The Asian market was mixed as mainland China was almost flat and Hong Kong was closed due to National Foundation Day. The STAR Board managed marginal profits and trading volumes were sluggish as Northbound Stock Connect was closed due to a market holiday in Hong Kong. Inflation data will be released overnight in mainland China with weaker new lending, giving the People’s Bank of China (PBOC) a reason to increase liquidity and push for another reserve requirement RRR reduction to support the economy. there is. Quiet overnight trading on the mainland market suggests investors are waiting for a clarification of the central bank’s stance after the release of economic data.
China released both the Consumer Price Index (CPI) and the Producer Price Index (PPI) last night before the mainland market opened. On the positive side, inflation was lower than expected in September, but still high, but reflects the record inflation seen in the United States in September. PPIs, which measure the price producers pay for inputs, rose by a whopping + 10.7% year-on-year, slightly higher than expected. However, due to the recent energy crisis and the surge in oil and other commodities, a sharp rise in PPI was expected.
Solar PV inventories have increased over the past two days. The sector has recently undergone a correction due to soaring commodity prices, especially for silicon used in solar panels, and increasing demand for polluted energy sources during the recent energy crisis. CICC analysts believe the sector could soon be hit by a positive tailwind, thanks to support policies and stabilization of raw material prices. China’s PV infrastructure construction goals remain ambitious, despite slowing construction due to bad weather and rising raw material costs.
The director of the CDC in China has announced that if vaccination rates exceed 85% in the new year, the quarantine requirements for foreign visitors may be abolished.
Some analysts expect Tencent’s third-quarter results to be weaker as the significant impact of regulation on games and advertising becomes apparent. However, mainland investors are buying stocks of that size because of their favorable valuation. Perhaps, unlike Western analysts, mainland investors expect positive results.
H share renewal
The Hong Kong market closed overnight.
Shanghai, Shenzhen and STAR Boards traded -0.10%, -0.08% and + 0.19%, respectively, with -3% less trading volume than yesterday due to the closure of Northbound Stock Connect due to Hong Kong market holidays. I’m done. Foreign investors were unable to trade mainland stocks.
Exchange rates, prices and yields last night
- RMB / USD 6.44 vs. yesterday 6.43
- RMB / Euro 7.47 vs. yesterday 7.44
- Yield of 1-day government bond 1.70% vs. 1.70% yesterday
- Yield of 10-year government bond 2.96% vs. 2.96% yesterday
- Yields on 10-year Chinese Development Bank Bonds were 3.26% compared to 3.26% yesterday
- Today’s copper price + 2.40%