Ping An View:
The real economy: the local new demand has rebounded again, the operating rate has mostly fallen, the domestic demand for real estate continues to fall, and the Christmas peak season and epidemic situation of external demand promote the recovery. 1) The epidemic in China worsened again this week, Monday to Friday (November 29 – December 3) a total of 319 newly confirmed cases were added in seven provinces and cities including Inner Mongolia, Heilongjiang and Yunnan, up again from 20 newly confirmed cases in three provinces and autonomous regions in the same period last week. The transmission of Omicron mutant strain is strong, but the severe and mortality after infection and the protective effect of the original vaccine still need to be confirmed in a few weeks. With the rapid spread of major overseas countries, China’s epidemic prevention and control is still under way The control pressure is not small. 2) Most industrial operating rates fell. The national blast furnace operating rate, automobile tire semi steel tire operating rate and coking enterprise operating rate all fell month on month, and the operating rate of petroleum asphalt unit rebounded slightly. We are concerned about the marginal impact of overseas epidemic trend and industrial power price adjustment on China’s industrial production. 3) De inventory of industrial finished products. This week, rebar social inventory, electrolytic aluminum inventory and coking coal inventory have been removed, while port iron ore inventory continues to rise at a high level. 4) Real estate continued to fall and foreign trade recovered. This week, the transaction area of commercial housing in 30 large and medium-sized cities decreased by 15.3% month on month; Last week, the land transaction area of Baicheng decreased by 49.2%. Although it is a seasonal decline, it is far lower than that in the same period of 2019 and 2020. Last week, the subway passenger volume in nine major cities picked up month on month, but the film box office and congestion index all fell. In terms of external demand, the container throughput of domestic trade and foreign trade of the eight hub ports in late November was – 0.4% and 3% respectively year-on-year. The warming of overseas epidemic has brought some support to foreign trade. 5) Black commodities rose and fell, and Shenzhen Agricultural Products Group Co.Ltd(000061) wholesale prices fell. The spot price of China Shipbuilding Industry Group Power Co.Ltd(600482) coal was flat and stable this week, the spot price of coking coal increased slightly, and the spot price of coke decreased greatly. In terms of rebar, the supply side blast furnace operating rate is still falling, the inventory decontamination has increased, indicating that the apparent consumer demand is OK, or there is still support for the commencement under the real estate policy of “guaranteed delivery”, the futures price has recovered, but the spot price is still depressed. This week, the wholesale price of Shenzhen Agricultural Products Group Co.Ltd(000061) fell by 0.8% month on month, the wholesale price of vegetables, eggs and fruits fell, and the wholesale price of pork rose by 0.2%.
Capital market: this week, the capital level became loose after another month, most of the main stock indexes of A-Shares rose, the yields of treasury bonds of all main maturities rose, the US dollar index rose slightly, and the RMB appreciated again. This week, the financial market focused on the spread of Omicron variant of the epidemic in overseas countries, the higher than expected manufacturing PMI data and the warming expected by the Federal Reserve to raise interest rates next year. In the money market, the central bank’s open market reverse repo net recovered 170 billion yuan this week, but there was little capital pressure after the next month. Dr007 and R007 fell 28.5bp and 21.3bp respectively on Friday compared with last Friday. In the stock market, most of the major A-share indexes rose this week. Although the epidemic spread in overseas countries, the market has strong confidence in China’s epidemic control ability. In the bond market, China’s PMI data in November rebounded to the expansion range, the interest rate increase expectation increased under the hawkish speech of the chairman of the overseas Federal Reserve, and the yields of treasury bonds of all major maturities rose this week. In the foreign exchange market, the US dollar index closed at 96.17 on Friday, up 0.1% from last Friday. This week, both onshore RMB and offshore RMB appreciated by 0.4% against the US dollar, or due to the spread of overseas Omicron virus, the market has confidence in China’s epidemic prevention and control ability and China’s exports.
Risk tip: the steady growth is less than expected, the overseas epidemic is out of control again, and the geopolitical conflict is escalating.
