Research On The Effect Of China's Real Estate And Precious Metals Market To Hedge Inflation

Inflation has an important impact on economic and social development.Whether it is ordinary people or institutional investors,inflation will have an adverse impact on its holdings.The decline in purchasing power and the loss of assets make inflation risk resistance gradually become a concern for everyone.The problem.Since the real estate reform in China in 1998,the development of the real estate market has gradually accelerated,and housing-related research has gradually become a hot spot for scholars.The traditional view is that real estate and precious metals are high-quality assets that hedge inflation risks.The rapid rise in real estate prices makes investment returns more substantial and can make up for the losses caused by inflation,while silver and gold are the most common precious metals.Varieties are tangible value reserves that can play a complementary role in diversification of investment,so precious metal investment can be a good investment to hedge inflation.In the past,research on the ability of real estate and precious metals to resist inflation has yielded rich research results,but relevant research on China has yet to be deepened.Under the background of frequent fluctuations in asset income levels,we fully study the characteristics of inflation hedging in China's real estate and precious metals market investment,and find evidence in the theoretical and empirical evidence of hedging inflation in China's asset market,which can maintain stability for China's asset market.Effective development provides theoretical basis and practical value.This paper focuses on the relationship between real estate and precious metal assets returns and inflation,and theoretically explains the impact mechanism between inflation and real estate and precious metal assets.In the empirical research,based on the monthly real estate income data from 1991 to 2017 in China,the structural mutation test and NARDL model were used to measure the effect of different real estate types in China on hedging inflation risks.In addition,panel data of 31 provincial-level regions in China were used.From the perspective of the overall distribution of the rate of return,the ability of different property incomes to resist inflation was studied.The quantile regression and Markov conversion model were also used to test the inflation hedging ability of precious metals investment from the perspective of extreme return risk and nonlinear conversion.Specifically,based on the NARDL model,the inflation changes are positively and negatively decomposed,and the long-term and short-term asymmetric hedging characteristics of real estate income are analyzed.Using the structural mutation unit root test,it is found that there are obvious structural mutations in China's real estate market.Before the housing reform in 1998,there was no inflation hedging effect on commercial housing and residential investment in both long-term and short-term,but after housing reform,four real estates only existed long-term effective hedge against inflation risks,the effect of office building investment hedging inflation is the best among the four real estates.From the perspective of asymmetry,the effect of four real estates on hedging inflation when inflation is lower is greater than the hedging effect when rising.Further,using panel quantile regression to conduct empirical tests on subregions,the results show that the overall commercial housing,residential and office building income can positively resist inflation risks,and there is a difference in the effect of hedging inflation at the quantile of different real estate returns.However,the effect of commercial camps on hedging inflation is not significant.In the study of precious metals,it was found that the ability of precious metal investment income to hedge inflation risks at different quantile levels is different.In the long run,the three gold stocks cannot significantly hedge inflation,but this situation is mainly affected by the extreme values of individual periods.After excluding the extreme values,gold can effectively hedge inflation in the long run,while Ag(T+ D)Silver spot gains can better resist inflation in the long run.Au99.99,Au99.95 gold spot can make up for the loss caused by inflation at high and low points.When it is higher than 80%,the better the gold yield,the better the currency.The ability to expand is also stronger.The period in which silver spot hedges inflation risk is mainly in the case that the yield is at a slightly better average,and the market cannot resist inflation risk under extreme circumstances.When the silver yield is at a higher quintile,it is not only unable to resist the inflation risk,but also causes investors to cause certain losses.From the perspective of asymmetric hedging,the Markov switch regression model is used to identify the effect of precious metals on hedging inflation under different volatility regime.It is found that when the yield is in a high volatility regime,only silver can significantly hedge inflation.However,gold has a better inflation hedging effect in the low-volatility regime.In the high-volatility regime,not only can it not hedge against inflation,but it will cause investors to have greater losses.Precious metals have the highest self-sustaining probability in low volatility period,and gold has remained relatively low volatility for most of the period including the subprime crisis and the European debt crisis,which is an effective tool for hedging inflation in most periods.Finally,based on the empirical conclusions,the paper puts forward reasonable suggestions for Chinese investors based on China's current real estate and gold market conditions and the domestic and international economic environment.Investors should not only pay attention to the real estate market,but also pay attention to the risks brought about by market deflation,because in the short term,this will lead to a rapid decline in real estate income,resulting in greater losses.In addition,we should also consider the impact of structural break factors.At this stage,many regions in China have introduced a series of policies to control housing prices.The impact of these factors on housing prices cannot be ignored,and the effect of real estate to hedge inflation may also change.In addition to real estate,private investors can also preserve and increase their value by investing in precious metals.The ability of precious metals to hedge inflation depends on investment time span,market conditions and market risk levels.Investors should consider these non-linear characteristics in their investment in precious metals and make appropriate choices based on their economic stage.