The United States on Friday the third quarter of 2010 GDP growth stronger than expected results, but this week, November 2 ~ 3 at the two-day Federal Open Market Committee, is likely to also announce the second round of the U.S. The quantitative easing policy. If the Fed did not announce the second round of quantitative easing actions, then the market is expected to be large. Stronger than expected third quarter GDP growth is expected in the second round of easing the impact of major policies will be limited to the scale.

The second round of quantitative easing, the Fed will have any effect on the market? This will mainly depend on its size. Many large compared to the optimism in the market to judge, I believe that the scale of the second round of quantitative easing would be limited. On the one hand the general trend of the U.S. economy to the good, the other members of the Federal Open Market Committee, a difference of opinion, such as a new round of quantitative easing policy is necessary, quantitative easing can be effective and whether there are other alternative policies. We expect the policy size in 500 to 1000 billion U.S. dollars between. More than one trillion U.S. dollars is unlikely, because the most difficult times of financial crisis, also 2 trillion.

In addition, we expect the second round of the quantitative easing program will be implemented gradually. Fed to buy assets that may be established overall goals and phased targets and the end of each stage in the assessment of the need to continue to buy. Evaluation variables should include the inflation rate, unemployment rate and GDP growth. The first round of purchases may be relatively small.

If so, how will it impact it? We judge that the policy impact on the real economy may not be too great, but in the financial markets, announced the quantitative easing policy will support the market sentiment, coupled with the private sector, the gradual recovery in investment and consumer spending, the stock market at the end of the year the former will likely continue upward.

In exchange, we expect the upcoming second round of the quantitative easing policy would not make the dollar continues to weaken. The dollar will fall in late 2010 to about 1.3 level. This is due to the scale of quantitative easing is not expected too much, and second, because the market had digested the expectations.

The impact on commodity markets, but also on the progress of the second round of the degree of easing and ultimately the amount of assets purchased. We determine commodity prices may fluctuate in the moderate range.

Well, the Chinese market will be affected? In recent months, capital flows to emerging market countries, heating, despite the high valuation of these countries, and structural concerns about high inflation still exists. Recent European and American investors through the exchange, we found that, although China’s high valuation of non-performing loans, local government debt and real estate has many concerns about policy uncertainty, most investors confidence in China’s strong growth. Regardless of the introduction of the second round of the U.S. policy of quantitative easing, the extent of capital inflows into China is a good news.

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