What is hot money ? What is hot money ?

What does not bring benefits to the country and society will bring about destructive effects. The most obvious feature is that you will leave with one vote.

Capital to make short-term investments.

Categories: Business Banking >> Finance.

Analysis: "Hot money" is a popular term for international arbitrage capital, which is flooded with liquid capital without specific purposes. Some people also vividly refer to international arbitrage capital as "crossing the river dragon" and "financial crocodile".

It is a short-term speculative capital that flows rapidly in the international financial market in pursuit of the highest return and lowest risk. Its biggest feature is short-term, arbitrage and speculation. When the RMB exchange rate is expected to improve and the interest rate is higher than that of foreign currencies, "hot money" will flow into arbitrage in every possible way.

Once these two conditions change in the opposite direction, the "hot money" will quickly withdraw, causing turmoil in the financial markets.

Thailand pursued a policy of high interest rates before the 1997 Asian financial crisis, and a large amount of "hot money" poured in; After the depreciation of the Thai baht, this "hot money" quickly escaped, causing Thailand's economic edifice to collapse.

In general, international heat money flows to two heat sources:

1.Short-term interest rates are at swing highs, or are still rising.

2.In the short term, the exchange rate is poised to gain momentum and is about to appreciate.

As long as China meets the above two requirements.

Hot money just keeps flowing.

Generally speaking, in developing countries, the economy is taking off, the national income is growing, and the market that is waiting to rise, as long as it meets the above requirements compared with other countries, it can attract hot money from all over the world.

But hot money is also the least loyal at all, and they will stay until their home country is relative to other countries:

1.Short-term interest rates have retreated**.

2.The exchange rate is waiting to depreciate in the short term.

Hot money will flow out again.

The so-called hot money outflow is the sale of domestic currency-denominated assets, such as foreign-owned assets, treasury bonds, speculative land, etc., sold in large quantities, exchanged for other countries' currencies, and then remitted.

If the above one in and one out, if the time is short and the flow is large, it will cause the country's ** bond market to burst and fall. The seniors said well, and you must guard against it.

1. Hot money refers to floating capital, or speculative short-term funds, which is defined in the business dictionary as "short-term capital with high liquidity that moves quickly to any country that can provide better returns." The Shanghai ** R&D Center believes that the traditional sense of hot money refers to international short-term capital, but according to China's national conditions, hot money includes both international short-term capital and medium and long-term capital.

2. The purpose of hot money is to make money in as little time as possible, and it is short-term speculative money that flows rapidly in the market in pursuit of high returns, purely to make money by speculation, rather than to create jobs, goods or services. In October 2011, the new foreign exchange account showed negative growth for the first time in nearly four years, and overseas hot money withdrew from China. It has had varying degrees of impact on China's economy.

Hot money means floating money, or speculative short-term money, which is defined in the business dictionary as "highly liquid short-term capital that moves rapidly to any country that offers better returns." The Shanghai ** R&D Center believes that hot money in the traditional sense mainly refers to international short-term capital, but according to China's national conditions, hot money includes both international short-term capital and medium and long-term capital.

The formation of hot money is due to the globalization of financial markets and the rapid expansion of international investment**. In addition to medium- to long-term investments, many** of well-resourced countries also reserve some opportunities for short-term investments in mobile funds in search of high returns. The characteristics of hot money are as follows:

1. High reward and high risk. The pursuit of high returns is the ultimate goal of the flow of hot money in the global financial markets. Of course, high returns often come with high risks, so hot money earns high-risk profits.

2. High degree of informatization and sensitivity. Hot money is the darling of the information age. It is highly sensitive to the economic and financial conditions and trends of a country, a region or the world, the exchange rate differences, interest rate differentials and various ** differences in various financial markets, as well as the economic policies of the relevant countries, and can be quickly reflected.

3. High liquidity and short-term. Based on a high degree of informatization and a high degree of sensitivity, they can enter quickly when there is money to be made, and flee immediately when the risk increases. It is very short-term, even ultra-short-term, and can be quickly in and out in a day or a week.

4. Investments are highly fictitious and speculative. Hot money is a kind of investment in funds, which mainly refers to their investment in the world's valuable markets and currency markets in order to profit from the fluctuations of the market and currency, that is, "using money to make money", which has a certain lubricating effect on the financial market.