Core Viewpoint - The economic data for October indicates a general slowdown in total economic activity, with key indicators such as industrial output, services, investment, retail sales, exports, and real estate sales all showing varying degrees of decline compared to previous values [1][5][19]. Economic Data Overview - The monthly GDP index simulated from industrial output, retail sales, and service production indices shows a year-on-year growth of 4.53%. This index has gradually recovered since the low in September 2022, reaching a high in March 2023, but has faced pressure in the second quarter and again in October [1][6]. - To achieve the annual growth target of 5%, the combined growth for November and December needs to be no less than 4.5% [1][6]. Industrial Sector Analysis - October's industrial output growth was 4.9%, down from 6.5% in the previous month. The month-on-month seasonally adjusted industrial value added was 0.17%, significantly lower than the previous 0.65% [6][8]. - The decline in industrial output is attributed to three main factors: fluctuations in export delivery values, a slowdown in major industrial product outputs, and the impact of policy financial tools on the construction sector [2][8]. - Key industrial product outputs showed negative growth, including crude steel (-12.1%), cement (-15.8%), and solar cells (-8.7%), while integrated circuit production increased by 17.7% [8][12]. Retail Sales Insights - Retail sales in October did not show an overall decline, with many categories improving. The apparent slowdown was mainly due to high base effects in durable goods like automobiles. Excluding automobiles, retail sales grew by 4.0%, surpassing the previous 3.2% [9][10]. - Growth was observed in sectors such as dining, alcohol, food, clothing, cosmetics, and daily necessities, while declines were noted in real estate-related furniture and high-base automotive and home appliance sales [9][10]. Fixed Asset Investment Trends - Fixed asset investment saw an expanded decline, with cumulative year-on-year growth dropping from -0.5% to -1.7%, and a monthly decline of 11.2% [3][11]. - The share of real estate development in fixed asset investment fell to 18.0%, the lowest since 2018. Excluding real estate, fixed asset investment growth was only 1.7%, indicating persistent low levels [3][11]. Real Estate Market Conditions - Real estate data in October continued to show significant pressure, with declines in sales, new construction, investment completion, and funding availability [15][16]. - The price indices for new and second-hand residential properties in 70 major cities showed a slight increase in the rate of decline compared to previous values, indicating a need for price stabilization to support sales and investment [15][17]. Overall Economic Outlook - The overall economic data for October suggests a marginal increase in total pressure, with structural highlights in general consumption and service consumption showing initial signs of recovery [4][19]. - The shortfalls remain in fixed asset investment and real estate volume and price, with recent policy measures yet to translate into hard data [4][19].

Core Viewpoint - The recent closure of the Emperor Palace Casino in Macau highlights the ongoing challenges faced by the gaming industry in the region, particularly for companies like Emperor Entertainment Hotel and its affiliates, amid financial difficulties and operational changes [1][3][10]. Group 1: Casino Operations - Emperor Palace Casino ceased operations on October 30, 2023, as part of a termination agreement between its parent company, Tianhao, and Aoyou [1][3][10]. - Aoyou Holdings had previously announced on June 9, 2023, that it would stop operating gaming activities in several satellite casinos, including Emperor Palace [5]. - New Macau International Development also announced that its satellite casinos would end operations by the end of this year [6]. Group 2: Financial Performance - Emperor Entertainment Hotel reported stable income from hotel and rental apartment operations for the fiscal years ending March 31, 2024, and 2025, with cash reserves of approximately HKD 526 million and no bank borrowings [11]. - Emperor International's total revenue for the fiscal year 2024-2025 reached HKD 1.376 billion, a 41.5% increase year-on-year, but the loss increased from HKD 2.028 billion to HKD 4.84 billion, a 138% rise [14][16]. - As of March 31, 2023, Emperor International had HKD 16.6 billion in overdue bank loans, raising concerns about its ability to continue as a going concern [16]. Group 3: Debt Crisis and Asset Sales - The company is facing a significant debt crisis, with overdue loans potentially triggering immediate repayment demands [12][16]. - In response to financial pressures, Emperor Group has accelerated asset sales, including residential projects in Hong Kong and properties in Macau, totaling over HKD 2.23 billion in sales contracts [17][18]. - The company's financial troubles have roots in previous business failures, such as the closure of its cinema operations in late 2022, which led to bankruptcy due to high net liabilities [19].

Core Viewpoint - The recent closure of the Emperor Palace Casino in Macau marks a significant shift in the operations of Emperor Entertainment Hotel and reflects broader challenges within the gaming industry in the region [2][4][6]. Group 1: Company Operations - Emperor Palace Casino ceased operations on October 30, 2023, at 23:59, following a termination agreement between its subsidiary, Tianhao, and AUB [4][6]. - Emperor Entertainment Hotel will continue its hotel business, including properties like the Emperor Jockey Club Hotel in Hong Kong, despite the closure of the casino [8]. - The company reported stable income from hotel and rental apartment operations for the fiscal years ending March 31, 2024, and 2025 [8]. Group 2: Financial Performance - Emperor International reported a total revenue of approximately HKD 1.375 billion for the fiscal year ending March 31, 2025, a 41.5% increase from HKD 972.55 million in the previous year [12]. - However, the company also faced significant losses, with a net loss attributable to shareholders increasing from HKD 2.091 billion to HKD 2.321 billion, marking a 10.9% increase [12]. - As of March 31, 2023, Emperor International had HKD 16.6 billion in overdue bank loans, raising concerns about its ongoing viability [12][13]. Group 3: Market Context - The Emperor Palace Casino was once a prominent player in Macau's competitive gaming market, having opened in January 2006 and generating approximately HKD 1.2 billion in revenue for the fiscal year ending March 31, 2007 [8]. - The closure of the casino is part of a broader trend, as AUB had previously announced its decision to cease operations at several satellite casinos, including the Emperor Palace [4][6]. - The financial struggles of Emperor International have led to significant stock price declines, with shares dropping over 15% following the announcement of its financial difficulties [13].

Group 1: U.S. Macro Strategy - The Federal Reserve is expected to lower interest rates by 25 basis points in both October and December meetings, bringing the year-end policy rate to a range of 3.5-3.75% [2] - September's U.S. CPI data was weaker than expected, with a year-on-year increase of 3.0% and a month-on-month increase of 0.3%, indicating short-term inflation concerns may be alleviated [2] - The U.S. economy is facing downward pressure, with a significant tightening in fiscal stance reflected in a surplus of $25.4 billion for week 42, compared to the same period last year [3] Group 2: U.S. Equity Market - The S&P 500 index rose by 1.9% last week, supported by strong corporate earnings and the expectation of continued rate cuts from the Federal Reserve [3] - Despite the current resilience in the U.S. stock market, uncertainties are rising, with high valuations primarily driven by AI narratives and tech giants' earnings [3] - The risk premium in the U.S. stock market is low, which may not align with potential credit and geopolitical risks [3] Group 3: U.S. Debt Market - Due to lower-than-expected inflation, expectations for rate cuts have strengthened, leading to a forecasted decline in U.S. Treasury yields [4] - The long-term interest rates face pressure from concerns over U.S. fiscal sustainability and the independence of the Federal Reserve, limiting their downward potential [4] Group 4: Chinese Macro Strategy - High-frequency data indicates a contraction in durable goods consumption and real estate transactions, with new home sales in 30 major cities down by 23.6% year-on-year [7] - Industrial enterprise profit growth accelerated to 21.6% year-on-year in September, supported by low base effects and recovery in upstream product prices [8] - Exports are expected to remain stable in October, with positive signals from recent U.S.-China trade discussions [9] Group 5: Chinese Equity Market - The A-share market saw a 2.9% increase last week, driven by liquidity support and stable economic fundamentals [11] - Growth and small-cap stocks are expected to outperform, with technology sectors showing high investment interest [11] - The Hong Kong stock market rebounded by 3.6%, benefiting from improved U.S.-China trade relations and favorable policies for the technology sector [12]

Economic Overview - Q3 2025 GDP growth is 4.8%, down from 5.2% in Q2, aligning with market expectations[1] - Industrial output in September increased by 6.5%, up from 5.2% in the previous month[1] - Retail sales growth in September is 3.0%, a decline from 3.4% in August[1] Investment Trends - Fixed asset investment from January to September decreased by 0.5%, down from a previous growth of 0.5%[1] - Real estate investment fell by 13.9% year-on-year, worsening from a decline of 12.9%[1] - Broad infrastructure investment grew by 3.3%, down from 5.4%[1] Consumption Insights - Retail sales in September showed a continuous decline, marking the fourth consecutive month of decrease[5] - The impact of the "trade-in" policy is diminishing, contributing to lower consumer spending[5] - September's retail sales growth was below market expectations of 3.1%[5] Future Outlook - To achieve the annual GDP target of 5%, Q4 growth needs to reach at least 4.4%[4] - Short-term policies may increase but are expected to be more supportive rather than transformative[4] - Key areas to monitor include central bank actions, fiscal policy effectiveness, and export performance[4]

Leadership Change & Investigation - Former Vanke A President and CEO, Zhu Jiusheng, has reportedly been subject to criminal compulsory measures [1] - Zhu Jiusheng had resigned from his positions as director, president, and CEO of Vanke in January 2025 [1] - Media reports in January indicated Zhu Jiusheng was under investigation, which he initially addressed via social media [1] - Industry insiders noted a subsequent lack of communication from Zhu Jiusheng [1] Response & Confirmation - Zhu Jiusheng reportedly responded to messages and posted on social media, indicating he was safe [1] - A journalist successfully contacted Zhu Jiusheng for a brief conversation [1]

Core Insights - The business sentiment and future expectations of small and medium-sized enterprises (SMEs) in Hong Kong have improved further in September, with overall employment conditions remaining stable [1] Business Performance Indicators - The current business revenue index for SMEs rose from 42.3 in August to 43.8 in September, while the business revenue outlook index for October is at 47.2 [1] - Although the current business revenue index remains below the neutral level of 50, all industries surveyed showed an increase compared to the previous month [1] Industry-Specific Analysis - The real estate sector's current business revenue index increased from 43.9 to 47.1 [1] - The retail sector's index rose from 41.1 to 42.8 [1] - The logistics sector's index improved from 40.5 to 42.2 [1] - The current new orders index for the import and export trade sector increased from 44.2 in August to 46.5 in September, with an outlook index of 47.3 for October [1] Economic Outlook - A government spokesperson indicated that despite ongoing uncertainties in the external environment, the robust local economy and the continued growth of economies in other parts of Asia, particularly mainland China, will support the business sentiment in Hong Kong [1]

Core Insights - The business sentiment and future expectations of small and medium-sized enterprises (SMEs) in Hong Kong have improved further in September, with overall employment conditions remaining stable [1] Group 1: Business Performance Indicators - The current business performance index for SMEs rose from 42.3 in August to 43.8 in September, while the business outlook index for October is at 47.2 [1] - All industries surveyed showed an increase in their respective indices compared to the previous month, with the real estate sector rising from 43.9 to 47.1, retail from 41.1 to 42.8, and logistics from 40.5 to 42.2 [1] Group 2: Trade and Orders - The current index for new orders in the import and export trade sector increased from 44.2 in August to 46.5 in September, with the outlook index for October at 47.3 [1] Group 3: Economic Outlook - Despite ongoing uncertainties in the external environment, the robust local economy and the continuous growth of economies in other parts of Asia, particularly mainland China, are expected to support the business sentiment in Hong Kong [1]

Core Insights - The current business situation index for small and medium-sized enterprises (SMEs) in Hong Kong increased from 42.3 in August 2025 to 43.8 in September 2025, indicating a slight improvement in business conditions [1] - The future business outlook index for October 2025 is projected at 47.2, suggesting a more optimistic sentiment among SMEs [1] - All sectors surveyed showed an increase in their respective indices in September 2025, particularly in real estate (from 43.9 to 47.1), retail (from 41.1 to 42.8), and logistics (from 40.5 to 42.2) [1] Industry Analysis - The current index for new orders in the import and export trade sector rose from 44.2 in August 2025 to 46.5 in September 2025, with a future outlook index of 47.3 for October 2025 [1] - The business atmosphere for SMEs in Hong Kong has improved, with stable employment conditions reported [1] - Despite ongoing uncertainties in the external environment, the robust local economy in Hong Kong and growth in mainland China are expected to support the business climate [1]

Economic Overview - In Q2 2025, Hong Kong's GDP grew by 3.1% year-on-year, an increase of 0.1 percentage points from Q1, and a quarter-on-quarter growth of 0.4% [3][5] - Private consumption expenditure rose by 1.9% year-on-year in Q2 2025, recovering by 3.1 percentage points compared to Q1 [3][5] - Local fixed capital formation increased by 2.8% year-on-year in Q2 2025, with machinery and equipment investment accelerating [3][5] Domestic Demand - Consumer spending showed signs of recovery, ending a four-quarter decline, supported by a recovering financial market and stabilizing real estate market [7] - Durable goods consumption fell by 6.2% year-on-year, while non-durable goods consumption increased by 3.1% [7][8] - Investment in machinery and equipment surged by 38.4% year-on-year in Q2 2025, reflecting a stable business environment [8] External Demand - Hong Kong's merchandise exports grew by 11.5% year-on-year in Q2 2025, with a notable increase in exports to emerging markets [9][10] - Service exports rose by 7.5% year-on-year, driven by a recovery in tourism services and sustained growth in financial services [10] Employment and Inflation - The unemployment rate in Hong Kong slightly increased to 3.5% in Q2 2025, with a further rise to 3.9% by August 2025 [12] - The overall consumer price index (CPI) increased by 1.8% year-on-year in Q2 2025, with a slight rise in private housing rent CPI [13] Financial Market - The Hong Kong dollar initially strengthened but later weakened in Q2 2025, influenced by increased trading activity and changes in interest rates [15][16] - The benchmark interest rate remained unchanged in Q2 2025, while HIBOR rates fluctuated significantly [16][21] - The stock market continued its upward trend, with the Hang Seng Index rising by 4.1% in Q2 2025 [21][25] Real Estate Market - Total transaction volume in Hong Kong's real estate market decreased by approximately 21% year-on-year in Q2 2025, but showed a quarter-on-quarter increase [26][28] - The average rent for private residential properties rose by 3.5% year-on-year in Q2 2025, indicating a potential increase in rental yield [28] - The number of new residential units completed in Q2 2025 was 4,577, reflecting a year-on-year increase of 116% due to a low base effect [33] Banking Sector - HIBOR rates declined significantly in Q2 2025, leading to a decrease in net interest margins for banks [4][51] - Customer deposits in the banking sector grew by 4.0% quarter-on-quarter, with a notable increase in foreign currency deposits [38][42] - The asset quality of banks showed slight improvement, with a decrease in the non-performing loan ratio to 2.13% [53]