On January 10, the central exchange rate of the renminbi against the US dollar in the interbank foreign exchange market was 6.7611 yuan, up 654 basis points from the previous year. Since 2023, the renminbi's median parity ratio against the US dollar has led to "six consecutive appreciations."
Coincidentally, the stock market had a "good start" on New Year's Day and week. Until January 10th, after the "Lunar Yang" Lunar New Year, the Shanghai Composite Index fell slightly, but the cumulative increase reached 2.6%.
In that respect, the author believes that economic fundamentals and policies will improve in 2023. Against the backdrop of a positive economic recovery, market investor confidence has increased, and domestic and foreign funds have invested in Chinese assets.
Factors such as China's economic revival, inflow of foreign capital, and seasonal foreign exchange payments and sales are believed to have been attributed to the market as the cause of this surge in the yuan. The continued appreciation of the renminbi during this period has undoubtedly been one of the factors that boosted the stock market, leading to a sharp inflow of foreign capital into A-shares. Relations between the two domestic and international institutions are unanimous, optimistic about Chinese assets.
Guo Shuqing, party secretary of the People's Bank of China and chairman of the China Banking Insurance Regulatory Commission, said that from a domestic perspective, the yuan has recently surged in value since late last year. , The increase in foreign capital income clearly indicates that the international financial market is very optimistic about our country's economic development, and is not interested in economic fundamentals such as prices and is full of confidence. In the medium to long term, the yuan will fluctuate bilaterally, but overall it will continue to strengthen.
From an international perspective, many Wall Street institutions have recently expressed renewed optimism about Chinese assets. On January 9, Goldman Sachs released its latest report, which predicted that China's stock market would rise 15% this year and that the yuan would rise to its highest level since April last year.
According to data, since January 10 this year, Northern Funds have poured into A-shares, net buying a total of 33.52 billion yuan. UBS suggested over-allocation of Chinese assets, saying that it is more reasonable to estimate the net profit of North Korean funds at around 200 billion yuan in 2023.
The long-term performance of capital markets is inextricably linked to the support of economic fundamentals. The excessive decline in market valuations in 2022 largely reflects a lack of market confidence. The key to promoting economic stability and recovery in 2023 is the comprehensive implementation of a set of policies to stabilize growth and protect it from the effects of various uncertainties, together with the combined efforts of multiple policies to stabilize growth. Agencies generally predict that China's GDP growth will exceed 5.5% in 2023.
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