RMB Surges by 2,000 Points, Foreign Capital Returns?

Many people believe that when Foxconn moved to India, and the associated industrial chain partially shifted to Vietnam and India, it was perceived as foreign capital withdrawing from China and not being optimistic about China's economy. But what is the real situation? Today, Feizhu will use four pieces of data to prove this.

Firstly, there is the change in exchange rates. Capital flows have a direct impact on exchange rates, causing fluctuations in the foreign exchange market. An increase in the exchange rate implies a strong local currency and inflow of foreign capital.

Since November, the exchange rate of the Chinese yuan against the US dollar has risen by about 2000 points in a row, and it is currently close to 7.17. As of Feizhu's publication, on the morning of November 20th, it rose by more than 450 points, breaking through the important threshold of 7.2 for the first time in nearly four months. It is highly likely that it will break the 7 mark in the future.

It is important to note that on September 8th of this year, this figure once reached close to 7.37, and it has been maintained above 7.3 for the past few months. This data clearly shows that foreign capital is continuously buying yuan-denominated assets, leading to the appreciation of the yuan. The exchange rate of the yuan is still on the rise.

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There are many reasons for the recent decline, among which interest rate hikes, settlement and exchange, and blind follow-up selling are important reasons. The investment market often has a last drop, which is to break everyone's psychological defense line of stop-loss, and then it will quickly bottom out and rebound, or even reverse.

This is the current trend and performance of the yuan exchange rate. So, there is no need to guess whether foreign capital has left or come, as the data does not lie.

Secondly, there is the number of newly added foreign enterprises. This data is even more direct. Isn't it said that foreign capital has withdrawn? According to this statement, if foreign capital has withdrawn, then the number of foreign companies in China must have decreased, right?However, the data tells a different story. According to the latest data from the Ministry of Commerce on November 17th, in the first ten months of this year, the number of newly established foreign-invested enterprises in China increased by 41,947, which is approximately a 32% increase compared to the same period last year.

Clearly, this is a significant deviation from the common perception that foreign capital is withdrawing from China. In fact, foreign capital is not withdrawing but entering.

In our existing concepts, due to the United States' containment of us, they want to isolate us from the global high-end industrial chain and withdraw enterprises from our country back to the United States or some Southeast Asian countries.

However, the withdrawal of the United States has also provided opportunities for other foreign capital. Other foreign capital is more optimistic about the Chinese market, and we can use the following third data to support this.

That is the data from Canada. When we mention Canada, the first thing that comes to mind is the arrest of Huawei's rotating CEO, Ms. Meng Wanzhou.

So in our imagination, would such a country follow the footsteps of the United States and withdraw its investments in China? If you think so, you are very wrong.

This is the third data point: Canadian investment in China has doubled, with an increase of 110%. This is what I just mentioned, you withdraw, but some people are looking forward to your withdrawal to fill the vacancy.

This is a pity for South Korea, which has been almost bankrupted by the United States' mobile hype.

In addition, there are also significant increases in the United Kingdom and France, with investments in China increasing by 95% and 90%, respectively.

The United States' containment has not stagnated our high-tech industry, but instead has optimized our country's industrial structure. The newly added foreign enterprises are more concentrated in high-tech manufacturing.Data indicates that the growth rate of foreign investment in the national manufacturing industry is 1.9%, but the increase in foreign investment in high-tech manufacturing has reached 9.5%.

This is very realistic; what we want is high-tech manufacturing.

Of course, the outflow of foreign capital, in addition to industrial companies, also includes outflows from the capital market. Not long ago, major foreign investments continuously flowed out, causing panic among people.

However, there is no need to worry too much because recently, Northbound funds have made significant purchases again. If we only look at the short-term inflow and outflow of funds, it is easy to be confused.

But another piece of data contradicts this illusion: the number of foreign investors among the top ten circulating shareholders of our country's listed companies has reached more than 800.

Although many U.S. public funds have withdrawn from our country, they have come back with a different guise because everyone knows that those who came early have floating profits.

If our stock market rises, they are likely to cash out and leave. Now, with the market fluctuating at a long-term bottom, these foreign investments are shouting to leave, allowing other foreign investments to come in. Otherwise, who would want to carry someone else's sedan chair!

In addition to U.S. funds, wealthy individuals from the Middle East have also arrived, with sovereign funds from countries such as Saudi Arabia, the United Arab Emirates, and Kuwait all coming in, still holding the RMB they sold oil for. This is incredibly refreshing!

Such real data, when presented here, can prove that our economic growth is still very strong. According to the current data, the U.S. economic growth this year is only 2.2%, while Europe and Japan have all experienced contraction, with the engine of the European economy, Germany, falling into a recession.

Now, for foreign investments, buying Chinese assets can not only enjoy the dividends brought by our strong economic growth but also enjoy the asset premium brought by the appreciation of the RMB exchange rate.It is estimated that the Chinese yuan will resume its appreciation against the US dollar in the near future. As is well known, the primary reason for the previous devaluation of the yuan and the depreciation of global currencies was the United States' unbridled interest rate hikes.

Now that the interest rate hikes have stopped and there is a high likelihood of future rate cuts, the yuan will once again enter an upward trajectory. Although the US cited controlling inflation as the excuse for raising interest rates, the high core inflation in the US is actually due to the increased tariffs imposed on us. After the recent easing of Sino-US relations, these tariffs will likely be lifted in the near future.

With such hedging, the US has gained the courage to stop raising interest rates. Overall, it can be seen that cooperation between China and the US can lead to mutual benefits and win-win outcomes. The global economy can stop falling and stabilize. Although the dollar has fallen, it has reduced inflation, and the appreciation of the yuan means that foreign capital can gain more returns.