Today's Market Focus: The Central Huijin Investment Buys into Exchange-Traded Funds (ETFs)

Market Review

Focus News

China Market

1. Central Huijin Invests in Exchange-Traded Funds (ETFs)

Central Huijin takes action again, following its additional stakes in the four major banks, it has invested in exchange-traded funds (ETFs). The company announced it purchased ETFs and plans to increase its holdings in the future. Previously, eight years ago, Huijin spent 4.77 billion yuan on stakes in the four major banks - Agricultural Bank, Bank of China, Construction Bank, and Industrial and Commercial Bank of China, announcing increased shares in these banks’ A-shares. It also indicated plans to continue buying within the next six months, during the 2015 stock market turbulence, Central Huijin entered the market to rescue the situation, spending 20 billion yuan to increase holdings in the four major banks, and also purchased large amounts of 50ETF, 180ETF, and 300ETF.

2. The Beijing Stock Exchange Promotes Accelerated Landing of Transition Cases

The Beijing Stock Exchange held a roundtable meeting with sponsoring institutions, analyzing the "Transition Guidelines" institutional arrangements, operational points of concern, and answered questions from listed companies, sponsoring institutions, and other market participants. Participating sponsoring institutions expressed that the discussion helped them to further familiarize themselves with the transition business operations steps, clarified focus points, responded to market concerns, and is beneficial for promoting the rapid implementation of transition cases under the new regulations.

Overseas Market

1. The US Announces More Troop Deployments to the Middle East

Israeli Defence Minister Gallant stated that Israel's operation would proceed in three main stages: The first stage involves military actions through airstrikes, followed by ground operations aimed at "eliminating armed forces, thereby defeating and destroying Hamas"; the second stage involves combat of lower intensity "to eliminate the remaining resistance forces"; the third phase will "establish a new security environment in the Gaza Strip".

2. US ETFs Experience a Surge in Investor Demand

With market expectations for interest rates to remain high for a longer period, investors have been flocking to fixed income ETFs (exchange-traded funds) this year to secure higher yields, despite widespread sell-offs in the bond market. Data compiled by BlackRock shows that in the first three quarters of this year, fixed income ETFs listed in the US and Europe attracted a record $235 billion in net inflows, surpassing last year’s $169 billion and $222 billion in the same period of 2021.

3. EIA Expects a Decrease in OPEC's Oil Production Share

The US Energy Department (EIA) analysis suggests a shift in the global oil supply side landscape. Over half of the growth in global liquid fuels production in 2021 and 2022 took place among OPEC member countries. This is expected to change in 2023 and 2024, as new oil upstream projects come online, increasing production more significantly in non-OPEC countries. EIA anticipates substantial production increases in North America, South America, and Western Europe in 2023 and 2024, with half of this growth coming from the United States.

4. Argentina's Elections Deal a Blow to Stocks and Bonds

No candidate achieved a majority in last weekend's elections, with the pro-dollarization candidate Milei unable to maintain the advantage from the August primary and was overtaken by Argentina's Economy Minister Massa, leading to a second round of elections in November. Following the announcement of the results, Argentina's dollar bonds due in 2030 saw their biggest drop in 15 months, and the publicly traded Argentine oil company YPF SA nearly fell 12% at one point.

What to Watch Today

Today, investors should pay attention to economic data including the UK unemployment rate, the German Gfk consumer confidence index, manufacturing and services PMIs in various European and American countries. Besides, investors should continue to closely monitor risk events such as the Israeli-Palestinian situation, the Eurozone bank lending survey report, and the new round of adjustments in China's refined oil pricing window.