Hong Hao: It is highly probable that capital will start flowing back to China and gold will continue to hit new highs.

Recently, Hong Hao, Chief Economist of Suisui, stated that the entire return expectation and capital flow are likely to change, and capital is beginning to flow back. At least four to five trillion US dollars can flow back to the Chinese market from overseas, which will greatly boost the appreciation of the RMB. He believes that gold will continue to reach new highs. This is mainly because, if the Fed cuts interest rates, the cost of holding gold will decrease as holding gold does not earn interest, while holding US government bonds does. Hong Hao pointed out that the appreciation of the RMB is good for Hong Kong stocks, as Hong Kong stocks are assets priced in US dollars. In this wave of market trends, Hong Kong stocks are performing slightly better than A-shares. Due to low valuations and changing expectations for the RMB, technology stocks are rebounding more strongly. The real estate sector is also being boosted by rumors of mortgage rate cuts. In fact, some of the large banking stocks in A-shares are showing clear signs of a triple top pattern from a technical perspective. Therefore, with the combination of technical and fundamental news, many are taking profits in the banking sector, which has already risen so much. Hong Hao believes that one should not be too pessimistic about A-shares. The breadth of the market has actually improved rather than worsened. If the width expands, and small and medium caps and the Growth Enterprise Market can rise a little, although the overall index may not look as good, for the majority of investors, the probability of making gains by buying stocks is increasing, as the proportion of rising stocks is increasing, and the winning side is expanding rather than shrinking. Regarding gold, the investment logic of gold in the past was mainly triggered by the lack of purchasing power of sovereign currencies and the lack of trust in the existing dollar credit system. Now, if the logic of sovereign debt and currency purchasing power still exists, but the opportunity cost is decreasing, Hong Hao believes that gold will continue to reach new highs. Hong Hao stated that the volatility of the world is increasing, so there is actually a lack of safe assets. Or, the supply of safe assets is far smaller than the demand for them, not only for US Treasury bonds. Therefore, Chinese government bonds have the potential to become a global safe asset supply. Not only because the macro trends are very clear, but also because the credit rating of the Chinese government is underestimated, especially for international investors, they are unlikely to default. Therefore, in the new situation, Chinese government bonds can also become an attractive safe asset for global investors. If people continue to buy, the yield of government bonds will continue to decline.