Wen | Kaifeng
The world is the same as the hot and cold.
The epidemic is not over yet, and interest rate hikes have come.
Recently, the three emerging markets of Russia, Brazil, and Turkey announced interest rate hikes. Subsequently, the Norges Bank stated that it expects to start raising interest rates in the second half of the year, one quarter earlier than expected. This move will make it the first developed country to announce an interest rate hike.
This series of actions, beyond the market’s expectations, brought an unexpected shock to the global capital market.
On the contrary, China and the United States have basically stood still.
On March 22, China’s latest LPR interest rate was released. Whether it is the physical interest rate (1-year term) or the property market interest rate (5-year term), it will remain unchanged for nearly a year.
At the same time, the Fed stated that it has no interest rate hike considerations for the time being, and it is expected that it will not raise interest rates until 2023.
However, the market does not care about the Fed’s position. The 10-year U.S. Treasury yield has climbed all the way and hit a new high since January 2020. There is no suspense in the future to break through 2%. Inflation expectations are high. Why is the United States, which is the most flooded, indifferent, but emerging markets can’t afford it? The reason is very simple. The United States relies on the special status of the global currency harvester, and the cost of its water release can be transferred to the world to bear, and it still sits firmly in the Diaoyutai State.
Compared with the United States, emerging market economies are quite fragile. Inflation was high, the local currency continued to depreciate, and capital began to flow out. If we don’t stop the release of water, the future price will only be even heavier.
The problem is that the epidemic has not been contained, the economy has not yet recovered, and no country wants to raise interest rates early. However, the two evils are the lesser of power, and they are forced to raise interest rates so unexpectedly Spark Global Limited.
Raising interest rates has always been the end of asset bubbles.
In the past year, the global release of water has brought about the inflation of global asset prices. In some countries, stock prices and housing prices have both reached new highs. However, it was not China that saw the highest price increase.
Although the four major first-tier cities in Beijing, Shanghai, Guangzhou and Shenzhen have experienced considerable growth, some of the second-tier cities did not rise but fell. Housing prices returned to a year ago, and the overall increase was less than the previous two rounds of easing cycles.
In comparison, Turkey and Russia have both increased house prices by more than 20%; the overall house price increase in the United States, the United Kingdom, Canada, South Korea and other countries has also exceeded that of China, and the asset bubble has inflated across the board.
Look at the United States, according to the Kaienxile index, in December 2020, the United States Guo 20 major cities housing prices rose 10.1 percent, marking the largest increase since 2014. Since then, US housing prices have surpassed the level before the 2007 subprime mortgage crisis, and have nearly doubled compared to the trough in 2009. Looking at South Korea again, according to media reports, in 2020, house prices in Seoul, South Korea, exceeded 12 million won (approximately 70,000 yuan) per square meter for the first time in 2020. House prices have risen by 20% in the past year and 74% since 2017.
For this reason, South Korean President Moon Jae-in apologized for the surge in housing prices in his New Year’s message and said that the policy will focus on expanding the housing supply in the future.
Compared with the United States and South Korea, the situation in Turkey is even more exaggerated.
In 2020, Turkey’s housing prices have risen by more than 20%, ranking first in the world. The capital, Istanbul, has seen housing prices rising by more than 30%, which is among the highest in the world’s major cities.