The Federal Open Market Committee (FOMC) announced the latest interest rate resolution on June 15, local time, raising the benchmark interest rate by 75 basis points to a range of 1.50%-1.75%, the largest rate hike since 1994.

The Federal Reserve has started the most aggressive round of interest rate hikes in the past 20 years or more, and even ordinary people who are separated by oceans have felt the impact of this interest rate hike.

What will be the impact of Fed rate hikes? How should high net worth individuals allocate assets? Follow Xiaoxing to find out!

01

Fed rate hikes will have these effects

exchange rate loss

The most direct market reaction to the Fed rate hike is the strengthening of the dollar, followed by the weakening of the renminbi.

For those who need to study in the United States and buy American goods, the devaluation of the renminbi is a direct and visible loss.

In fact, the losses caused by the devaluation of the renminbi have an impact on almost everyone in the country. Inflationary pressures brought about by the appreciation of the dollar mean that ordinary people are paying more than before to bear the cost of raising interest rates by the Federal Reserve.

stock market losses

For many investors, the stock market losses caused by the Fed raising interest rates are far greater than the losses caused by exchange rate changes.

Although the A-share market is relatively independent from the US stock market, it cannot be completely insulated from the performance of the US stock market.

For example, on April 25 this year, the A-share market plummeted by 5%, and the Shanghai Composite Index fell below 3,000 points, partly due to the impact of the previous plunge in U.S. stocks.

triggering the global financial crisis

The reason why the U.S. dollar can trigger a global shock when it tightens currency is because of the existence of U.S. dollar hegemony, the U.S. dollar has become the world's most important reserve and settlement currency.

Historically, every time the Fed raises interest rates, it basically has a global impact, such as the Latin American debt crisis in the 1980s, the Southeast Asian financial crisis in the 1990s, and the Russian debt default in 1999, etc. All triggered by the Fed raising interest rates.

02

How to protect our "money bag"?

The Fed raises interest rates, the dollar enters a cycle of strength and appreciation, and other currencies will almost depreciate relatively.

For high net worth individuals, they should "don't put all their eggs in the same basket", and try to choose a multi-currency and diversified investment portfolio in asset allocation.

The best way to deal with inflation is to invest in real assets with inflation hedging properties. Therefore, it is a better choice to purchase overseas real estate than stocks, futures, exchange rates, purchasing commodities and other anti-inflation assets.

As early as 2020, in order to fight the epidemic and save the economy on the verge of collapse, the central banks of various countries had to "globally release water", resulting in up to 30% of the extra banknotes sprinkled into the circulation market around the world. Under the relationship between supply and demand, the global "price surge", and the most persistent and widest coverage is also the global real estate market.

In the past year, housing prices in many countries around the world have ushered in the largest increase in ten years, and the growth in housing prices in developed countries such as Europe, North America, Japan and South Korea has reached an astonishing level.

It can be seen that real estate is more worthy of investment than the stock market and other financial products.

Overseas real estate investment also has the following advantages:

Diversify the risk of a single currency.

With rental loans, the investment income can be amplified through the "leverage" of overseas real estate loans.

Building a house from a house and using the appreciation of real estate to achieve "fission of real estate".

Housing for the elderly, housing for education, asset inheritance, etc.

Overseas real estate has experienced nearly 20 years of development and changes from the original self-occupation function to today's asset allocation function, and its importance has gradually been recognized by investors.

Especially in recent years, in order to boost the economy, many countries have launched the immigration policy of buying a house and sending the status. Investors can also gain a "second status" while allocating assets.

"Second status" allows investors to enjoy the same treatment as locals in terms of children's education, career development, tax planning, and convenient transportation, which can be said to double the benefits!

Nebula International has successively established extensive and close cooperative relations with governments and relevant departments in the United Kingdom, the United States, Australia, Singapore, Turkey, Greece, Cyprus, etc., to help high-net-worth individuals around the world perfectly realize their dreams of global identity planning and asset allocation. Welcome to consult!