【After-Work Economics】Full Breakdown of the Fed's Interest Rate Hike! Why Retail Investors Shouldn't Panic-Sell Stocks? Experts Reveal the Key to Taiwan Stocks Hitting Record Highs

Federal Reserve rate hikes often unsettle markets, but financial expert Wu Jia-long points out that the real purpose of rate hike cycles is to combat inflation expectations. Historical data shows that risk assets, including equities, tend to rise during periods of rate hikes. As long as the economic outlook remains positive, corporate profitability is expected to surge rapidly.

Regarding the Taiwan stock market and the movements of 'national champion' TSMC, experts suggest that if TSMC's future earnings and price-to-earnings (P/E) ratio are revised upward, combined with foreign capital expenditure forecasts, the potential for Taiwan stocks to reach record highs becomes increasingly plausible.

Meanwhile, a major global reallocation of capital is underway. The U.S. Treasury and the Bank of Japan are jointly intervening in currency markets through repurchase agreements and currency swap arrangements, providing unlimited support for the yen. This has triggered the unwinding of carry trades and a return of capital to Japan.

In contrast, China's 10-year government bond yield continues to decline, revealing a lack of viable domestic investment opportunities. Major state-owned Chinese banks are shifting funds overseas to capture interest rate differentials, effectively enabling the U.S. to conduct a broad financial tightening on China, accelerating capital flight.

China's economy faces a severe crisis involving real estate, debt, and capital outflows. According to experts, President Xi Jinping has effectively abandoned market rescue efforts, instead prioritizing enhanced social surveillance and military control—attempting to transform China into a larger version of 'North Korea.' Fearing that economic reforms could undermine the Communist Party's political legitimacy, the government appears willing to accept economic decline and increased public dependence on the party.

This geopolitical and economic retreat not only traps China's economy in a dead end but also creates a 'transfer effect' benefiting Taiwan. For more insights, tune into 'After-Work Economics,' hosted by Xie Zheqing, Zhang Qiongfang, and financial expert Wu Jia-long.