Market Review
Market Focus
Chinese Market
1. The central bank and the regulatory authority identify 20 systematically important domestic banks
Recently, the People's Bank of China and the National Financial Supervisory Administration conducted the 2023 assessment of systematically important banks in China. They identified 20 domestically systematically important banks, including 6 state-owned commercial banks, 9 joint-stock commercial banks, and 5 city commercial banks. Officials from the People’s Bank stated that systematically important financial institutions have large sizes, high complexity, strong linkages with other financial institutions, and their problems could significantly spread within the financial system, possibly having a substantial impact on the operation of the macroeconomy.
2. The first time-linked floating rate fund to be launched soon
The industry's first time-linked floating rate fund has announced its contract! According to an announcement by Invesco Great Wall, Invesco Great Wall Value Discovery Fund shares will be publicly offered from October 11, 2023, to October 27, 2023. The prospectus shows that the management fees of the fund will be divided into three tiers, with different fund share classes (A1, A2, A3) set based on the duration of investor holdings. Each class of fund shares will have its unique fund code, with its net asset value calculated and announced individually.
Overseas Markets
1. Hawkish Federal Reserve officials hint at more than one rate hike ahead
At least four Federal Reserve officials, including two voting members this year and one for next year, have spoken extensively, conveying a unified message that interest rates will be maintained at a higher level for a longer period, with the possibility of further rate hikes not easily dismissed. Among them, a permanent voting member and Fed Governor Bowman appears to be leaning towards becoming one of the most hawkish members of the Fed, following in the "hawk king" Brad's steps, and even stated that more than one rate hike might be necessary to effectively combat inflation.
2. US economy shows signs of stagnation
US businesses signaled widespread production stagnation at the end of the third quarter, with manufacturers and service providers both indicating weak demand. According to the latest data from S&P Global, US businesses signaled widespread production stagnation at the end of the third quarter, with manufacturers and service providers both indicating weak demand. As the service sector economy loses further momentum, the performance of the entire private sector has been the worst since February this year (see figure below).
3. Global stock funds experience largest outflow since December last year
Based on the prospect of central banks in Europe and America maintaining higher interest rates for an extended period, increasing the risk of economic recession, investors have massively sold off stock assets in the latest week, marking the largest selling force since December last year. According to a report by Bank of America citing EPFR Global data, in the week ending September 20, global stock funds saw an outflow of $16.9 billion, with US stock funds experiencing the largest outflow, and European stock funds have seen outflows for 28 weeks.
4. Bank of Japan holds steady and keeps monetary policy unchanged
The Bank of Japan reiterated that if necessary, it would not hesitate to augment its stimulus policies, giving a reason for short-sellers to continue betting on the yen's weakness. Bank of Japan Governor Kazuo Ueda stated that the Bank of Japan has not yet reached the stage of achieving its inflation targets. If prospects for achieving price stability and inflation targets are visible, it would consider adjusting policies. The yen fell sharply, with the yen-to-dollar exchange rate reaching 148.36 during intra-day trading, near its lowest point in a year.
5. The Australian natural gas strike ends
Two weeks ago, workers initiated a partial strike, which was escalated last week, threatening the supply of natural gas from a main production pipeline that accounts for 5% of the global liquefied natural gas inventory, alarming the global natural gas market. The Offshore Alliance in Australia stated in a declaration that workers from Chevron’s three Australian natural gas plants (Gorgon, Wheatstone Offshore gas platform, and Wheatstone Onshore LNG plant) have met and decided to accept an agreement proposed by the Australian Fair Work Commission (FWC).
