Market Review
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Chinese Market
1. Middle Eastern consortiums are intensively investing in China
Recently, a UAE delegation led by Abdullah bin Touq Al Marri, a UAE cabinet member and the Minister of Economy, comprising more than ten people, visited Shenzhen's venture capital powerhouse, Shenzhen Capital Group for discussions. Prior to this, the team from Abu Dhabi's sovereign wealth fund, Mubadala Investment Company, had visited Shenzhen Capital Group. This year also marked the introduction of the Saudi Arabian sovereign fund in Shenzhen, and the latest news is that the Saudi Investment Ministry (MISA) is planning to open an office in the Greater Bay Area. Middle Eastern financial groups have thus been prominently active in Shenzhen recently.
2. Special refinancing bonds may resume issuance in the second half of the year
In June-July this year, local authorities reported their pilot solutions for the risk resolution of the hidden debt of organized counties, and the regulatory bodies have provisionally approved the plans and quotas. Special refinancing bonds, exceeding a trillion in amount, may resume issuance in the second half of the year, targeting 12 high-risk provinces to substitute hidden debt and mitigate debt risks. A debt resolution plan from a province in the west has also been approved recently, requiring cities and counties to develop and refine local resolution plans and enter detailed information in the monitoring system’s relevant sections.
3. A hundred-billion-scale strategic emerging industries development fund to be operational within the year
China National Investment & Guaranty Corporation announced its active preparation for a hundred-billion-scale State-Owned Enterprise (SOE) strategic emerging industries development fund. Currently, with the intended contributions from over 20 SOEs, local governments, and relevant social capitals, the fund is expected to finish its preparation and begin operation within this year.
Overseas Market
1. US House Republicans debate on revising the temporary funding bill
The White House directed federal agencies to prepare for a shutdown due to severe disagreements within the majority of the House Republicans, preventing a consensus on funding. The House is expected to return this Tuesday and progress with the bill to avoid a government shutdown, with the Senate possibly introducing a bipartisan bill to prevent the shutdown, a temporary funding bill lasting 14 to 60 days.
2. Japan to commence the second round of nuclear-contaminated water discharge
According to the latest reports from Japanese media, the second round of Fukushima nuclear-contaminated water discharge is scheduled to start from the end of September to early October, with preparations currently underway by Tokyo Electric Power Company (TEPCO). According to TEPCO's earlier plan, the total discharge volume in the second round is expected to be around 7,800 tons. By the end of March next year, TEPCO will have conducted four rounds of discharges, totaling approximately 31,200 tons, accounting for 2.3% of the current total volume of nuclear-contaminated water, equivalent to emptying about 40 storage tanks. The remaining over 1,000 storage tanks of nuclear-contaminated water will be discharged gradually over the next few decades.
3. Canadian union and Ford reach a record-breaking wage increase agreement
Unifor, the Canadian auto workers' union, reached a record-high wage increase agreement with Ford Motor (F.N), securing a $10,000 productivity and quality bonus for workers. In the first year of the agreement, including temporary workers, the starting wage for workers will be nearly $30 per hour. Each year of the agreement will see a general wage increase, with a 10% raise in the first year, followed by 2% in the second year, and 3% in the third year, in addition to improvements in the pension plan, special allowances, and living benefits for the workers.
4. Russia to significantly increase defense spending next year
According to draft documents obtained by Bloomberg, in the context of the prolonged Russia-Ukraine conflict, Russia plans to significantly increase its defense spending next year, reaching 6% of its Gross Domestic Product (GDP), a rate higher than 3.9% in 2023 and 2.7% in 2021 (see figure below). Energy trade is an important source of income for Russia. The baseline scenario compiled along with the budget proposal indicates that the average price of Russian crude oil in 2024 will reach $71.30 a barrel, higher than this year's estimate of $63.40. According to the budget draft, Russia expects its oil and gas revenue next year to also increase by nearly a quarter, reaching 11.5 trillion rubles (approximately 874.6 billion yuan).
Today's Focus
Today, investors should pay attention to key economic data such as the German September IFO Business Climate Index, the UK September CBI Retail Sales differential, and the Dallas Fed Manufacturing Activity Index. Additionally, investors should also keep an eye on risk events, including speeches by the Bank of Japan Governor Kazuo Ueda and European Central Bank President Christine Lagarde.
