Market Recap
Headlines
China Market
1. Direct flights between China and the USA expected to increase to 70 per week from November 9
The U.S. Department of Transportation released a notification from November 9 allowing Chinese airlines to operate a total of 35 weekly direct passenger flights between China and the USA. The involved Chinese airlines include Air China, Capital Airlines, China Eastern, China Southern, Hainan Airlines, Sichuan Airlines, and Xiamen Airlines. If U.S. airlines correspondingly increase flights, the weekly flights between China and the USA could potentially rise to 70. The Civil Aviation Administration recently stated that for the 2023/2024 winter-spring flight season, the weekly regular direct passenger flights between China and the USA are expected to increase from the current 48 to 70, providing more convenience for personnel and economic and trade exchanges between the two countries.
2. Several provinces debunk rumors of "implementing retirement based on length of service"
Recently, articles suggesting that retirement age will be determined based on individual work duration, with longer service leading to higher retirement age and pension, circulated in several places. In response, Hebei, Sichuan, Hunan, Shandong, and other provinces debunked these rumors through different channels. China's employee basic pension insurance system began reforming in the 1980s, and in 1991, the "State Council's Decision on the Reform of the Basic Pension Insurance System for Enterprise Employees" (No. 33 [1991] of the State Council) established the individual contribution system. The "Notice on Deepening the Reform of the Pension Insurance System for Enterprise Employees" (No. 6 [1995] of the State Council) clarified in 1995 that the continuous work years conforming to national regulations before the implementation of the individual contribution system could be regarded as the payment period.
3. John Lee says he will promote the inclusion of a Renminbi counter in the Hong Kong Stock Connect
At the 20th Global Annual Meeting of the International Financial Forum (IFF), Hong Kong SAR Chief Executive John Lee said in a video speech that Hong Kong, being the largest offshore Renminbi business center in the world, will promote the inclusion of a Renminbi counter in the Hong Kong Stock Connect. This will encourage Renminbi-denominated trading of Hong Kong stocks while pushing forward the implementation of offshore national debt futures and expanding the variety of Renminbi investment products. Hong Kong will continue to take advantage of the financial reform and innovation measures of the Qianhai cooperation zone, including promoting the Hong Kong fund industry's participation in mainland private equity investment. Furthermore, in the first half of next year, it will set up the Shenzhen-Hong Kong Financial Cooperation Committee with Shenzhen to promote high-level financial cooperation between Hong Kong and Shenzhen.
Overseas Markets
1. Israeli Prime Minister claims the second phase of operation against Hamas has started
The Israeli wartime cabinet held a press conference in Tel Aviv. Israeli Prime Minister Benjamin Netanyahu said that as more Israeli ground forces enter the Gaza Strip, the second phase of operations against the Palestinian Islamic Resistance Movement (Hamas) has started. Netanyahu mentioned that the ground assault was a unanimous decision made by the wartime cabinet and the security cabinet. The expansion of the Israeli Defence Forces' ground operation in Gaza will not hinder the rescue of detainees. Member of the Israeli wartime cabinet and leader of the opposition National Unity Party, Gantz, emphasized that Israel is "making every effort" to bring the detainees back.
2. The U.S. hints at a "still very high" risk of the war between Israel and Hamas spreading
U.S. National Security Advisor Jake Sullivan stated, the U.S. believes the war between Israel and Hamas poses a "higher" risk of regional escalation and will continue to respond to any attacks by Iranian proxies against U.S. troops. As one of President Biden's senior aides, Sullivan once again called on Israel to protect innocent civilian lives. He accused Hamas of using the people of Gaza as human shields, but also stated that this does not diminish Israel's responsibility to distinguish between terrorists and innocent civilians and to protect civilian lives.
3. U.S. automotive industry strike nearing an end
According to reports from multiple media outlets, Stellantis Group, the parent company of Chrysler, and the United Auto Workers (UAW) have reached a preliminary agreement to end the six-week strike. Ford Chief Financial Officer John Lawler told the media that this agreement will increase the cost of each vehicle by several hundred dollars. This represents a significant expenditure for each vehicle. It's worth noting that Ford's traditional internal combustion engine business (commonly referred to as Ford Blue) had an average profit of about $2,000 per vehicle in the third quarter.
4. Wall Street starts "bottom fishing" for U.S. Treasury bonds
The bond bear market seems not to have ended yet. The hot U.S. economy and labor market force investors to face the prospect of the Federal Reserve's "higher and longer" monetary policy, with U.S. Treasury prices plummeting for several months in a row. Last week, the benchmark ten-year U.S. Treasury broke through the 5% psychological barrier for the first time since 2007. However, as the yield on benchmark U.S. Treasuries surged to 5%, confidence in a bond rebound began to spread. EPFR data shows that in the seven days ending October 25, funds flowing into long-term sovereign U.S. debt reached $5.7 billion, setting a new all-time high. Major institutions including Vanguard, Pimco, and BlackRock are buying into U.S. Treasuries, betting that the bond market's pain is nearing its end.
What to Watch This Week
This week, investors should pay attention to PMI data from China and Western countries, GDP from Germany, France, the Eurozone, Canada, and employment market reports from Japan, New Zealand, Germany, Canada, and the United States. In addition, investors should also closely monitor the situation in Palestine and Israel, interest rate meetings and press conferences of central banks from Japan, the Federal Reserve, and the Bank of England, among other risk events.
