Foreign Market Reserves In Emerging Market Countries Begin To Decline

On Tuesday, data released by the International Monetary Fund (IMF) showed that foreign exchange reserves in emerging and developing economies fell by US $114 billion 500 million in 2014 to US $7 trillion and 740 billion in 2014, the first annual decline since 1995.

At the end of the second quarter of last year, emerging markets

It has reached a record high of 8 trillion and 60 billion dollars.

According to the British report, the newspaper surveyed 10 people.

Economists, 9 of them, say that emerging markets have gone through a "peak of external reserves" and that their foreign exchange reserves may continue to decrease in the coming months.

The reasons for the decline in foreign exchange reserves in emerging markets may include competitiveness decline, capital flight and concerns about the appreciation of the US dollar.

Last but not least, the strength of the current US dollar has brought to the emerging economies.

The appreciation of the US dollar increases the debt burden of the emerging market countries, and capital outflows trigger a liquidity crisis.

Statistics from Holland International Group (ING) show that in the first two months of this year, foreign exchange reserves of emerging economies decreased by US $299 billion 700 million, and the rate of decline was accelerated.

Maarten-Jan Bakkum, a senior strategist at emerging markets in the group, said that emerging markets began to peaked in June last year, and most of the world's reserves are declining except Mexico, India and Indonesia.

At the end of 2004, foreign exchange reserves in emerging markets were US $1 trillion and 700 billion, and over the past ten years increased by more than US $6 trillion. A large proportion of them existed in the form of State bonds in developed countries.

The financial times commented that a large proportion of the capital from the trade surplus, portfolio inflow and direct investment in emerging markets returned to the debt markets of the United States and Europe, providing funding for debt driven growth in developed economies.

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As a weathervane of institutional change, China's stock market can be interpreted in three levels: 1, to release the potential of the economy; 2, to boost market confidence; 3, to drive industrial innovation.

In the work report of the National People's Congress, Premier Li Keqiang passionately appealed to "mass entrepreneurship and innovation", which means that the leading force of investment and financing will gradually change from the government at all levels and the state-owned enterprises to the capital market and the private economy.

At the same time, economic potential will be enlarged step by step through the stock market.

Whenever the stock market rises beyond the expectations of me and most organizations, I will instinctively think of a classic concept of Behavioral Finance: irrational prosperity.

The original meaning of this financial concept is: irrational and prosperity. Once institutional change becomes the consensus of most people, it will form positive feedback through the wealth effect of stock market investment, turn into optimism of investors, and drive more capital into the market, so that more people will have optimistic expectations and even forget risks.

The most difficult factor to quantify in the stock market prediction is investor sentiment, and investor sentiment is contagious.

The spread of the spirit in the stock market drives stock prices skyrocketing and plunging, which is unpredictable, just like what Newton said when he bought shares and lost his savings for many years, "I can figure out the orbit of celestial bodies, but can not calculate the craziness of human nature."

If the stock market rises only from the emotional side, it will be difficult to sustain. Substantive institutional changes will continue to drive the pformation of the economy, so that the fictitious wealth of the stock market will become virtual, so that the stock market risks can be turned into danger.

So what is the goal of this system reform? If only the reform of the stock issuing registration system is achieved, the Shanghai Composite Index will achieve the expected goal, so the strength behind the rising stock market is not just the institutional change of the stock market itself.

It can be expected that China's stock market seems to be looking forward to further deepening reform in the future.