interest rate
Interest rate, also known as interest rate, refers to the ratio of the interest amount formed during the loan period to the amount of borrowed funds. The interest rate directly reflects the cost of the debtor's use of funds in the credit relationship, and is also the reward for the creditor's transfer of the right to use funds.
Why is the relationship between the rise and fall of interest rate and the change of stock price in reverse motion? There are three main reasons for this:
The rising interest rate will not only increase the borrowing cost of the company, but also make it difficult for the company to obtain the necessary funds. In this way, the company has to reduce the production scale, and the reduction of production scale will inevitably reduce the company's future profits. As a result, the stock price will fall. On the contrary, the stock price will rise.
(2) When the interest rate rises, the discount rate used by investors to evaluate the stock price will also rise, so the stock value will drop, and the stock price will also drop accordingly; On the contrary, interest rates fall and share prices rise.
(3) When the interest rate rises, some funds will shift from investing in the stock market to bank savings and buying bonds, which will reduce the market demand for stocks and make the stock price fall. On the contrary, when the interest rate falls, the yield of savings decreases, and some funds may flow from banks and bond markets to the stock market, thus increasing the demand for stocks and raising the stock price. Since it is common that interest rates and stock prices move in opposite directions, investors should pay close attention to the rise and fall of interest rates and make necessary predictions on the trend of interest rates so as to make stock trading decisions before interest rates change.
To predict the fluctuation trend of interest rates, we should pay attention to the changes of the following factors in China:
(1) Changes in loan interest rate. Since the loan funds are supplied by deposits, it can be inferred from the downward adjustment of the loan interest rate that the deposit interest rate will inevitably fall.
(2) Market trends. If the market is prosperous and prices rise, the state may take measures to raise interest rates to reduce market pressure by attracting residents' deposits. On the contrary, if the market is weak, the country may start the market by lowering the interest rate level.
③ The tension of the capital market and the interest rate level of the international financial market. The interest rate level in the international financial market can often affect the rise and fall of the domestic interest rate level and the stock market. In an open market system, money has no national boundaries. If the overseas interest rate level is low, on the one hand, it will have an impact on the domestic interest rate level, on the other hand, it will also attract overseas funds to enter the domestic stock market and push up the stock price. On the contrary, if overseas standards rise, the opposite will happen.