Historically, there is a clear "leverage effect" between interest rates and the stock market. In general, interest rates rise, the stock market will fall; interest rates down, the stock market will rise.
The first interest rate hike was on May 15, 1993, when the Shanghai index fell 69.86 points; the second interest rate hike on July 11, 1993, made the index fall by a maximum of 40.02 points, the two interest rate hikes made the Shanghai market in three months from 1,167.47 points to 777.73 points, a drop of more than 30 percent.
The third interest rate hike occurred on October 29, 2004, the stock index fell a maximum of 37.67 points on that day, and ended up with a loss of 21.20 points; the fourth, March 17, 2005, the People's Bank of China raised the housing loan interest rate, the Shanghai Composite Index fell a maximum of 13.08 points on that day, and then the market rushed to the bottom of 998 points.
However, the impact of the interest rate hike on the market has tended to weaken so far this year. On April 28 this year, the financial institutions of the lending rate hike, the day the market jumped 13.21 points lower, but then on the fast uptrend, and finally closed up 23.49 points, which also opened the prelude to the main market in May.
Yibang Investment Pan Minli pointed out that, under the impact of the news of the interest rate hike, this week's stock index will break the previous hard to build up a short balance, tendency to choose.
Last Friday, the central bank announced a rate hike of 27 basis points, the stock market's sensitive nerves were once again touched, and institutions also tend to increase the differences for the market. Some people believe that the interest rate hike on the stock market to form a substantial negative; but some other people pointed out that the interest rate hike does not hinder the market pace of the bull.
Capital supply and corporate earnings under pressure
Interest rate hikes have been seen as one of the major downsides to the stock market, as higher interest rates will attract away some of the stock market's capital. At the same time, rising interest rates will also raise production costs, dampen corporate demand and personal consumption demand, which will ultimately affect the performance of listed companies.
Some market participants pointed out that the interest rate hike will lead to a decline in the valuation level of the stock market. Especially in the first half of this year, the stock market cumulative gains, investors higher profits, the interest rate hike in the short term will constitute a certain negative impact on the stock market, will inhibit the recent stock market trend. Experts particularly emphasized that the interest rate hike will inevitably cause a certain impact on the psychology of investors to further enhance their expectations of increasing macro-control, and may make their expectations of the market change, thus affecting the confidence of investors to hold stocks.
Southwest Securities researcher Zhang Gang believes that the shortfall will be realized to form a wave of rebound, but the impact of macro-control measures and tight monetary policy is not a short-term can be ended, will still cause the listed companies benefiting from the accelerated investment, performance of the upstream industry's market positioning has been adjusted downward, the institutional funds to cash out of the cause of the decline. Judging from this, the interest rate hike, although the short-term rebound, but the medium-term impact on the stock market is negative.
Industry researchers generally believe that the interest rate hike has increased the financing costs of listed companies, for capital-intensive, high debt ratio of industries and companies will have a greater impact, the first to bear the brunt of the real estate industry may be. The negative impact on the aviation, automobile, steel, petrochemical, cement, highway and other capital-intensive and high debt ratio industry is also more obvious. Market analysts suggest that investors should avoid high-debt, high-energy-consuming industries or enterprises after the interest rate hike, and can shift their investment focus to leading companies in consumer industries with brand advantages and abundant cash flow.
The negative is good?
However, there are some institutions are still optimistic about the market, they believe that in the bull market, after the shortcomings, the market may, on the contrary, treat it as a good thing.
Jiang Fan, a researcher at Soochow Securities, studied the pattern of several interest rate hikes on the market and found that if the market is in a bear market and in the early and late stages of the decline, the hike will accelerate the pace of the market downward, on the contrary, in a bull market, the hike will have only a short-term impact, and will not be able to change the upward trend of the market.
"The previous five interest rate hikes on the market impact once than a small strength, on the one hand, because the market has been expected, on the other hand, that when the market size gradually grows, the plate will be between this and that." Jiang Fan said.
Some market participants pointed out that the bull market in the short-term news will cause the market to briefly shock, but will never change the trend, after the interest rate hike on April 28 this year, the stock market opened low and high and a record high is a typical example.