ATFXAnalysis: Is lowering reserve requirements good or bad for the stock market, and investing away from fraud

Lowering reserve requirement refers to the central bank lowering the statutory deposit reserve ratio, which is one of the three major policy tools for the central bank to carry out macroeconomic regulation. However, what impact will the central bank's reserve requirement reduction have on the stock market?Is it positive or negative?Let's take a look with the editor.

Is lowering reserve requirements good or bad for the stock market?

Lowering reserve requirements does not have a direct impact on the stock market, but rather an indirect and positive impact. As mentioned earlier, lowering the reserve requirement is a macroeconomic regulation operation conducted by the central bank, aimed atforeign exchangeThe main purpose of lowering the reserve requirement is to resist the current depreciation trend of the RMB, so it does not directly affect the stock market, but has an indirect positive effect.

There is an expectation of depreciation of the RMB, and investors naturally tend to seek hedging targets. However, the decrease in bank deposit rates and the economic downturn in the real estate market have led to people flocking to the stock market, which is beneficial for the stock market. In addition, the depreciation of the RMB will promote exports and suppress imports, improve the export competitiveness of China's goods, and maintain overall economic stability. Corresponding to the improvement in the operating conditions of export-oriented listed companies, it naturally has a certain positive impact on stocks.

Of course, lowering reserve requirements not only benefits the stock market, but also tends to be beneficial for banks. By lowering reserve requirements, the central bank can increase market liquidity and enhance commercial banks' credit lending capabilities. On the other hand, by providing relatively loose liquidity of funds, it is beneficial for commercial banks to lower their costs at market interest rates, which helps banks to provide lower financing costs and credit funds in the future.