Interest rates rise after the company Countermeasures Countermeasures

Document Sample
Interest rates rise after the company Countermeasures Countermeasures Powered By Docstoc
					Interest rates rise after the company Countermeasures Countermeasures

 interest rates Enterprises to
 recent, events in the evolution of China's inflation and central bank issued the
relevant policies, are harbingers of a 10-year-old interest rate history will end down,
interest rates trend has become increasingly clear. Generally speaking, interest rates
on deposits, interest income may increase, but businesses, as borrowing costs
increased, business investment projects requires a higher return, the corresponding
increase investment risk. To do this, find interest rates should      line and after the
reunification noon        enterprises to thick waterproof silk Tuo E clever little vent
neck them must cut off the feet】 Man-Kang Pan cup core purpose Weng Suan?

  interest rates on business impact
  higher interest rates, optimize the capital structure of the natural positive impact, but
it is difficult to offset the negative impact of increased investment risk, so companies
are most concerned about the negative impact of higher interest rates. Interest rates
negative impact on the business are many, specifically, from the beginning elements
of corporate financial statements, and then observe the impact on listed companies.
  1. Elements of the financial statements
  first impact of asset and negative effects. Since deposit interest rates, businesses will
get more money in the bank's risk-free interest income, obviously businesses are more
willing to "sit back", which may "bank" to increase. At the same time, companies will
give up some of the corresponding investment rate of return less than the deposit rates
of projects, thus reducing the investment projects, which may make "long-term
investment" to reduce the amount of such items. The "bank deposits" increased,
"long-term investment," the reduction, they then convey a message to the external: the
company has no long-term profitable investment projects, only the wearer posing with
immediate savings, despite the good prospects of the. This loss of space for
development of the signal makes the current and potential investors already have lost
confidence in the enterprise, to sell shares held on the company's public image
  second impact of contingent liabilities and negative effects. As interest rates rise,
companies either to or from the financial markets from banks for funding, will pay a
higher price than ever, business development is expected to weigh the benefits and the
cost of funding level, in some cases, companies may be forced to give up some
short-term expected returns are low or high risk of significant long-term benefits of
development projects. While reducing corporate debt, such as "long-term borrowing"
such items, but to a certain extent, business decisions will show the "quick",
"short-sighted" of the state.
  third impact of owner's equity resulting from the negative effects of the project.
Interest rate movements and changes in stock price movement is a reverse relationship,
that is, interest rates, the stock price will fall. In the same number of shares issued
under the premise of the value of corporate stock to fall, then the value of enterprises
will decline.
 Fourth, the impact of costs arising from the negative effects of the project. Clearly,
the rise in interest rates makes the financial costs of corporate interest payments were
increased; deposit interest rate rise has made to increase the amount of interest income.
The difference between the two movements will increase as the financial cost or
deduction. As we all know, the general goal of business is profit maximization, cost
increases to achieve this goal is clearly a process of "stumbling block."
 fifth, the negative impact of the role of profits. Interest rate rise will not only
increase corporate borrowing costs, but also difficult to obtain the necessary funding
to enterprises, such enterprises have to cut production scale, while the scale of
production, there will inevitably reduce the company's future profits. To measure the
effectiveness of those profits for companies, reducing profits will adversely affect
their survival.

 2. Stock prices of listed companies, the impact of
 for the listed companies, stock is the market value of integrated enterprise
performance, adverse changes will affect the company's image, affect the survival and
development. The changes in interest rates impact on the stock market the most direct
and rapid. Generally speaking, interest rates decline, the stock price up; interest rates,
the stock price will fall. This is mainly for three reasons:
 first, interest rates, not only increases the cost of borrowing for companies, but also
difficult to obtain the necessary funding to enterprises so that enterprises have to
reduce the scale of production, and production scale narrow, there will inevitably
reduce the company's future profits. The bleak outlook is expected to make stock
prices fall. On the contrary, shares of
 ticket price will rise.
 second, interest rates, investors used to evaluate the stock value of the discount rate
will rise, while the discount rate and inversely proportional to the value of the stock
value will decline, therefore, to also make the corresponding stock prices down; the
other hand, interest rates decline, the stock price rises.
 third, interest rates, the part of the shift of funds from a bank savings into stocks and
buying bonds, which will reduce demand for the stock market, according to supply
and demand principle, the stock price will decline. Conversely, when interest rates
decline, the profitability of savings and lower part of the funds could come back to the
stock market, thereby expanding the demand for shares, the stock prices.
 interest rate changes and stock price movement is the reverse was the general
situation, in practice, there will be some exceptions. In addition, corporate bond
interest rates lead to higher costs, lack of funds for those who own, send expect
significant growth through the issuance of bonds to raise funds for businesses, interest
rates reduced the bond issue and even blocked. However, the negative impact of
interest rates show more on the financial statements for the negative effects generated
by the project.
 after interest rates Strategies
 corporate lending interest rates, finance charges will increase income and other
expenses in the same conditions, will reduce the profits of enterprises, but also serve
the interest tax deductible role, so that the amount of enterprise income tax payable
reduced accordingly. However, in practice depends on the role of interest tax
deductible, very few companies, mostly concerned about the financing costs, find
ways to defuse the negative impact of higher interest rates.
  first, adjusting the investment portfolio structure. Although the investment in stocks
or bonds than the return on investment high, investment money market funds invest in
bonds than safer, but as interest rates rise, bond investment will significantly enhance
the appeal. While bond yields have not yet reached the point where people coveted,
but shares owned enterprises for various reasons, will inevitably face the risk of one
kind or another. While a good business investment operations can be part of a
scientific approach to avoid risks, but the inherent risks of difficult to resolve, would
make impossible the way corporate shares held up; while income risk is relatively low
(or even no) and the final level of future bond returns are likely to exceed the stock.
Of course, this does not mean that enterprises should throw all the stock, but if a slight
change in investment strategy, such as the traditional stock and bond "64 to open," the
ratio of investment to make some adjustments, into the two equal shares, etc., may
does not need to pay too much, but it can be above-average returns.
  second suspension of purchase of bonds. The implementation of the contract interest
rate debt, which means buying bonds today and tomorrow if interest rates rise, you
can only purchase agreement by the interest rate. Also, advance payment bonds to
suffer a certain loss, holding period of less than six months of no interest payment, at
least six months can enjoy the equivalent of less than one year of current deposit rates.
In addition, cash advance fees should also pay the thousandth, so soon after the
purchase of bonds, if the deposit after-tax adjustments of interest rates higher than
government bonds, it would mean to be "wiped off" the. So, if you think the
conditions have been raising interest rates, may wish to temporarily put the money in
the bank, and then decide according to changes in interest rates later in the investment

 third, more investment in "short debt." In interest rates, shorten the total duration of
the portfolio is a universal and effective way to avoid interest rate risk. Investors often
sell "in the long-term debt" and will free up the funds used in "short-term debt" and
capital markets. Large accumulation of capital and competition will help to money
market interest rates remain at low to run. Need to remind investors that the currency
market is also interest rate risk, although investors can hold the "short bond" to
resolve this risk, but the utilization rate of capital, liquidity and improve the return
rate perspective, enterprises are still should be taken into account various factors, and
make positive adjustments.
 fourth, to consider the savings in foreign currency into yuan. The dollar, Japanese
yen, Hong Kong dollar and the euro common currency deposit rates are lower than
the RMB deposit interest rate over the same period, if the experience of RMB deposit
interest rates, foreign currency time deposits more uneconomical. If you do not take
into account changes in the exchange rate factor, just to get interest on deposits, then
met the yuan interest rates, can be in the hands of foreign currency converted into
yuan through the proper channels savings to enjoy the high interest rates after the
interest income.
  fifth, good use of the special interest-bearing call deposit requirements. Call deposit
is the deposit without the agreed deposit period, paid in advance notice when the bank
paid the agreed date and amount before being paid a deposit types. Notice deposits,
certificates of deposit does not indicate the existence
  [1] [2] Next / center>