioned US asset management companies also reminded that China's exchange rate policy is not necessarily synchronized with fiscal policy and monetary policy. "First of all, I don't think China's economy will make a hard landing. Even if it is hard landing, it will reflect a long period of RMB exchange rate." From the economic fundamental point of view, the second logic of bearish RMB is that the RMB is close to equilibrium estimate. value. Since the exchange reform in July 2005, the RMB has appreciated by nearly 22% against the US dollar. China's trade imbalance has improved significantly, and the trade surplus as a share of GDP has fallen from 7.5% in 2007 to around 3% in 2010. A person in the foreign exchange administration believes that, in theory, the recent improvement in current account balances, especially the imbalance in trade balances, shows that there is no significant appreciation of the RMB exchange rate. Judging from the over-estimation of asset prices such as stock prices and house prices, the RMB exchange rate may even depreciate. In addition, inflation plays an increasingly important role in the adjustment of the RMB exchange rate. On February 4 this year, the semi-annual exchange rate policy report issued by the US Treasury Department pointed out that since China's inflation is significantly higher than that of the United States, the actual appreciation of the renminbi adjusted for inflation will be faster, and it will reach an annual appreciation of 10%. The appreciation of the position theory has also been questioned. Wang Zhihao believes that the trade surplus will increase in the second half of the year, as the growth rate of imports will slow down and the export situation is not bad. Even if the capital account is gradually liberalized, there is no way to balance the capital account within a day or two. Therefore, "double surplus will continue, there will be pressure for appreciation." In June, China's trade surplus was higher than expected to reach 22 billion US dollars. RMB go in tracking foreign exchange market more than a decade researchers Adam Kriz (Adam Kritzer) endorsed the yuan continues to appreciate the economic base has been relatively weak, but he believes that this does not mean that the yuan "will not or should not continue to rise ". “Investors’ behavior is often irrational.†Kris received an interview with Caixin’s “New Century†reporter. In the next few years, China may have a economic downturn or financial crisis, forcing foreign investors to stop betting on the renminbi’s further appreciation. . But the reality now is that foreign investors are still happy to ignore fundamentals and blindly invest large amounts of money in Chinese projects, directly or indirectly betting that the yuan continues to appreciate. The above-mentioned Hong Kong hedge fund people also believe that from the perspective of purchasing power, the renminbi can be considered overvalued, but overestimation cannot be a reason for bearishness. Stephen Jen, managing director of macroeconomics and monetary operations at London-based hedge fund BlueGold Capital Management LLP, believes that the key consideration for answering “whether the yuan will depreciate†is that Chinese policymakers are on the RMB exchange rate. What can I do? "The real impact of market pressure on the renminbi is not as big as other currencies." Ren Yongli accepted an interview with Caixin's "New Century" reporter. Although the renminbi has become more flexible, in terms of the rate of change of the renminbi against the US dollar, Policy implications remain a very important factor. “The accumulation of foreign exchange reserves is still very fast. This shows that the movement of RMB against the US dollar is in the hands of policy makers rather than investors.†A Chinese research director at the Washington Hedge Fund believes that the Chinese central bank holds more than 30,000 The US$100 million foreign exchange reserve can control the rise and fall of the renminbi. If there is depreciation pressure, it can sell the US dollar to buy the renminbi. In this regard, Thompson believes that people mentioned that China's large-scale foreign exchange reserves are correct, but the risk is that such large-scale liquidity may suddenly disappear. Ren Yongli believes that as long as the Chinese government regards inflation as the primary focus of growth, the RMB will continue to appreciate against the US dollar. However, if the global economy slows down substantially in the second half of the year, weakening the Chinese government's confidence in economic growth, it may see a slowdown in the appreciation of the renminbi. The Chinese research director of the Washington hedge fund believes that even if China's economic slowdown is still much higher than the growth rate of the US and Europe, the appreciation of the renminbi may slow down, but the direction will not change. However, some signals from recent market data transmissions indicate that the appreciation of the RMB against the US dollar is weakening and deserves further attention. Beginning in May, one-year non-deliverable forward foreign exchange transactions (NDF) showed a gradual decline in the expected appreciation of the renminbi. The one-year NDF and the mid-price of the RMB against the US dollar showed an appreciation rate from 3.02% on April 29 to 1% on July 19. At the same time, domestic RMB forward settlement and sales (DF) and NDF prices continued to be upside down. Liu Dongliang, an analyst at China Merchants Bank's financial market department, said in an interview with Caixin's "New Century" reporter that the spread between DF and NDF is often sensitive to the strength of the expectation of appreciation. Generally, the appreciation of overseas NDF is expected to be larger than DF, that is, The NDF value is less than DF. When NDF is greater than DF, it means that the expectation of overseas investors' appreciation is weakened. Overseas investors are more sensitive to changes in exchange rate expectations. Therefore, it is worth paying attention to the upside down. Historical data shows that since the exchange reform in July 2005, the phenomenon of DF and NDF prices has been reversed three times. The first time between the third quarter of 2008 and the first quarter of 2009, along with this upside down, the RMB has been stagnation for two years with the appreciation of the US dollar; the second time appeared briefly in the second quarter of 2010, when the regulatory authorities repeatedly Reiterate that the renminbi will not appreciate at one time, and the market appreciation expectation will continue to weaken. On the third occasion, the spread will narrow from May, and there may be upside down. Liu Dongliang believes that under the influence of China's trade surplus trend narrowing, high inflation, erosion of the appreciation space, narrowing of the arbitrage space, and macroeconomic cooling, the unilateral appreciation of the RMB against the US dollar is nearing completion. The appreciation may continue, but after half a year, the renminbi is likely to end the unilateral appreciation phase, entering two-way volatility and even phased devaluation. In addition, the latest published foreign exchange reserve data shows that in the last two months of the first half of the year, the growth of foreign exchange reserves fell sharply. In the second quarter, foreign exchange reserves increased by 152.8 billion US dollars, down 22.56% from the first quarter. In particular, in May and June, new foreign exchange reserves were only $20.2 billion and $31.5 billion, respectively, while the trade surplus for the month was $13.1 billion and $22.3 billion, respectively. If foreign direct investment (FDI) is considered, the last two months The slowdown in capital inflows, and possibly even capital outflows, may also be a sign of weakening expectations for RMB appreciation.
Eagleburgmann Seals,Burgmann Seals,Burgmann M7N Mechanical Seal,Mechanical Seal Mg1
Shanghai Enactus Industrial Co., Ltd. , https://www.enactuseal.com