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Weekly Financial Summary 2023-12-25

Date: 2023-12-25
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Financial attention


Macroeconomics




Central Bank: Recently, the People's Bank of China released the "China Financial Stability Report (2023)", which looks forward to the future. The Chinese economy has enormous development resilience and potential, and the long-term positive fundamentals have not changed. The financial system should adhere to the overall tone of seeking progress while maintaining stability, fully, accurately, and comprehensively implement the new development concept, accelerate the construction of a new development pattern, comprehensively deepen reform and opening up, increase macroeconomic policy regulation, focus on expanding domestic demand, boosting confidence, and preventing risks, continuously promote the continuous improvement of economic operation, the continuous enhancement of endogenous momentum, the continuous improvement of social expectations, and the continuous resolution of risks and hidden dangers, and promote the effective improvement of quality and reasonable growth of the economy. Efforts should be made to create a favorable monetary and financial environment, maintain the stability of monetary policy, and better focus on cross cycle and countercyclical adjustments. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.




Ministry of Finance: The National Financial Work Conference was held in Beijing from December 21st to 22nd. The meeting pointed out that in 2024, it is necessary to strengthen the countercyclical and cross cyclical adjustment of macroeconomic policies, continue to implement active fiscal policies, moderately increase strength, improve quality and efficiency. Moderate acceleration is mainly to maintain appropriate expenditure intensity and release positive signals; Reasonably arrange the scale of government investment and give full play to the driving and amplification effect; Increase the intensity of balanced transfer payments and secure the bottom line of grassroots "three guarantees"; Optimize and adjust tax and fee policies to improve accuracy and targeting.




China Securities Journal: Fan Xiang, Co Director of Goldman Sachs China and Chairman of Goldman Sachs (China) Securities Co., Ltd., stated that Goldman Sachs is confident in the medium and long-term development prospects of the Chinese economy. Both in terms of scale and importance, China is an important driving force for global economic development.




Stock market inventory from December 18th to December 22nd




Last week, the Hang Seng Index fell by 2.69% and the Hang Seng Technology Index fell by 6.15%.




Last week, the A-share market launched a battle to defend its 2900 points, which not only fell but also fell below 2885 points in the market. It stabilized and rebounded at 2882 points between last year's two low points of 2863 points and 2885 points. During the process of bottoming out and rebounding in the market, regardless of whether it was up or down in the market, the two markets were able to continue to release their volume. This means that after the 2900 point fell, there were panic outflows on the market and outflows of off exchange funds, and the "siege" effect of the market has emerged. Despite occasional external disturbance factors and fluctuating structural market trends, the bottom characteristics of the market have emerged.




So, as the year-end approaches, will A-shares have a cross year market trend, will 2024 have a spring market trend, and can the overall market in 2024 end the "two consecutive negative" trend, emerge from an upward trend and end with a red market, or will the market continue to decline and emerge from the "three consecutive negative" trend of the annual line? Where is the structural market for the cross year and next year, and what structural risks need to be avoided? This is a market concern, and our viewpoint is:




Firstly, A-shares have a cross year market trend. In the second half of this year, the A-share market continued to be sluggish. In addition to geopolitical factors that accelerated the outflow of foreign investment from the A-share market, leading to the loss of blood in the A-share market, local governments also issued a large number of special bonds for chemical bonds, occupying a large amount of liquidity. The capital interest rate has continued to rise since late August, and the A-share market has remained in a tight liquidity situation. As the end of the year approaches, the capital interest rate remains strong, and the liquidity pressure has not decreased. This is one of the internal reasons why the market continues to weaken and fall below 2885 points. However, as the end of the year funds are fully recovered, the liquidity pressure will weaken, and liquidity improvement is a high probability event, laying the foundation for the cross year market.




From a historical perspective, there is a cross year improvement in liquidity at the end of each year. After the market falls below 2885 points, the market not only remains at a low level, but the daily MACD index continues to show a "bottom divergence" trend. The weekly MACD index and SKD index of the market also show a bottom divergence trend. Among the main broad base indices, the Science and Technology Innovation 50 day MACD index has continuously deviated from the bottom three times, the weekly MACD index has continuously deviated from the bottom three times, the ChiNext 50 index daily MACD index has deviated from the bottom three times, and the weekly MACD index has continuously deviated from the bottom three times. These all send a signal of A-share bottoming out, laying a foundation for the cross year market.




Secondly, there will be an upward trend next year. We have emphasized in our previous report that the high and low position to some extent determines the subsequent trend of the market, especially the trend of the spring market. The low point of the market at the beginning of 2019 was 2440 points, which was the lowest point after five consecutive quarters of continuous decline, and it was also the low point that formed a "resonance" after the decline of large and small market cap stocks. Due to its low position, the market began to show a significant upward trend in 2019. After three consecutive years of rise in early 2022, the stock price was at a high level since the 2440 point rise. In early 2022, there was an adjustment trend, and it is reasonable that it did not move out of the spring market.




After two consecutive years of adjustment, the current market is at a low level in the past two years. Historical patterns indicate that there has been no "three consecutive negative" trend in the market's annual line. From the current market characteristics, it is a high probability that the market's annual line will experience a "two consecutive negative" trend. In addition, the market is at a low level since the 3731 point correction. Therefore, it is reasonable for the 2024 market's annual line to not only achieve a positive closing, but also a spring upward trend. The probability of the 2024 market continuing the downward trend in 2023 is relatively low, and the downward space of the market is far less than the upward space. As predicted in our annual market analysis report "Who controls the ups and downs", the 2024 market is expected to continue its downward trend. The high point of the market is expected to be between 3600-3700 points.




Thirdly, structural opportunities and risks coexist. The main trend of the structural market in each year is not expected by the market, but rather appears unintentionally. However, one rule remains unchanged, which is that the main trend of the structural market in the new year must occur in industries where the industry index has been running low for more than two consecutive years, with a decline of more than 50%. The industry's prosperity is at its extreme, and the market is consistently bearish and hesitant to take a long view, such as TMT from 2013 to 2015, TMT from 2019 to 2020, new energy and military industry from 2019 to 2021, and AI and communication this year.




CSI New Energy, represented by photovoltaic and lithium-ion batteries, has experienced a significant decline for two consecutive years, with a decline of nearly 63% from high to low. The index has basically fallen back to low, and coupled with the extreme downturn in the industry, the reduction of production capacity is accelerating. Next year, it has the basic and technical conditions for bottoming out and becoming the main trend of the market. In addition, there are similar conditions for biopharmaceuticals (mainly innovative drugs), which can be expected to be the main trend of the market next year in new energy and biopharmaceuticals. On the contrary, the cultural and entertainment industry, which has performed well this year, has been affected by the recent release of the "Online Game Management Measures (Draft for Comments)" by the National Press and Publication Administration on the cultural and entertainment industry, as well as the impact of the economic cycle on the real estate industry chain. Can the relevant industry Winning the market next year is worth discussing.






Industry observation




1. National Energy Group: The daily power generation has reached 4.01 billion kilowatt hours, and the heating capacity has reached 3.65 million gigawatt joules, an increase of 520 million kilowatt hours and 390000 gigawatt joules respectively compared to the highest values in the same period last year. Both sets a historical record for the highest electric heating during the peak winter season for the National Energy Group.




2. Jiupai News: This winter, the prices of strawberries from multiple varieties such as Hongyan, Tianbao (milk), and Ningyu have plummeted significantly. With a large number of strawberries on the market, the price will continue to decline, and it is expected to reach a low point in February and March, when "strawberry freedom" can be achieved.




3. Lotto Technology: In November, the online sales volume of monitors in Chinese Mainland was 932000, down 28.6% year on year and up 20.4% month on month; The sales revenue was 1.03 billion yuan, a year-on-year decrease of 35.9% and a month on month increase of 13.5%.




4. Zeng Congqin, Chairman of Wuliangye: At present, opportunities in the Baijiu industry outweigh challenges. In the future, Wuliangye will make every effort to promote the increase of channel profits. Reasonable channel profits are the primary issue that the company must work hard to solve, and the factory price of the eighth generation Wuliangye will be adjusted appropriately at the appropriate time. The recent contract signed between Wuliangye and its distributors plans to reduce the quantity by 20% in the coming year.




5. Pengpai News: "World Supermarket" Yiwu City in Zhejiang Province has exceeded 10 billion parcels of express delivery business this year, becoming the first county-level city in China with an annual express delivery business volume exceeding 10 billion. The scale of express delivery in Yiwu reached 100 million in 2012, and after 11 years, it exceeded 10 billion, becoming the second largest express hub city in China after Guangzhou, accounting for about 1/12 of the country's total and 40% of Zhejiang's total.




6. Reference news: The price of eggs in Russia has skyrocketed by 46.2% this year, becoming the fastest-growing staple food in the country. The government said it would import 1.2 billion eggs from Türkiye duty-free in the first half of next year to alleviate the shortage of eggs and curb the rise in egg prices.




7. Caixin News Agency: Samsung and SK Hynix have raised their investment and shipment targets for semiconductor equipment in 2024, with Samsung Electronics planning to invest approximately 27 trillion Korean won and SK Hynix planning to invest approximately 5.3 trillion Korean won, representing a year-on-year increase of 25% and 100% in investment. Meanwhile, Samsung plans to expand DRAM and NAND production by approximately 24% each, while SK Hynix plans to increase DRAM production to levels before the end of last year.




8. Thailand: Introducing the second phase of electric vehicle incentive measures, with a subsidy of 5000 to 100000 Thai baht per new vehicle, and implementing multiple measures such as reducing import tariffs and consumption taxes. The goal is to increase Thailand's electric vehicle production by more than four times next year compared to this year.




Financial data





domestic




1. CCTV News: This year, the central government issued an additional 1 trillion yuan of treasury bond, and the first batch of treasury bond capital budget of 237.9 billion yuan has been issued. Among them, a subsidy of 107.5 billion yuan was provided for post disaster recovery and reconstruction, as well as for enhancing disaster prevention and reduction capabilities. A subsidy of 125.4 billion yuan was provided for the construction of high standard farmland in disaster stricken areas such as Northeast China and Beijing Tianjin Hebei, and a subsidy of 5 billion yuan was provided for the construction of a comprehensive prevention and control system for key natural disasters.




2. Guangzhou Futures Exchange: Starting from the settlement on December 20th, the trading margin standard for lithium carbonate futures LC2401 and LC2402 contracts will be adjusted to 20%, the trading fee standard for lithium carbonate futures LC2407 contract will be adjusted to 3.2% of the transaction amount, and the intraday closing position trading fee standard will be adjusted to 3.2% of the transaction amount.




3. New Third Board: On December 18th, a total of 6264 companies were listed, a decrease of 2 on the same day, with a transaction amount of 372 million. The Third Board Component Index closed at 902.34, down 0.15%, with a transaction volume of 207 million yuan.




4. Domestic commodity futures: As of the afternoon of December 18th, the closing price was mixed, with the European consolidation line up by the limit, up 9.99%. LU fuel rose by more than 2%, while pulp, crude oil, styrene, and PTA rose by more than 1%; Glass fell more than 3%, soda ash fell nearly 3%, eggs, rapeseed meal, and lithium carbonate fell more than 2%, while corn, coking coal, iron ore, live pigs, and soybean meal fell more than 1%.




5. Treasury bond: On December 18, the main contract TS2403 of two-year treasury bond futures rose 0.01% to 101.154; The main contract of five-year treasury bond bond futures TF2403 declined 0.01% to 102.275; The main contract of 10-year treasury bond bond futures T2403 fell 0.01% to 102.475. The 10-year treasury bond bond interest rate fell 1.01BP to 2.61%; The 10-year China Development Bank bond interest rate fell 0.20BP to 2.73%.




6. Shanghai International Energy Trading Center: On December 18th, the main crude oil futures contract 2402 closed at 552.1 yuan/barrel, up 7.6 yuan or 1.40%. All contracts were traded in 271470 lots, with a decrease in holdings of 1757 lots to 73354 lots. The main contract sold 208988 lots, and the position increased by 2331 lots to 35175 lots.




7. Central Bank: On December 18th, it launched a 184 billion yuan 7-day and 60 billion yuan 14 day reverse repurchase operation, with bid interest rates of 1.8% and 1.95%, both unchanged from before. Due to the expiration of a 7-day reverse repurchase period of 285 billion yuan, a net withdrawal of 41 billion yuan was achieved.




8. Shibor: Overnight reported 1.6230%, up 2.90 basis points. The 7-day report was 1.8180%, up 6.50 basis points. Three month report of 2.6030%, up 0.20 basis points.




9. RMB: The onshore RMB closed at 16:30 against the US dollar at 7.1311, a decrease of 0.4564%, and the middle price of the RMB was at 7.0933, an increase of 0.0338%. NDF: 3-month report 7.0595, 6-month report 7.0395, 1-year report 6.9695, 2-year report 6.8495.




10. Shanghai Environmental Exchange: On December 18th, the trading volume of the national carbon market carbon emission quota listing agreement was 140299 tons, with a transaction amount of 10.074 million yuan, and the closing price was 71.61 yuan/ton, up 0.36%.




abroad




11. Asia: The Nikkei 225 index fell 0.64% to close at 32758.98 points. The South Korean KOSPI index rose 0.13% to 2566.86 points.




12. US stocks: The Dow Jones Industrial Average rose 0.00% to close at 37306.02 points; The Nasdaq rose 0.61% to close at 14904.81 points; The S&P 500 rose 0.45% to close at 4740.56 points.




13. Europe: The FTSE 100 in the UK closed up 0.50% at 7614.48 points; The German DAX30 closed down 0.60% at 16650.55 points; France CAC40 closed down 0.37% at 7568.86 points.




14. Gold: COMEX February gold futures settlement price rose 0.24% to $2040.5 per ounce.




15. Crude oil: WTI's January crude oil futures settlement price rose 1.46% to $72.47 per barrel; Brent February crude oil futures rose 1.83% to $77.95 per barrel.




16. The Baltic Dry Index: fell 2.56% to 2288 points.




·The global "arteries" are in urgent need·




Pengpai News: According to the freight forwarder, due to the impact of the international situation, COSCO Shipping, Dongfang Overseas, and Evergreen Shipping have verbally notified to suspend the loading of goods on the Red Sea route. ONE Ocean Network Shipping has also verbally notified the suspension of cargo loading on the Red Sea route. Maersk and the French ship Daphne notified earlier on the morning of December 18th that the loading of goods in the Red Sea direction will wait for notification from headquarters, and it is expected to receive news later. It should be noted that Dafei Shipping, COSCO Shipping, Evergreen Shipping, and Dongfang Overseas have previously formed an alliance through cooperation. In addition, some freight forwarders have stated that Mediterranean shipping is currently only notifying them to detour around the southern tip of Africa's Cape of Good Hope and has not suspended the loading of goods in related directions.




Huachuang Securities: As a transportation hub connecting Asia, Africa, and Europe, the Mandela Strait Red Sea Suez Canal is one of the busiest routes in the world, and its traffic conditions are crucial to the international supply chain. As of December 14, 2023, the total volume of ships passing through the Suez Canal was 2.093 billion tons, with a total of 24800 ships passing through. Among them, crude oil tankers, finished oil tankers, container ships, and dry bulk carriers passed through 2875, 2975, 5706, and 6975 ships, respectively. The proportion of capacity of each ship type (in deadweight tons) was 19.9%, 11.9%, 33.4%, and 25.5%, respectively. This channel carries a large amount of trade transportation, so its traffic condition is crucial for ensuring supply.




Guohai Securities: In addition, the Panama Canal has experienced a decrease in traffic volume due to climate reasons since July 2023, leading to congestion and continued to worsen. Some bulk carriers have started to bypass the Suez Canal, and the proportion of fleet traffic has increased from


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