Market Insights: Jan 15, 2024

Financial Markets and Policy

Chinese Central Bank Policy and Market Response:

• The People's Bank of China (PBoC) announced it would not cut interest rates and will maintain the 995 billion RMB Medium-term Lending Facility (MLF) operations, with the interest rate unchanged.
• Baidu's shares listed in Hong Kong fell nearly 10%, marking the biggest drop since October 2022.
• Debt market at a crossroads: Guotai Junan Securities believes that expectations for reserve requirement ratio cuts and interest rate cuts have been overpriced in the bond market, which may lead to volatile market sentiment.
• The Financial Regulatory Administration issued a statement emphasizing the need to thoroughly rectify chaos in the financial markets and implement zero tolerance for major illegal and non-compliant activities.

Stock Market Dynamics:

• The Growth Enterprise Market fell by more than 1%, with government bond futures and spot prices both falling; Hong Kong's Hang Seng Tech Index fell by more than 2%. The yield on interbank interest rate bonds in the A-share market generally rose, while sectors such as liquor tourism, medicine & health, media, and road & railway transportation gained. Meanwhile, military, environmental protection, photovoltaic, and auto parts sectors saw the largest declines.
• Mixed performance in Asian stock markets: Under pressure from the People's Bank of China's unexpected decision to keep loan rates unchanged, Chinese stock markets dropped. Meanwhile, Japan's market showed remarkable performance, indicating a mixed trend in Asian stock markets.

Currency Market Fluctuations:

• The People's Bank of China unexpectedly decided to maintain the interest rates for its Medium-term Lending Facility (MLF), which was contrary to the prevalent market expectation for a rate cut. As a result of this unexpected decision, the value of the yuan fell against the U.S. dollar.

Corporate Dynamics

• Media reports surfaced again about TikTok's negotiations to purchase Ele.me, claiming only the acquisition price and method remain unsettled, which Ele.me has once again denied. It was reported that the managements of ByteDance and Ele.me held a meeting before the end of the year involving the acquisition price and method.

Law and Intellectual Property

• The presiding judge discusses the first case of AI-generated image infringement: The verdict encourages everyone to use new tools to create. The plaintiff's image created with the open-source software Stable Diffusion was deemed to have the “originality” required for copyright protection.

Policy and Economy

National Policy Dynamics:

• The National Development and Reform Commission (NDRC) policy: The NDRC emphasizes the high-quality advancement of issuing additional government bonds, effective use of special local government bonds, and accelerating project construction.
• Guangdong province encourages private enterprises to participate in reforms: The Guangdong provincial government encourages private enterprises to take part in the mixed-ownership reform of state-owned enterprises and supports private enterprises in establishing R&D institutions abroad.
• China Securities Regulatory Commission (CSRC) on the development of overseas listing mechanisms: The CSRC will further improve mechanisms for overseas listings, diversify issuance methods, and implement new trial regulations for overseas listing filings.
• The NDRC issued new regulations: The NDRC published the 'Measures for the Supervision and Administration of Central Budget Investment Projects' aimed at strengthening supervision and enforcement and improving the management of investment projects.

Global Economic Growth Forecast:

• Global economic growth forecast: The World Bank predicts that the global GDP growth rate for 2024 will be 2.4%, with the forecast for 2025 reduced from 3% to 2.7%.

Market Index Release:

• CSI Market Leaders 50 Index released: The CSI Market Leaders 50 Index is expected to be officially released on January 16th and is anticipated to have a certain impact on the market.