Impact of the Fed’s Rate Cut on China’s Capital Markets

Xiao Huang:DOORM, what impact will the Fed’s rate cut have on China’s capital markets? What specific effects can we expect?

DOORM:The Fed’s rate cut typically leads to a depreciation of the US dollar and a decrease in the attractiveness of dollar-denominated assets, prompting global funds to seek higher returns in other markets. This could lead to an appreciation of the Chinese yuan and other non-dollar currencies, with some international capital potentially flowing into Chinese markets. This influx could positively impact China’s capital markets, potentially driving up stock and bond prices. Additionally, the increased liquidity from international capital inflows could further boost asset prices.