Since the second half of 20 14, under the comprehensive influence of domestic economic slowdown, structural adjustment, international capital flow and expected changes in the Federal Reserve's monetary policy, the RMB exchange rate has continued to depreciate. In the second half of 20 16, in order to prevent the asset price bubble from affecting the financial system and release the pressure of capital outflow and narrowing spread brought by the Fed's interest rate hike, China's central bank guided the orderly depreciation of RMB.

Although RMB depreciation has changed from disorder to order, it still has a great impact on financial market risk appetite and asset allocation. On the one hand, RMB depreciation is not only affected by capital outflow, but also intensifies the pressure of capital outflow. According to the data of the International Finance Association, from 2000 to 20 13, a large amount of international capital flowed into emerging economies, but from the second half of 20 16, international capital was in an outflow trend in emerging economies. On the other hand, the deleveraging of financial markets and capital outflow have a positive effect, which brings new challenges to investors' wealth management. How to realize stable income or improve income under the macro background of low return on investment is an urgent problem for institutional and individual investors.

The first method is to use exchange rate derivatives to hedge the risk of exchange difference caused by the potential depreciation of RMB. From the perspective of financial institutions, the central bank is likely to coordinate with relevant departments in the future to allow and guide foreign investors to enter the domestic interest rate derivatives market to hedge interest rate and exchange rate risks. In addition, through infrastructure cooperation at home and abroad, we can explore ways to extend the transaction time and reduce the burden of repeated account opening by foreign investors, improve the convenience of transactions and realize the hedging of RMB exchange rate fluctuations.

The second method, which is more suitable for investors, is to use derivatives such as commodity futures, options and ETFs to achieve indirect hedging. At present, investing in overseas dollar products is not only limited by investment channels, but also troubled by cross-border costs. Therefore, hedging through commodity derivatives can not only save capital costs, but also expand investment channels and make investment methods more flexible.

Judging from the impact of RMB depreciation on commodity prices, first, it varies according to different commodity categories. For goods denominated in US dollars in the world and goods imported from China, the depreciation of RMB will drive the prices of such goods to be stronger than those of similar goods denominated in US dollars in the international market, and the import cost will increase; For domestic net exports, such as steel and electrolytic aluminum, the dependence on imports is not high. The depreciation of RMB means that capital outflow will suppress domestic demand and more surplus needs to be passed on, which is not necessarily a good thing. Second, from the perspective of time cycle, in the cycle of oversupply, such as 20 15, the depreciation of RMB will lead to the suppression of bulk commodities because of weak demand and capital outflow; However, the depreciation of RMB 20 16 boosted the prices of most commodities, because the supply-side reform of RMB 20 16 led to the temporary shortage of domestic supply of most commodities, and it was necessary to increase imports, thus increasing the import cost.

So how to use financial derivatives to hedge the risk of RMB depreciation? Compared with several investment methods under the background of RMB depreciation, such as buying dollar assets (including foreign exchange settlement and foreign currency wealth management products), investing in QDII funds, buying overseas insurance policies, buying overseas real estate, etc., there are more or less inconveniences or shortcomings. From the perspective of QDII funds, there are also quota restrictions, especially near the end of the year, QDII quotas are in unprecedented shortage, and many fund companies have announced that they will "close down". Since 20 16, more than half of QDII funds have issued a purchase restriction announcement.

QDII funds investing in the US market are mainly divided into three categories: stock market, property market and commodities. Therefore, commodity derivatives will remain an extremely important part in the allocation of alternative assets in financial markets. The data shows that as of June 1 1 20 16, the income of QDII funds with oil and gas and other resource commodities as the main investment targets has risen sharply, which is higher than the performance of investing in precious metals this year. In addition, QDII funds that invest in precious metals such as gold have also performed quite well.

From the perspective of futures and options, we can also hedge the risks brought by RMB depreciation through arbitrage inside and outside commodity futures and options, such as doing more imported goods and shorting self-priced goods; Investors with overseas investment accounts can also consider doing more "domestic goods denominated in RMB" and shorting "international goods denominated in US dollars" for hedging. However, with the increase in the resumption of production of most commodities in 20 17, we suggest doing more domestic RMB-denominated gold and shorting other risky commodities.