Updated every Sunday before 8:00 am to get a full picture of the week’s macro dynamics.
Summary of the week: Macro News: Li Keqiang in the China State Council executive meeting stressed the need to strengthen cross-cyclical regulation; Li Keqiang in the visit to Shanghai stressed the need to implement a good state policy on coal and power enterprises, such as tax deferral; The State Council General Office issued a notice on further strengthening the assistance to small and medium-sized enterprises; in the january-october period, the total profits of industrial enterprises above the size of the country increased by 42.2% year-on-year; Initial claims for unemployment benefits fell to a 52 year low this week. Data tracking: In terms of funds, the central bank put 190 billion yuan into the week; the operating rate of the 247 blast furnaces surveyed by Mysteel fell below 70% ; the operating rate of the 110 coal washing plants across the country remained stable; and the price of power coal remained stable while iron ore, rebar and steel rose significantly during the week, copper prices fell, cement prices fell, concrete prices fell, the week the daily average of 49,000 passenger vehicles retail sales, down 12% , BDI rose 9% . Financial Markets: All major commodity futures fell this week except LME lead; global stocks rose only in China, with both U.S. and European markets falling; and the dollar index fell 0.07% to 96.
1. Important Macro News
President Xi Jinping has presided over the twenty-two th meeting of the Central Commission for overall deepening reform, stressing the need to improve the overall design of the electricity market, power resources in the country to achieve a wider range of sharing and optimal allocation of each other. The meeting pointed out that it is necessary to push forward the construction of power market mechanism to adapt to the transformation of energy structure, and to promote the participation of new energy in market transactions in an orderly manner. The meeting also stressed the need to promote the formation of a virtuous circle of science and technology, industry and finance, and accelerate the transformation and application of scientific and technological achievements. On the morning of November 22, Chinese President Xi Jinping attended and presided over a summit on the occasion of the 30th anniversary of the establishment of the dialogue relationship between China and ASEAN via video link in Beijing. Xi formally announced the establishment of the China ASEAN Comprehensive Strategic Partnership, and pointed out that China will fully play the role of the regional comprehensive economic partnership agreement, launching the construction of ASEAN–China Free Trade Area 3.0, china will strive to import US $150 billion of agricultural products from ASEAN in the next five years. In the face of new downward pressure on the economy, the China State Council executive meeting, chaired by Premier Li Keqiang of the State Council, called for strengthening cross-cyclical adjustment, while continuing to do a good job in local government debt management and preventing and resolving risks, giving full play to the role of special debt funds in promoting social funds. We will speed up the issuance of the remaining amount of special bonds this year and strive to create more in-kind workloads early next year.
From Nov. 22 to 23, Premier Li Keqiang, a member of the Politburo of the Communist Party of China, visited Shanghai. Li Keqiang said that governments at all levels should further strengthen their support, including implementing the State’s policies on tax relief for coal and power enterprises, doing a good job of coordination and dispatching, ensuring a stable supply of coal for power generation, and solving the problem of power shortages in some places, to prevent the emergence of new “Power cut-off”phenomenon.
The State Council General Office issued a notice on further strengthening the support for smes, which said: (1) to ease the pressure on rising costs. We will strengthen commodity monitoring and early warning, strengthen market regulation of supply and demand, and crack down on illegal activities such as hoarding and profiteering, and driving up prices. We will support industry associations and large-scale enterprises in building supply-demand docking platforms for key industries, and strengthen the guarantee and docking services for raw and processed materials. (2) to encourage futures companies to provide risk management services to smes, so as to assist them in using futures hedging tools to cope with the risk of large fluctuations in raw material prices. (3) increase the support of rescue funds to help enterprises cope with the pressure of rising prices of raw materials, logistics and manpower costs. (4) to encourage localities where conditions permit to implement periodic preferential treatment for the use of electricity by small and micro enterprises. The Ministry of Commerce has issued the foreign trade high-quality development plan for the 14th five-year plan. During the period of the 14th five-year plan, the trade security system will be further improved. The sources of imports of food, energy resources, key technologies and spare parts are more diversified, and the risk prevention and control systems of trade friction, export control and trade relief are more sound. In the first ten months of 2019, the total profits of industrial enterprises above the national scale totaled 7,164.99 billion yuan, up 42.2 percent year-on-year, up 43.2 percent from January to October 2019, and an average increase of 19.7 percent in two years. Of this total, the profits of the petroleum, coal and other fuel processing industries increased by 5.76 times, the oil and gas extraction industry increased by 2.63 times, the coal mining and coal washing industry increased by 2.10 times, and the Non-ferrous metal and calendering industry increased by 1.63 times, the Ferrous and calendering industries increased 1.32 times.
Seasonally adjusted initial claims for unemployment benefits were 199,000 for the week ended Nov. 20, the lowest level since 1969 and an estimated 260,000, up from 268,000, according to the United States Department of Labor. The number of Americans continuing to claim unemployment benefits for the week ended Nov. 13 was 2.049 million, or 2.033 million, up from 2.08 million. The larger-than-expected decline could be explained by how the government adjusted the raw data for seasonal fluctuations. The seasonal adjustment follows an increase of about 18,000 in initial jobless claims last week.
(2) News Flash
In order to implement the opinions of the Central Committee of the Communist Party of China (CPC) and the State Council on deepening the battle against pollution prevention and control, the Ministry of Ecological Environment has made new arrangements, adding two important tasks and deploying eight landmark campaigns. The first new and important task is to strengthen the coordinated control of PM2.5 and ozone, and to deploy and implement the battle to eliminate heavy pollution weather and the battle to prevent and control ozone pollution. The second task is to implement the major national strategy, new Battle for ecological protection and control of the Yellow River. According to the Ministry of Commerce, the china-cambodia free trade agreement will come into effect on January 1,2022. Under the agreement, the proportion of tariff-free items for goods traded by both sides has reached over 90 per cent, and the commitment to open markets for trade in services reflects the highest level of tariff-free partners granted by each side. According to the Ministry of Finance, 6,491.6 billion yuan of local government bonds were issued nationwide from January to October. Of this total, 2,470.5 billion yuan in general bonds and 4,021.1 billion yuan in special bonds were issued, while 3,662.5 billion yuan in new bonds and 2,829.1 billion yuan in refinancing bonds were issued, broken down by purpose.
According to the Ministry of Finance, the profit of state-owned enterprises from January to October totaled 3,825.04 billion yuan, up 47.6 percent year-on-year and an average two-year increase of 14.1 percent. Central enterprises accounted for 2,532.65 billion yuan, an increase of 44.0 percent year-on-year and an average increase of 14.2 percent in two years: local state-owned enterprises accounted for 1,292.40 billion yuan, an increase of 55.3 percent year-on-year and an average increase of 13.8 percent in two years. A spokesperson for the China Banking Regulatory Commission (CBRC) said that the demand for reasonable loans for real estate has been met. At the end of October, real estate loans by banking financial institutions grew 8.2 per cent from a year earlier and remained generally stable. It is emphasized that carbon reduction should not be “One-size-fits-all”or “Sport-style”, and that reasonable credit support should be given to qualified coal power and coal enterprises and projects, and that loans should not be blindly drawn out or cut off. China’s macro-economic Forum (CMF) released a report that predicted real GDP growth of 3.9% in the fourth quarter and an annual economic growth of 8.1% to achieve the annual growth target of more than 6% . The US GDP for the third quarter was revised at an annualised rate of 2.1 per cent, 2.2 per cent and an initial rate of 2 per cent. The initial Markit manufacturing PMI for the United States rose to 59.1 in November, with the price input sub-index at its highest level since records began in 2007.
In the United States, the core PCE price index rose 4.1 percent in October from a year earlier, the highest level since 1991, and is expected to rise 4.1 percent, up from 3.6 percent in the previous month. In the euro area, the initial PMI for the manufacturing sector was 58.6, with a forecast of 57.3, compared with 58.3; the initial PMI for the services sector was 56.6, with a forecast of 53.5, compared with 54.6; and the Composite Pmi was 55.8, with a forecast of 53.2, compared with 54.2. President Biden nominates Powell for another term and Brenard for vice chairman of the Federal Reserve. On November 26, World Health Organization organized an emergency meeting to discuss B. 1.1.529, a new crown variant strain. The WHO issued a statement after the meeting, listing the strain as a “Concern”variant and naming it Omicron. The World Health Organization says it could be more transmissible, or increase the risk of serious illness, or reduce the effectiveness of current diagnostics, vaccines and treatments. Leading stock markets, government bond yields and commodities fell sharply, with oil prices plunging about $10 a barrel. U.S. stocks closed 2.5 percent lower, their worst one day performance since late October 2020, European stocks posted their biggest one day drop in 17 months, and Asia Pacific stocks plunged across the board, according to Dow Jones Industrial Average. To avoid asset bubbles and prevent further inflation, the Bank of Korea raised interest rates by 25 basis points to 1 per cent. Hungary’s central bank also raised its one-week deposit rate by 40 basis points to 2.9 per cent. Sweden’s central bank left its benchmark interest rate unchanged at 0% .
2. Data tracking
(1) financial resources
(2) industry data
Overview of financial markets
In Commodity Futures, all major commodity futures fell except LME lead, which rose 2.59 per cent during the week. WTI crude oil fell the most, by 9.52 per cent. On the global stock market, Chinese stocks rose slightly, while European and US stocks fell sharply. In the foreign exchange market, the dollar index closed down 0.07 per cent at 96.
Key statistics for next week
1. China will publish its manufacturing PMI for November
Time: Tuesday (1130) comments: In October, the manufacturing PMI fell to 49.2% , down 0.4 percentage points from the previous month, due to continued power supply constraints and high prices for some raw materials, according to the National Bureau of Statistics of the People’s Republic of China, the manufacturing boom has weakened as it remains below the critical point. The composite PMI output index was 50.8 per cent, down 0.9 percentage points from the previous month, indicating a slowdown in the overall expansion of business activity in China. China’s official manufacturing PMI is expected to pick up slightly in November.
(2) summary of key statistics for next week
Post time: Nov-30-2021