Market Review
Key News Focus
China Market
1. The Central Bank is establishing a credit system covering the whole society
An article published by the Credit Management Bureau of the People's Bank of China also indicates that the next steps for the central bank include continuously enhancing the strength of rating agencies, improving international competitiveness; supporting capable financial technology forces to enter the rating market, encouraging consolidation and strengthening of existing institutions to enhance market potency, improving the overall quality of the industry; creating a healthy and orderly rating ecosystem, enhancing the independence and credibility of rating agencies. Rating agencies are encouraged to "go global," expand into overseas rating markets, and enhance international competitiveness and influence.
2. Beijing and 15 other cities pilot comprehensive electrification of public domain vehicles
Notices issued by the Ministry of Industry and Information Technology, the Ministry of Transport, and other departments specify three primary objectives: significantly enhancing vehicle electrification levels, ensuring robust recharging and swapping service systems, and promoting innovation in new technologies and models. Key tasks include improving vehicle electrification levels, fostering new technology applications, enhancing recharging and swapping infrastructure, and refining policies and management systems. The expectation is to promote electric vehicles in fields such as official use cars, urban buses, sanitation vehicles, taxis, postal and express delivery vehicles, city logistic vehicles, airport vehicles, and certain heavy trucks for specific scenarios.
3. Guangzhou implements a "property not loan" policy for housing provident fund loans
The Guangzhou Housing Provident Fund Management Center has released a notice on optimizing issues related to individual housing provident fund loans, stating that the number of housing units a family owns will be calculated based on the “Natural Persons Real Estate (Land, House Type) Information Query Results” provided by the city's real estate registration authority, including all family members. For families purchasing their first home in the city, the minimum down payment ratio for provident fund loans is set at 20%.
Overseas Markets
1. U.S. inflation pressures cool more than expected
Due to significantly slower energy prices, the overall U.S. CPI in October cooled more than expected, with the core CPI also dropping to its lowest since September 2021, leading to increased market bets on the Federal Reserve cutting interest rates in 2024. Specifically, the U.S. CPI year-over-year increase for October was 3.2%, a significant slowdown from 3.7% in September; the month-over-month increase in October cooled to 0, a noticeable slowdown from 0.4% in September. The core inflation, which excludes food and energy costs and is more closely monitored by the Federal Reserve, slowed slightly to 4% from September's 4.1%, with the month-over-month increase slowing from 0.3% to 0.2%.
2. The risk of a U.S. government shutdown decreases
Senate Democratic leader Schumer expressed "encouragement" at House Speaker Johnson's short-term financing plan to avoid a government shutdown. Some Democrats disapproved of the plan because it did not include emergency aid for Israel or Ukraine and posed a threat of a shutdown next year. However, Democratic leaders hinted at their tacit approval of the temporary financing arrangement, as it maintains current levels of government funding support.
3. Global fund managers aggressively buying bonds
A recent monthly survey report by Bank of America shows that due to beliefs in decreasing interest rates next year, fund managers' optimism towards bonds has reached its highest level since the financial crisis, and the over-allocation to bonds has hit a new high since 2009. Surveyed fund managers mainly focused on healthcare stocks, technology stocks, and telecom stocks, favoring large tech stocks and long-term U.S. bonds, while being bearish on utilities, materials, and consumer staples. Additionally, investors anticipate interest rate cuts, a weaker dollar in 2024. The survey indicated increased holdings in U.S. and Japanese stocks, with a reduction in Eurozone and U.K. stocks.
4. More and more hedge funds start shorting crude oil
Over the past month, as concerns over demand returned to the market with the diminishing impact of the Israel-Palestine conflict, hedge funds significantly increased their bearish bets on U.S. oil, quadrupling in number. Data from the U.S. Commodity Futures Trading Commission (CFTC) for the week ending on November 7 shows an increase of over 20,000 short contracts, reaching 95,756, the highest bearish position since July. Meanwhile, hedge funds have reduced their bullish bets on oil prices for six consecutive weeks. Moreover, the International Energy Agency (IEA) recently reported an updated global oil demand forecast for this and next year, noting that next year's demand decrease will significantly exceed the supply reduction.
Today's Focus
Today, investors need to pay attention to China's industrial production, retail sales, and fixed asset investment, the U.K.'s CPI, the Eurozone's trade balance, U.S. retail sales, PPI, and EIA crude oil inventories, among other economic data. In addition, investors should closely monitor the Israel-Palestine situation and the EIA's monthly crude oil market report, among other risk events.
