Market Review
Headlines
China Market
1. The Ministry of Finance Strengthens Long-Term Assessment of State-Owned Commercial Insurance Companies
Shanghai Securities News reported that following the recent notice by the Financial Regulatory Administration to reduce the equity investment risk factor for insurance companies, the Ministry of Finance issued a notice on guiding insurance funds towards long-term stable investment and adjusting relevant performance evaluation indicators for state-owned commercial insurance companies. The assessment method for the operating benefit category, “return on net assets,” has been adjusted from an annual assessment to a combined "3-year cycle + current year" assessment method. The 3-year cycle assessment indicator is "3-year return on net assets (weighted 50%)" and the current year assessment indicator is "current year return on net assets (weighted 50%)". The requirements have been implemented since the date of issuance, and other commercial insurance companies can refer to this for execution.
2. The Big Five Banks Further Implement Measures Benefiting Enterprises and the Public
Following a collective endorsement earlier this month in response to the China Banking Association's initiative, the five major state-owned banks - ICBC, ABC, BOC, CCB, and BoCom - have again collectively announced further measures to benefit enterprises and the public, increasing efforts to reduce fees and benefit customers, thereby improving service quality and efficiency. Previously, the China Banking Association released an initiative to adjust some bank service fees to enhance service quality, encouraging banks to eliminate commercial bill issuance fees, reduce acceptance bill processing fees, and charge enterprise customers for safety certification tools at no more than cost price, guiding banks to further reduce operational costs for market entities.
3. China Nonferrous Metals Industry Association Predicts Decline in Lithium Carbonate Prices
The China Nonferrous Metals Industry Association stated that with the release of new capacity for upstream raw materials domestically and internationally and a slowdown in downstream demand, the decline in lithium carbonate prices is an inevitable trend. For lithium salt production enterprises with their resources, current profits are still very considerable, even though, compared to last year's high prices, a drop in prices and company profits is normal. However, for companies that buy resources externally or acquired resources at high prices last year, some may be on the verge of loss.
Overseas Market
1. Israel Refuses to Ceasefire and Advances Further into Gaza
The Israeli military has penetrated deeper into the besieged Gaza Strip, engaging in combat with Palestinian militants near Gaza City. The United Nations and medical personnel have expressed concerns about airstrikes near hospitals. Israeli Prime Minister Netanyahu vowed that Israel would "continue to fight until victory is achieved" and stated that the Israeli forces are doing their utmost to "prevent civilian casualties in the Gaza Strip". At the same time, he emphasized that the international community must demand the "immediate and unconditional release of detainees".
2. The U.S. Treasury Department Lowers Borrowing Expectations for the Fourth Quarter by $76 Billion
The U.S. Treasury announced that from October to December of this year, it expects the federal government's borrowing amount to be $776 billion, a decrease of $76 billion from the previous forecast of $852 billion in late July. By the end of December, the Treasury expects a cash balance of $750 billion, the same as the previous forecast. Additionally, the Treasury expects a borrowing amount of $816 billion in the first quarter of next year, ending in March, with a cash balance remaining at $750 billion (see below).
3. Media Reports Suggest Bank of Japan May Allow Yields on Japanese Bonds to Exceed 1%
According to sources cited in media reports, the Bank of Japan is considering adjusting the framework of its Yield Curve Control (YCC) policy in today's meeting, allowing the 10-year Japanese government bond yield to exceed 1%. The Bank of Japan might also conduct more flexible purchases of Japanese government bonds. The YCC policy allows the Bank of Japan to suppress the yield of bonds of targeted maturities to a desired level by purchasing them, thereby lowering risk-free interest rates and stimulating economic growth through lower credit rates.
4. Foreign Investors Withdraw from Indian Stock Market at Fastest Pace Since February
According to data compiled by media, in the week leading up to October 26th, foreign funds withdrew $1.2 billion, marking the largest outflow since early February. On Thursday of the same week alone, foreign funds sold $768.4 million of Indian stocks, the largest daily net outflow since June 2022. Over the past week, the frantic selling of Indian stocks by foreign investors was partly due to disappointing earnings reports from bellwether companies affecting investor sentiment, as well as concerns over the Israel-Palestine conflict and the long-term rise in U.S. interest rates affecting the demand for high-risk assets.
5. Russian Crude Processing Hits Seven-Week High
As Russian refineries concluded seasonal maintenance, Russian crude oil processing volumes have risen to a new high over seven weeks. Sources say that in the seven days leading up to October 25th, Russia processed 5.48 million barrels of crude oil per day, an increase of nearly 210,000 barrels per day from the previous week. As routine maintenance due next month draws to a close, operational conditions at the refineries have improved. This has brought Russia's daily average processing volume from October 1st to 25th to 5.31 million barrels, though it is still lower than the daily average of 5.38 million barrels for most of September (see below).
Focus Today
Today, investors should pay attention to China's official manufacturing PMI, Eurozone and third-quarter GDP, German retail sales, the Chicago PMI, and the Conference Board's consumer confidence index among economic data. Additionally, investors should closely monitor the situation in Israel and Palestine, the Bank of Japan interest rate meeting, and the press conference by the central bank governor among risk events.
