Core Viewpoint - The article highlights a mixed economic outlook, with rising gold prices and declining consumer and production metrics, indicating potential challenges in various sectors of the economy [2][31]. Group 1: Economic Indicators - The Huachuang Macro WEI index has decreased to approximately 3%, down 3.59 points from the previous week, primarily due to a holiday effect impacting real estate transactions and vehicle sales [2][10]. - Subway passenger transport growth turned negative, with a 3% year-on-year decline in 27 cities compared to a 3.8% increase in September [3][14]. - The sales of commercial residential properties have seen a significant decline, with a 27% year-on-year drop in transaction area as of October 18, compared to a 1.2% decline in September [4][16]. Group 2: Consumer Behavior - Retail sales of passenger vehicles have turned negative, with a cumulative year-on-year decline of 7% as of October 12, contrasting with a 6% increase in September [16]. - The growth rate of express delivery volume has slowed to 1.7% year-on-year in the first two weeks of October, down from 12% in the previous month [4][16]. - Prices of pork and eggs have dropped significantly, with pork prices down 3.9% and egg prices down 4.4% [5][31]. Group 3: Production and Infrastructure - Infrastructure activity has noticeably declined, with the operating rate of asphalt plants at 35.8%, down 4.3% from pre-holiday levels [4][19]. - The apparent consumption of rebar has decreased by 18% year-on-year as of October 17, indicating weaker demand in construction [19][24]. - Industrial production metrics show a decline in coal throughput at Qinhuangdao port, with a year-on-year increase of only 6% as of October 17, down from 19% in September [19][24]. Group 4: Trade and Exports - Port container throughput has decreased by 6.1% week-on-week as of October 12, with cumulative year-on-year growth dropping to 5.3% [26][27]. - The number of cargo ships from China to the U.S. has significantly declined, with a year-on-year drop of 34.8% in mid-October [27]. - Export demand remains stable, with shipping rates for European routes showing a rebound, while North American routes also see price increases [26][27]. Group 5: Price Trends - Gold prices have surged to $4,304 per ounce, marking a 6.2% increase, while oil prices have continued to decline [31][36]. - The average listing price of second-hand homes in first-tier cities has decreased by 0.3% as of October 6, with a cumulative decline of 3.1% this year [38][40]. - The price index for industrial silicon futures has decreased by 1%, while polysilicon futures have increased by 6.3% [31][40]. Group 6: Interest Rates and Debt - The yields on 1-year, 5-year, and 10-year government bonds are reported at 1.4434%, 1.5899%, and 1.8246%, with slight fluctuations compared to the previous week [54][53]. - The government plans to issue new local government debt limits for 2026, with a focus on supporting major strategic projects [41].

Core Viewpoint - The article emphasizes the significance of the recent fiscal policy changes, particularly the allocation of 500 billion yuan from the local government debt balance limit, which is expected to directly support project construction in major economic provinces and facilitate credit expansion [5][11][38]. Group 1: Fiscal Data Overview - In September, the broad fiscal revenue increased by 3.2% year-on-year, compared to 0.3% in August, while broad fiscal expenditure rose by 2.3% year-on-year, down from 6% in August [2]. - The tax revenue growth reached a new high for the year at 8.7%, indicating strong fiscal performance [5][22]. Group 2: Understanding the Debt Balance Limit - The local government debt balance limit refers to the difference between the legally permitted debt limit and the actual debt balance, which allows for additional borrowing capacity [7][25]. - By the end of 2023, the local debt limit was 42.17 trillion yuan, with a balance of 40.74 trillion yuan, resulting in a balance limit of 1.43 trillion yuan [10][27]. Group 3: Purpose of the 500 Billion Yuan Allocation - The allocation of the 500 billion yuan is aimed at supporting major economic provinces to achieve their development goals and stabilize the economic recovery [11][29]. - This year's allocation is not primarily focused on meeting fiscal budget targets, as tax revenue has shown resilience, leading to a potential budget surplus [11][28]. Group 4: Implications of the Allocation - The 500 billion yuan allocation, combined with another 500 billion yuan from new policy financial tools, effectively provides a trillion yuan in additional fiscal resources for local governments [6][41]. - This funding can now be used for project construction in major economic provinces, marking a shift from previous years where it was limited to debt repayment and clearing arrears [16][38]. Group 5: Observations on Fiscal Performance - The article notes that tax revenue growth has been driven by price-related taxes and personal income tax, with significant contributions from the computer and communication equipment sectors [45][47]. - The government fund income growth turned positive in September, primarily due to a narrowing decline in land sales revenue [67].

Core Insights - The overall price trend shows marginal improvement in September, with CPI year-on-year rising from -0.4% to -0.3%, while core CPI increased to 1% [2][12] - The GDP deflator index for Q3 is expected to improve from -1.2% to -0.9%, supporting nominal growth stabilization [2][9] - Core CPI's rise is primarily driven by core goods, which saw a significant year-on-year increase of 1.8% in September, the highest since 2021 [4][13] CPI Analysis - The CPI year-on-year decline of 0.3% is influenced by food prices, which worsened from -4.3% to -4.4%, while energy prices improved from -3.1% to -2.7% [19][22] - Core CPI rose to 1.0%, marking five consecutive months of increase, with core goods contributing significantly to this rise [19][20] - Key contributors to core CPI include household appliances (up 5.5%), gold jewelry (up 42.1%), and communication tools (up 1.5%) [19][20] PPI Analysis - PPI remained flat month-on-month after eight months of decline, with a year-on-year decrease narrowing from -2.9% to -2.3% [28][31] - The stabilization in PPI is attributed to improved supply-demand dynamics in certain sectors, particularly coal, steel, and photovoltaic industries [28][32] - Input factors have led to price declines in oil-related sectors, while midstream manufacturing sectors like computer communication and automotive manufacturing continue to show weakness [31][32] Implications and Insights - The consumer goods replacement policy has positively impacted retail consumption and price recovery, although recent funding for this policy is depleting [5][16] - Broader consumer price trends indicate that the CPI may not fully reflect the underlying strength in various sectors, suggesting ongoing economic recovery [5][16] - The recovery of rental prices is crucial for the mid-term upward adjustment of core CPI, given its significant weight in the index [6][16]

Group 1 - The article emphasizes the importance of tracking three financial indicators: M1 year-on-year growth, non-bank deposits, and corporate medium to long-term loans, as they reflect industrial inventory and PPI improvements, market activity, and production investment trends respectively [4][5][6] - In September, M1 year-on-year growth increased by 1.2%, while non-bank deposits decreased by 1.97 trillion, and corporate medium to long-term loans saw a slight decrease of 500 million [4][5] - The decline in non-bank deposits in September is attributed to seasonal factors, particularly the pressure on banks to meet deposit assessments at the end of the quarter, leading to a typical seasonal drop in non-bank deposits [4][5][9] Group 2 - The article discusses the implications of the significant drop in non-bank deposits in September, suggesting it does not necessarily indicate a weakening of the equity market's activity, and further observation of October's data is required [8][9] - The increase in M1 year-on-year is likely driven by a rise in household demand rather than improvements in corporate cash flow, as evidenced by the relatively modest increase in corporate deposits [10][23] - The article highlights that while the new M1 metric is statistically more accurate, historical discrepancies suggest that it may not directly correlate with corporate expectations, necessitating further analysis of traditional M1 metrics [10][24] Group 3 - In September, the total social financing increased by 3.53 trillion, a decrease of 2.3 trillion year-on-year, with a stock growth rate of 8.7% [31][32] - The article notes that corporate medium to long-term loans continued to show a decrease, with a total loan increase of 1.29 trillion, which is 300 billion less than the previous year [27][31] - M2 growth rate fell to 8.4% in September, down 0.4% from the previous month, while new M1 grew by 7.2%, reflecting a mixed trend in liquidity [32][33]

Core Viewpoints - In September, China's exports in USD terms increased by 8.3% year-on-year, significantly exceeding Bloomberg's consensus expectation of 7.1% and the previous month's 4.4% [2][15] - The increase in exports is attributed to a low base effect from the previous year, an increase in working days, and a marginal improvement in external demand, as indicated by the PMI new export orders index reaching its highest level in nearly five years [4][7] - Looking ahead to the fourth quarter, exports may experience fluctuations due to base effects, with expectations of continued strength in the EU, ASEAN, and Africa, while the US remains weak [4][9] Group 1: September Export Performance - September exports exceeded expectations, with a year-on-year increase of 8.3%, supported by a low base from the previous year and a favorable working day count [4][15] - The average year-on-year growth over the past two years was 5.3%, lower than August's 6.5%, indicating a potential slowdown in growth momentum [7][15] - The PMI new export orders index for September rose to 47.8%, the highest in nearly five years, reflecting resilience in external demand [7][15] Group 2: Regional Export Trends - Exports to the US showed a significant year-on-year decline of 26.8%, while exports to the EU, ASEAN, and Africa increased by 14%, 15.8%, and 56.8% respectively [22][54] - The rebound in exports to Africa was notable, with a month-on-month increase of 20.3%, while exports to ASEAN experienced a seasonal decline [23][54] - The overall trend indicates that while the US remains weak, the EU, ASEAN, and Africa continue to show strength in demand [9][54] Group 3: Future Outlook and Risks - The WTO has revised its forecast for global goods trade growth in 2026 from 1.8% to 0.5%, primarily due to the gradual impact of tariffs and the diminishing effect of demand front-loading [10][29] - The core concern regarding tariffs is the potential β risk, which could lead to a collapse in US demand and a subsequent decline in global trade demand; however, current indicators suggest this risk remains low [5][29] - Observations indicate that neither the US nor the EU has shown significant signs of "import grabbing" from China, with US imports primarily driven by durable goods purchases without substantial inventory accumulation [11][41]

Core Viewpoint - The article discusses the escalation of the China-U.S. trade conflict, highlighting new tariffs and export controls imposed by both countries, which could significantly impact trade dynamics and supply chains [2][3][12]. Group 1: Trade Tariffs and Export Controls - On October 10, U.S. President Trump announced a 100% tariff on all Chinese goods starting November 1 [2]. - China has implemented export controls on key materials, including rare earth elements and lithium batteries, effective from November 8, 2025, asserting that the impact on supply chains is minimal [2][12]. - The U.S. plans to impose export controls on all critical software to China, with potential early implementation [2]. Group 2: Regulatory Measures and Charges - The U.S. Department of Commerce added several Chinese entities to its export control list on October 8, while China activated its "unreliable entity list" against foreign companies [3]. - Starting October 14, the U.S. will impose port fees on Chinese shipping, prompting China to retaliate with special port fees on U.S. vessels [3][13]. - Qualcomm is under investigation by China's market regulator for alleged antitrust violations as of October 12 [3]. Group 3: Political Developments - The 20th Central Committee's Fourth Plenary Session is scheduled for October 20-23, focusing on the 14th Five-Year Plan, emphasizing the importance of the Party's leadership in economic and social development [4][8]. - The meeting will address high-quality development, risk prevention, and the integration of market mechanisms with government intervention [8]. Group 4: Recent Policy Announcements - On September 28, the National Development and Reform Commission announced measures to combat price competition in key industries [11]. - A notification on September 30 established domestic product standards for government procurement, providing a 20% price deduction for domestic products in competitive bidding [11]. - The Ministry of Commerce confirmed that China's export controls are not prohibitive and will allow compliant applications for civilian use [12].

Core Viewpoint - The article discusses the current economic trends in China, highlighting both upward and downward indicators in various sectors, including consumer behavior, production, and trade dynamics, while also addressing the impact of external factors such as tariffs and commodity prices [2][3][4][5]. Group 1: Economic Indicators - Durable goods consumption shows a recovery in retail sales of passenger cars, with a year-on-year growth of 6% in September compared to 3% in August [2][15]. - The OECD composite leading indicator for G7 countries rose to 100.49 in September, indicating a continued recovery in external demand [3][24]. - The macroeconomic activity index from Huachuang Securities declined to 6.26% as of October 5, down from 6.65% the previous week [3][9]. Group 2: Consumer Behavior - The real estate market is experiencing a significant decline, with a 33% year-on-year drop in residential property sales in 67 cities during the first ten days of October, compared to a 1.2% decline in September [3][15]. - Non-durable goods consumption growth has slowed, with express delivery volume growth dropping to 4.5% as of October 5, down from 12% in the previous month [3][15]. - Service consumption, particularly subway ridership, has turned negative, with a 4.8% decline in the first ten days of October compared to a 3.8% increase in September [3][13]. Group 3: Production and Trade - The apparent consumption of rebar remains weaker than the previous year, with a 10% year-on-year decline as of October 9 [3][17]. - The OECD leading indicator for external demand continues to rise, suggesting potential improvements in trade dynamics, although direct trade with the U.S. is showing signs of decline [3][24]. - The prices of gold and copper have increased, with gold reaching $3986.2 per ounce (up 2.7%) and copper at $10,765 per ton (up 1.9%) [4][38]. Group 4: Policy and Financial Environment - Long-term bond yields have decreased, with the 10-year government bond yield at 1.8206%, down 3.99 basis points from September 30 [5][57]. - Recent developments in U.S.-China trade relations indicate an escalation in tariff tensions, with a proposed 100% tariff on all Chinese imports starting November 1 [4][26]. - New policy measures are being implemented to support various industries, particularly in the non-ferrous sector, with recommendations for price adjustments to alleviate industry losses [4][22].

Core Viewpoint - The article discusses the differences in the market, tariff, foreign trade, macroeconomic, and exchange rate environments between the current situation and that of April, highlighting the implications for investors amid escalating US-China trade tensions [2][4][5][6][7]. Group 1: Differences in US-China Equity Market Environment - The volatility and subsequent trends in the US and Chinese stock markets show significant differences, with A-shares experiencing more pronounced rebounds after declines compared to the US market, which tends to exhibit panic selling [3][9]. - As of now, the valuation of major indices is higher than in April, with the dynamic P/E ratios for the Shanghai Composite Index, Hang Seng Index, and S&P 500 Index at 14.1, 11.7, and 22.2 respectively, compared to 12.2, 10.2, and 20.5 in April [10][14]. - In the A-share market, 28 out of 31 sectors have a higher dynamic P/E than in early April, indicating a general increase in valuations [14]. Group 2: Differences in Tariff Environment - The current escalation of tariffs has exceeded market expectations, but the market's psychological resilience has improved compared to April, where there was significant uncertainty about future tariff directions [4][22]. - In April, the probability of a reduction in tariffs was perceived to be below 15%, while now there is a greater belief in the likelihood of a TACO deal [22]. Group 3: Differences in Foreign Trade Environment - The foreign trade environment for China is currently better than in April, aided by a global interest rate cut cycle initiated by the Federal Reserve, which has positively impacted industrial production expectations [5][24]. - The global manufacturing PMI has shown signs of recovery, indicating a more favorable trade environment for China compared to April [24]. Group 4: Differences in Macroeconomic Environment - Both the US and China are experiencing short-term economic pressures, but the mid-term outlook is more positive than in April, with signs of recovery in private sector economic cycles in China [6][27][28]. - In the US, the gradual implementation of trade agreements and tax cuts has reduced policy uncertainty, improving business and consumer confidence [6][33]. Group 5: Differences in Exchange Rate Environment - The RMB exchange rate is expected to remain stable amid ongoing economic recovery, with increased flexibility in the exchange rate being beneficial for macroeconomic management [7][38]. - For the USD, the risk of further depreciation appears limited, as overseas investment institutions have increased their hedging against USD assets [7][38].

Group 1 - The global asset performance in September shows that global stocks outperformed other asset classes, with a return of 3.31%, followed by global bonds at 0.65%, and commodities at 0.05% [2] - The international spot gold price has recently continued its strong upward momentum, breaking through $3,800 per ounce at the end of September, driven by multiple systemic factors and market sentiment [4][12] - Despite the U.S. government shutdown, the stock market showed resilience, with the Dow Jones Industrial Average and S&P 500 reaching historical highs, buoyed by optimistic market sentiment and expectations of a Federal Reserve rate cut [4][17] Group 2 - The credit spread for U.S. high-yield corporate bonds narrowed to a historical low of 2.67% by the end of September 2025, indicating high investor confidence in corporate credit quality [5][20] - Global fund managers increased their allocations to stocks, pharmaceuticals, communications, consumer discretionary, and technology, while reducing exposure to the UK, utilities, energy, Eurozone, and emerging markets [6][23] - The Indian stock market has underperformed the MSCI Asia-Pacific index for five consecutive months, reflecting a divergence between foreign and domestic investor sentiment [6][28] Group 3 - Speculative net positions in Japanese yen have decreased to 79,500 contracts, indicating a waning bullish sentiment towards the yen [6][31] - The volatility ratio of emerging market currencies to G7 currencies has continued to decline, reaching a low of 0.76, improving the risk-return profile for carry trades [6][36] - The scale of reserves held by banks at the Federal Reserve has fallen below $3 trillion, the lowest level since the beginning of the year, due to large-scale Treasury issuance and ongoing quantitative tightening [6][39] Group 4 - The S&P 500 index and the MOVE index (a measure of U.S. Treasury market volatility) have shown a strong correlation, suggesting that the current stock market rally is supported by low interest rate volatility [6][42] - The overnight interbank offered rate in Hong Kong surged to 5.35%, the highest level in nearly a year, highlighting short-term funding market tensions [6][45] Group 5 - From a fundamental perspective, the weekly economic activity index has shown signs of recovery, indicating a potential divergence between asset prices and economic fundamentals [6][47] - From a sentiment perspective, the market sentiment index has rebounded, reflecting improved investor confidence [6][63]

Core Viewpoint - The article discusses how the Federal Reserve's monetary policy impacts emerging market stock markets, categorizing the external macro environment into four scenarios that influence market performance [2][4]. Group 1: Scenarios of Emerging Market Stock Performance - Scenario 1: During global monetary policy switching periods (e.g., initial or final stages of rate hikes/cuts), market expectations regarding the Fed's stance (hawkish/dovish) are crucial, with emerging market economic strength being less significant [5][24]. - Scenario 2: In periods of stable rate hikes/cuts, the sensitivity of the market to monetary policy decreases, and the economic expectations of emerging markets compared to the U.S. become key factors [9][25]. - Scenario 3: During global economic recessions or when recession expectations exist, emerging markets generally perform poorly [13][54]. - Scenario 4: In times of excessive liquidity, emerging market stocks typically perform well [15][62]. Group 2: Historical Review of Emerging Market Stock Performance - The article reviews emerging market stock performance from 2008 to 2025, highlighting key periods and their corresponding MSCI Emerging Markets Index movements [23][26]. - For instance, from January 2008 to February 2009, the MSCI Emerging Markets Index fell by 59.9% due to the global financial crisis, while from February 2009 to April 2010, it rebounded by 92.6% during a period of excessive liquidity [26]. - The performance during the stable rate hike period from February 2016 to January 2018 saw a 69.0% increase in the MSCI Emerging Markets Index, driven by improving global economic conditions [46][48]. Group 3: Future Outlook for Emerging Markets Post-September Rate Cut - Following the September rate cut, three potential macro scenarios for emerging markets are outlined: 1. Continued mild economic cooling with no inflation rise, allowing for a sustained rate cut cycle [73]. 2. A rapid economic recovery post-rate cut, leading to a potential shift back to a hawkish stance by the Fed, which could pressure emerging markets [73][76]. 3. Risks of stagflation due to fluctuating tariffs impacting inflation, which could lead to downturns in both emerging markets and U.S. stocks [73][76]. - The article suggests that the likelihood of scenario 2 is higher, indicating that the best time for emerging market stock performance may have passed, while U.S. stocks could remain strong [76].