Market Review
Market Focus
Chinese Market
1. China Announces Export Controls on Graphite-related Items
As the EU launches an anti-subsidy investigation into China's new energy vehicles and the US further tightens restrictions on China's chip industry, China has announced export controls on graphite-related items. High-purity (purity >99.9%), high-strength (tensile strength >30Mpa), and high-density (density >1.73g/cm³) synthetic graphite materials and products, as well as natural flake graphite and its products (including spherical graphite, expandable graphite, etc.), will officially be included in the export control list and will be implemented from December 1st.
2. CSRC Solicits Public Comments on Regulatory Document for Cash Dividends
To further improve the regular dividend mechanism of listed companies and enhance investor returns, the China Securities Regulatory Commission (CSRC), in light of regulatory practices, has revised the "Regulatory Guidance for Listed Companies No. 3 - Cash Dividends of Listed Companies" (hereinafter referred to as "Cash Dividends Guidance"), and the related clauses of cash dividends in the "Guidance for the Articles of Association of Listed Companies" (hereinafter referred to as "Articles of Association Guidance"), and is now openly soliciting public comments.
3. "Assessment Methods for Systemically Important Insurance Companies" to Be Implemented Next Year
The People's Bank of China and the National Financial Regulatory Administration have jointly issued the "Assessment Methods for Systemically Important Insurance Companies" (hereinafter referred to as "Methods"), which will be implemented starting January 1, 2024. The "Methods" state that the systemic importance of insurance companies participating in the assessment will be evaluated to identify China's systemically important insurance companies. A list of these companies will be published every two years, and differentiated supervision will be applied to them to reduce the possibility of major risks and prevent systemic financial risks.
4. China's 1-Year and 5-Year LPRs Remain Unchanged in October
Authorized by the People's Bank of China, the National Interbank Funding Center announced that the Loan Market Quotation Rate (LPR) for October 20, 2023, is: the one-year LPR is 3.45%, and the five-year LPR is 4.2%, both remaining consistent with previous values. Financial institutions have stated that the reduction in the LPR quoted in June and August has nearly depleted the room for improvement in the cost of liabilities brought about by earlier reductions in deposit rates and interest rates. With the rolling re-pricing of outstanding loans, along with a recent rise in market liability costs, the pressure on banks' net interest margins will increase again, making it difficult to change the stressed state, nor is there the momentum or space to further reduce the LPR quote.
Overseas Markets
1. Israel Announces a Three-Phase Plan for Military Operations in Gaza
Announcing plans and objectives for the Gaza war, Israel's Defense Minister outlined a three-phase operation: the first phase involves air strikes, followed by ground operations with the goal of "eliminating armed forces to defeat and destroy Hamas"; the second phase consists of lower-intensity combat to "eliminate remaining resistance forces"; the third phase aims to "establish a new security environment in the Gaza Strip".
2. Fed Report Indicates Stubborn Inflation Could Pose Financial Risks
The Federal Reserve has released a financial stability report expressing concerns about persistent inflation risks, potential massive losses in the US office market, and financial pressures facing some banks. The latest report states that following recent turmoil, deposit flows in the US banking sector have stabilized. However, a sharp contraction in bank credit supply could increase financing costs for businesses and households, potentially slowing economic activity.
4. BOJ Governor States Patience in Maintaining Ultra-Loose Policy
Bank of Japan Governor Kazuo Ueda stated in a speech that the BOJ will "patiently" maintain an ultra-loose monetary policy and flexibly respond to developments in the economy, prices, and financial and foreign exchange markets, while warning that uncertainties around the economy and inflation remain high. Ueda pointed out that the Japanese economy is continuing a moderate recovery, the impact of supply constraints is diminishing, offsetting the impact of a global demand slowdown on exports. He expects that inflation may slow as cost-push pressures dissipate but could accelerate again due to stronger economic growth and changes in corporate wage-setting behavior.
