In China, several foreign institutions have actively expressed optimism about the Chinese stock market. Central bank-affiliated media have indicated that there is ongoing support for the formation of the Renminbi exchange rate. The Securities Times reported that the legislation on the real estate tax has been postponed. On the international front, China's holdings of US Treasuries have dropped to a new low since 2009, and the US government is only two weeks away from a shutdown. The "central bank of central banks" has warned that hedge fund bets could destabilize the US Treasury market, while Saudi Arabia stated that OPEC does not set oil price targets.
Market Review
Focus News
China Market
- Numerous foreign institutions have voiced their optimism about the Chinese stock market
With the introduction of various policies for the A-share market, the recovery improvement of the national economy in August, and the adjustment and optimization of real estate policies, positive factors have been accumulating. Against this background, several foreign institutions including Goldman Sachs, Fidelity International, UBS, Deutsche Bank, and Invesco have proactively expressed their optimism about the prospects of China's economic development and the Chinese stock market. As one of the most important categories of investors in the A-share market, the investment strategies of foreign capital are closely watched by the market.
- Central bank's media outlet states that the RMB exchange rate will be supported going forward
The central bank's media outlet, Financial Times, stated that driven by favorable macroeconomic data, market expectations have significantly improved. Positive changes in prices reflect improvements on both supply and demand sides, and the economic recovery is stable. The domestic and foreign interest rate difference has gradually been reflected, and a good fundamental environment helps stabilize the exchange rate. The RMB exchange rate will see a positive turnaround after bottoming out.
- Securities Times reports a pause in the legislation of real estate tax
The “14th National People's Congress Standing Committee Legislative Plan” (hereinafter referred to as "Plan") was released. In the field of finance and taxation, the Plan specifies that laws on value-added tax, consumption tax, and customs duties will be submitted for consideration during the current term of the Standing Committee of the National People's Congress; however, the much-anticipated real estate tax legislation and the revision of the personal income tax law were not included in this legislative plan.
- The Securities Regulatory Commission guides listed companies to increase dividend levels
The Securities Regulatory Commission plans to further improve relevant measures to guide listed companies to increase dividend levels. Listed companies on the main board that do not reach a certain dividend ratio are required to disclose and explain the reasons; there are enhanced disclosure requirements for companies with more financial investments, urging them to improve asset utilization efficiency, better focus on their main business and return investors; intensifying inquiries and regulatory discussions, strengthening regulatory inquiries to help investors make better judgments on dividend information, and urging increased dividend efforts through discussions and other means.
Overseas Market
- China's holdings of US debt drop to a new low since 2009
The US Treasury Department announced that China reduced its holdings of US Treasury bonds for the fourth consecutive month in July, while Japan increased its holdings for two consecutive months. The total foreign holdings of US Treasury bonds reached a new high in over a year, with foreign investment funds flowing into the US for two consecutive months. Comments suggest that China's holdings of US treasuries seem to decrease, but in reality, they have shifted towards higher yielding corporate bonds. Official Chinese data shows that China's foreign reserves increased for two months in July, and gold reserves increased for nine months.
- The US government is only two weeks away from shutdown
As the shutdown of the US federal government is imminent, a series of important US economic data may have to be postponed. According to the actions of various institutions during previous government shutdowns, the US Department of Labor's monthly employment data and the US Department of Commerce's key inflation indicators, among others, will not be released on their scheduled dates in October. During the 2013 US federal government shutdown, the release of employment and other data was also forced to be delayed.
- The "central bank of central banks" warns that hedge fund bets could disrupt the US Treasury market
The Bank for International Settlements (BIS) noted that hedge fund basis trading is growing, and the scale of short positions in US Treasuries, such as 2-year bonds, has risen to record highs in recent weeks, potentially leading to disruptions in the US Treasury market. In March 2020, at the onset of the COVID-19 pandemic, the unwinding of basis trades and deleveraging caused volatility in the US Treasury and repurchase markets, forcing the Federal Reserve to step in and purchase $1.6 trillion in US Treasuries.
- Saudi Arabia says OPEC does not set a target for oil prices
Saudi Energy Minister Abdulaziz bin Salman, while attending the 24th World Petroleum Congress in Calgary, said that OPEC is striving to stabilize the oil market and improve global energy security, without setting any specific targets for crude oil prices. Monthly reviews will be conducted, and further decisions will be made once tangible data indicates a shortage in the oil market supply.
Today's Focus
Today, investors need to pay attention to important economic data such as the Eurozone August CPI, US August building permits and new home starts, and Canada's August CPI. In addition, investors should also focus on risk events such as the minutes from the September monetary policy meeting of the Reserve Bank of Australia and the OECD Economic Outlook Report.
