Bank of Korea: Raise the benchmark interest rate by 50 basis points to 3% to control the soaring inflation rate.

Raising interest rates is still a risk point that the global market pays attention to.

Facing the fierce devaluation tide, the Bank of Korea announced on June 5438+02 that it would raise the benchmark interest rate by 50 basis points to 3%, reaching 3% for the first time in ten years. Some analysts believe that the Bank of Korea's sharp interest rate hike again is a signal of a major turning point in monetary policy. It tries to defend the won exchange rate, curb capital flight, and control the soaring inflation rate at the risk of economic downturn. According to the data released by the Korea Financial Supervisory Authority on June 5438+02, foreign investors sold 2.3 trillion won (about RMB11700 million yuan) of Korean stocks in September.

At present, the US stock market is in a critical time window, and the technology giant Intel suddenly exposed a big layoff plan. On June 27th, local time 10, Reuters quoted people familiar with the matter as saying that Intel is planning to lay off a large number of employees, and the number of layoffs may reach thousands. The announcement time is about 654381October 27th, before and after the release of the third quarter financial report. Since 2022, the market has continued to sell Intel shares, with a cumulative decline of nearly 50% during the year, and the total market value has evaporated by about 102 1 billion US dollars (about 732.2 billion yuan).

Meanwhile, legendary investor RayDalio, the founder of Bridge Water, the world's largest hedge fund, warned that a "perfect storm" was forming in the United States as the Federal Reserve kept raising interest rates. The head of the International Monetary Fund (IMF) money and capital markets also said that changes in investor sentiment may lead to a further 20% decline in the US stock market.

The Bank of Korea made a move.

At the critical moment, the Bank of Korea suddenly raised interest rates.

On June 2, local time 10, the Monetary Committee of the Bank of Korea (the central bank) held a meeting on the direction of monetary policy and decided to raise the benchmark interest rate by 50 basis points to 3%. This is the first time that South Korea's benchmark interest rate has reached 3% since June 20 12, and it is also the fifth time that the Bank of Korea has raised interest rates this year. Since August 20021,the Bank of Korea has raised interest rates by 250 basis points.

Looking back at the trajectory of the Bank of Korea's monetary policy, after a radical interest rate hike of 50 basis points in July this year, it began to be cautious in August, only raising interest rates by 25 basis points. The South Korean authorities are worried that excessive interest rate hikes may seriously harm the South Korean economy.

However, in the face of the storm of interest rate hike by the Federal Reserve, the depreciation of the won and inflationary pressure, the Bank of Korea raised interest rates by 50 basis points again in June+10, 5438, which is undoubtedly a major turning point in monetary policy signals. Moreover, the Bank of Korea said that it is necessary to continue raising interest rates, and the speed and extent of raising interest rates depend on inflation and economic growth.

Some analysts believe that under the downward pressure of the economy, the Bank of Korea firmly defends the won exchange rate, suppresses capital flight and tries to control the soaring inflation rate.

Lee Chang Yong, governor of the Bank of Korea, said at the press conference of the interest rate meeting that the foreign exchange trend is one of the main reasons for the decision to raise interest rates by 50 basis points, and the foreign exchange fluctuation stems from the expectation that the US dollar will strengthen. As the spread between South Korea and the United States continues to expand, the risk of capital outflow is currently being assessed.

After the Bank of Korea announced a 50 basis point interest rate hike, the exchange rate of the Korean won rose for a short time, and the exchange rate of the US dollar against the Korean won once fell by more than 1.5%, and then the decline narrowed. The yield of Korean 10-year government bonds once fell by 20 basis points, and now it is running around 4. 13%.

However, this action did not reverse the depreciation trend of the won. Since the Federal Reserve sharply raised interest rates, overseas capital has continuously sold the won, once pushing the exchange rate of the won to the lowest level in 13 years. In late September, the won fell below the key psychological integer of 1400 won in one fell swoop, and then continued to fall. Since 2022, the Korean won has fallen by nearly 20% against the US dollar, making it one of the worst performing currencies in Asia during the year.

At the same time, in order to defend the won, the South Korean authorities directly intervened in the market, resulting in a sharp drop in foreign exchange reserves. According to the report of the Bank of Korea, as of the end of September 2022, South Korea's foreign exchange reserves were 416.8 billion US dollars, a decrease of19.7 billion US dollars from the previous month, the largest monthly decline since the global financial crisis in 2008.

In addition, the data released by the Korea Financial Supervisory Institute on June 5438+02 showed that foreign investors sold 233.3 billion won (about RMB11700 million yuan) of Korean stocks in September. By the end of September, foreign investors held a total of 550.4 trillion won (about 2.9 trillion yuan) of listed stocks.

Another reason for the Bank of Korea to raise interest rates sharply is inflationary pressure. Due to heavy dependence on imported energy and upstream raw materials, the depreciation of the won has continuously aggravated the domestic inflation rate. According to official Korean data, South Korea's CPI rose by 5.6% year-on-year in September. Although July fell from the high point of nearly 24 years, it was still at a high level. For the future forecast, the Bank of Korea said that the inflation rate in South Korea will remain at a high level of 5% to 6% for a long time.

After the Bank of Korea raises interest rates, the Korean economy will face a great test. Affected by the downward pressure of the global economy, South Korea's exports are being negatively affected. The trade deficit in September was US$ 3.7 billion, which was the first consecutive six-month deficit in 25 years. The Bank of Korea believes that raising interest rates and the global economic slowdown will put pressure on the Korean economy, and South Korea's GDP growth rate in 2023 may be lower than the 2. 1% predicted in August.

American chip giant suddenly laid off employees

On the eve of the opening of the US stock market earnings season, the technology giant Intel exposed a big layoff plan.

On June 2, local time 10, Reuters quoted people familiar with the matter as saying that Intel is planning to lay off a large number of employees, and the number of layoffs may reach thousands.

At the same time, Bloomberg also reported that in the face of the slowdown in the PC market, Intel is planning to lay off a large number of employees, and the number of layoffs may reach thousands. The layoffs will be announced as early as June 5438+ 10, and the time will be around the third quarter earnings report released on June 27th 65438+ 10. Intel's sales and marketing department may affect about 20% employees. As of July 2022, the total number of Intel employees was 1 13700.

Intel declined to comment on reports of layoffs.

However, industry analysts said that reducing costs and maintaining performance are the main considerations of this layoff plan. Reuters said that in July, Intel lowered its annual sales and profit forecast after its second-quarter results failed to meet expectations.

According to the financial report in the second quarter of 2022, Intel's gross profit margin has shrunk to about 45% compared with the previous 60%. At the same time, the company lowered its sales forecast for 2022 by about $65,438+0,654,380 billion. Analysts predict that Intel's revenue will drop by nearly 20% in the third quarter.

At present, the capital market is also worried about Intel's future. Since 2022, Intel's share price has fallen by nearly 50%, and its total market value has evaporated by about 102 1 billion US dollars (about 732.2 billion yuan). At present, its share price has not stopped falling. Since June 10, it has dropped again by 1.7%, and the latest total market value is about 104 billion USD.

PatGelsinger, CEO of Intel, said that the company will adjust its business structure to increase profits, reduce core expenditures in 2022, and take more actions in the second half of the year.

At present, Intel's PC market is facing greater downward pressure. According to the latest data released by IDC, global PC sales declined 15% in the third quarter of this year, and the sales of PC brands such as HP, Dell and Lenovo all dropped sharply this year. In addition, the global chip winter is approaching, and Intel's chip business is also facing a greater test.

Bank of America said in its latest report that AMD's recent warning to the PC industry indicates that Intel's performance in the fourth quarter and 2023 is expected to have greater downside risks.

Intel may be just a microcosm of American technology giants. Under the shadow of the risk of economic recession in the United States, Silicon Valley giants such as Apple, Google and Amazon have slowed down their recruitment, and technology companies including Netflix and Raffles have also joined the ranks of layoffs.

Legendary warning: perfect storm

On June 65438+1October1local time, RayDalio, the founder and legendary investor of Bridgewater, the world's largest hedge fund, warned that a "perfect storm" was forming in the United States as the Fed kept raising interest rates, which would lead to the spread of economic pain.

Daglio said that the US government's stimulus plan during the epidemic caused an economic bubble. Loose policies have caused unprecedented inflation in the United States. Now, the Fed is braking hard, which will cause a huge retrogression. Coupled with this year's international geopolitical conflict, many factors have contributed to a "perfect storm."

Daglio added that when the federal funds rate exceeds 4.5%, the US economy may fall into recession. On Tuesday, US President Biden said, "If there is a recession in the US economy, it will be a very slight recession".

At present, the US stock market is in a critical time window, and the latest US inflation data will be released soon. In addition, the third quarter earnings season of US stocks has been announced one after another, and the US stock market is facing greater uncertainty. The funds of all parties in the US stock market are becoming more cautious. The three major US stock indexes collectively closed down overnight. The Standard & Poor's 500 index fell 0.33%, the Nasdaq index fell 0.09%, and the Dow index fell 0. 1%. Both the Standard & Poor's 500 Index and the Nasdaq Index suffered six consecutive losses, and the Nasdaq Index continued to hit a new low in July 2020.

JPMorgan Chase's trading department warned that if the US CPI exceeds the previous value of 8.3% in September, it will be a big trouble for US stocks, which is similar to the 4.3% decline of the Standard & Poor's 500 Index when the CPI data was released last time, and it is likely to be another trading day with a one-day decline of 5%.

Local time 1 1, TobiasAdrian, head of money and capital markets of the International Monetary Fund (IMF), warned that changes in investor sentiment may lead to a further 20% decline in the US stock market. According to IMF research, in the current market downturn, rising interest rates and future earnings expectations are depressing the company's valuation.