Market Recap
Key Highlights
China Market
1. September 1-Year and 5-Year LPR Remain Unchanged
Authorized by the People's Bank of China, the National Interbank Borrowing Center announced on September 20, 2023, that the Loan Market Quoted Rate (LPR) for one year is 3.45%, and for five years is 4.2%, both holding steady with expectations and previous values (see below). Generally formed from the MLF rate plus a bank's markup, since the LPR reform in August 2019, adjustments were only made twice independently from the MLF operation rate: a decrease in the 1-year LPR in December 2021 and in the 5-year (and above) LPR in May 2022, with other months moving in tandem with the corresponding month's MLF operation rate.
2. Guangzhou Introduces Further Real Estate New Policies
Guangzhou continues to release new policies aimed at stabilizing the housing market, adjusting the scope of the housing purchase restriction policy areas, changing the value-added tax exemption period for second-hand housing from "5 years to 2 years," and reducing the tax and social security payment period for non-household registered population's first home purchase from 5 years to 2 years. Following comprehensive relaxation of purchase restrictions in second-tier cities like Nanjing and Wuhan, Guangzhou's relaxation signals that the easing of restrictions has reached first-tier cities, indicating a significant relaxation of current policies.
3. Shenzhen's Real Estate New Policy Shows Effect
More than half a month since the implementation of Shenzhen's "recognizing houses but not loans" policy, the city has seen a continued growth in transaction volumes for both new residential houses and second-hand residential houses, rejuvenating market confidence. Data indicates that in the past half month, Shenzhen's housing market saw a 74% increase in second-hand housing viewing volume, a 62% increase in transaction volume, and over a 28% increase in new customer volume, unveiling a promising "Golden September" housing market.
4. Xiong'an New Area Cancels Pre-sale of Commercial Housing
Xiong'an New Area cancels the pre-sale of commercial housing, adopting actual housing sales to ensure "what you see is what you get, delivery of the house means handover of the certificate." At the same time, Xiong'an New Area supports talents interested in resolving housing issues through renting, and grants “equal rights in rent and sale” in public services domains such as education, medical care, and employment. Relevant staff from the Housing Management Center of Xiong'an New Area stated that relocation staff who work stably in the area can purchase market project housing, including commercial and shared ownership housing.
Overseas Market
1. The Federal Reserve Raises Interest Rate Forecasts for the Next Two Years
The Federal Open Market Committee (FOMC) announced post-meeting that the target range for the federal funds rate remains at 5.25% to 5.50%, keeping policy interest rates at the highest point in twenty-two years. This marks the second time in this tightening cycle that the Federal Reserve has not continued the action of raising interest rates from the previous meeting. However, compared to the dot plot in June, the latest dot plot reveals that Fed decision-makers expect a higher level of interest rates this year, with most officials anticipating one more rate hike (see below).
2. Two American Auto Companies Lay Off Over 2000 Workers
General Motors and Stellantis reported having laid off more workers due to consequences related to strikes by the United Auto Workers (UAW). General Motors stated that a strike-induced parts shortage led to the closure of an assembly plant in Kansas, resulting in approximately 2000 workers being laid off. Stellantis announced the immediate layoff of about 370 workers in three parts factories in Ohio and Indiana due to "inventory restrictions" related to the strike.
3. Hedge Funds Sell off Energy Stocks
Despite rising oil prices, hedge funds initially shorting energy stocks suggest a market bet on a peak in oil prices. Data shows that hedge funds have net sold energy stocks for the first time in three weeks, with net sales occurring in North America (primarily the US and Canada) and Europe (mainly the UK and France), while Asia shows a moderate net purchase. Meanwhile, Goldman Sachs, a commodities flag bearer, has raised its 12-month Brent crude oil price forecast from 93 dollars per barrel to 100 dollars per barrel.
4. UK Inflation Unexpectedly Drops to 18-Month Low
According to data from the UK Office for National Statistics, the UK's CPI increased by 6.7% year-on-year in August, dropping to the lowest level in 18 months. The core CPI, excluding food and fuel, also saw a substantial drop from the previous value of 6.9% to 6.2%, with the inflation rate in the service sector falling from 7.4% to 6.8%. Following the release of the data, the swap market showed that traders' expectations for the Bank of England to raise interest rates by 25 basis points on Thursday had significantly decreased to 50%, below the previous 80%.
Today's Focus
Today, investors should pay attention to New Zealand's second-quarter GDP, the Eurozone's September Consumer Confidence Index, the U.S. initial jobless claims, the second-quarter current account, August's existing home sales, and other significant economic data. Additionally, investors should also focus on the Reserve Bank of Australia's Economic Bulletin, the Swiss National Bank and the Bank of England's interest rate meetings, and speeches by the European Central Bank President Christine Lagarde, among other risk events.
