Market Review
Key News
China Market
1. Inner Mongolia Plans to Issue 66.32 Billion Yuan in Special Refinancing Bonds
As the issuance of a large volume of new local debts draws to an end and the quotas for special-purpose bonds are essentially in place, the financial system’s effort in undertaking debt restructuring becomes a focal point. The market is keenly observing whether the "special refinancing bonds," under close attention recently, will be reissued within the year. The People's Bank of China's reserve ratio cut on September 15 has created a favorable monetary environment for subsequent debt restructuring by local governments. Disclosure documents for general refinancing bonds of the Inner Mongolia Autonomous Region Government in 2023 reveal the issuance of three batches of such bonds.
2. PBOC Releases Quarterly Meeting Minutes for Q3
The People's Bank of China reiterated in its Monetary Policy Committee's third quarterly meeting minutes for 2023, emphasizing the need to enhance macroeconomic policy adjustment, implement a prudent monetary policy accurately and forcefully, manage counter-cyclical adjustments effectively, and correct any pro-cyclical activities resolutely. It remains firmly committed to averting risks of excessive currency fluctuations. It will implement a dynamic adjustment mechanism for the newly issued first-home loan rate policy, reducing the down payment ratio and the interest rate floor for second-home loans to ensure the reduction in existing first-home loan rates takes effect.
3. Profits of Major Industrial Enterprises in China Increase in August
Data released by the National Bureau of Statistics show that profits of major industrial enterprises rose by 17.2% year over year in August, marking the first positive growth in monthly profits since the second half of last year. Yu Weining, a statistician from the Industry Department of the National Bureau of Statistics, stated that the recovery of industrial enterprises' profits has notably accelerated, although the cumulative profit decline remains substantial.
Overseas Markets
1. Increasing Likelihood of a U.S. Government Shutdown
After the Senate reached a temporary compromise, members of the Republican Party controlling the House of Representatives still seem intent on blocking the agreement, raising the likelihood of a U.S. government shutdown. The growing divisions between the Republicans in both chambers become more evident after Senate Republicans concluded a closed-door meeting, where Mitch McConnell defended the bipartisan plan to keep the government running until mid-November and to provide $6 billion in new aid to Ukraine.
2. Chain Reactions Emerge from the Major U.S. Auto Industry Strike
The ongoing major strike organized by the United Auto Workers (UAW) in the U.S. auto industry is beginning to show its chain reactions. Brazilian steel company Gerdau SA mentioned that the continued strike might affect the demand from automotive parts manufacturers, planning to reduce its special steel production in the U.S. next month. The enduring labor disputes in the U.S. auto industry will inevitably affect the production of automotive components requiring special steel, causing a domino effect on the demand for such steel and impacting Gerdau's operations.
3. Russia's Industrial Metals Continue Flowing to Europe
More than one and a half years into the Russia-Ukraine conflict, despite the EU's dual approach of sanctions and disengagement, the economic ties between the EU and Russia have not been completely severed underneath the political statements. Customs documents and photos obtained by the media show that Swiss commodity trading giant Glencore has transported thousands of tons of Russian copper to Italy via Turkey, highlighting the EU's ongoing dependency on Russian products despite sanctions.
4. "Middle Eastern Tycoons" Again Partner with A-shares
The Middle Eastern giant Saudi Aramco has made another move, this time setting its sights on petrochemical companies. The listed company Orient Hengyi announced a framework agreement with Aramco Asia, a subsidiary of Saudi Aramco. Saudi Aramco or its affiliates intend to become strategic investors in Jiangsu Hengyi Petrochemical Industrial Group Co., Ltd., a wholly-owned subsidiary of the company. Following an investment exceeding 100 billion yuan in China in the first half of the year, Saudi Aramco has once again made a significant move, clearly targeting Chinese petrochemical companies.
Today's Focus
Today, investors should pay attention to important economic data such as the Eurozone's economic and industrial sentiment indexes, consumer confidence index, Germany's CPI, Canada's CFIB Business Barometer, as well as the U.S. initial jobless claims and pending home sales index. In addition, they should watch for risk events like the vote on the U.S. Senate's temporary funding bill, speeches by Chicago Fed President Charles Evans, and Bank of England's Monetary Policy Committee member Catherine L. Mann.
