Focus this week:
In October, the profits of industrial enterprises increased by 24.6% year-on-year, with a compound average growth of 26.4% in two years; From January to October, the profits of industrial enterprises increased by 42.2% year-on-year, with a two-year compound average growth of 19.7%.
Core view:
In October, corporate profits continued to maintain a high growth rate, and the structural differentiation was still severe. Specifically, the three factors of price, volume and profit margin have improved compared with last month, and the high price operation is still the core support. In terms of structure, the profit differentiation of enterprises continued to increase in October. The mining industry and upstream raw material manufacturing industry were the core contributions driving profit growth, accounting for 52.5%, an increase of 9 percentage points compared with the previous month; At the same time, excluding agricultural and sideline food and food manufacturing, the profit growth of consumer goods manufacturing industry rebounded significantly, indicating that the profit recovery of consumer manufacturing industry has accelerated under the support of good market sales.
Looking ahead, the proportion of upstream profits may usher in an inflection point, and the growth rate of enterprise profits has entered a downward channel. Since late October, the policy has continued to focus on coal prices and energy supply, and the prices of relevant industrial products have dropped significantly recently. We expect that PPI will enter the decline channel year-on-year in November, the pressure drop of capacity superimposed on high energy consuming industries will continue, and the inflection point of profit proportion of upstream enterprises may come, which will drive the overall profit margin of enterprises to weaken.
Overseas observation:
The yield of us 10-year Treasury bond and inflation expectation decreased; The term spread of us 10-year and 2-year treasury bonds fell. The assets of the Federal Reserve, the Bank of Japan and the European Central Bank increased.
Overseas policy:
Biden nominated Powell for re-election as chairman of the Federal Reserve; Biden announced the release of strategic oil reserves to reduce oil prices and ease inflationary pressure; US Vice President Harris announced an investment of US $1.5 billion to expand the group of health care services; New variants of covid-19 virus with more mutations than delta virus strain were found in South Africa.
Global assets:
Most global stock markets closed lower, with the NASDAQ down 3.52% and the S & P 500 down 2.20%. European stock markets generally closed lower, as did Asian stock markets. In terms of commodity prices, coking coal and iron ore increased significantly, DCE coking coal increased by 8.33% and DCE iron ore increased by 7.37%; Crude oil fell sharply, ice oil distribution fell 8.72%; LME copper rose 1.14% and SHFE rebar fell 4.22%.
Central bank observation: the Federal Reserve released the minutes of the interest rate meeting, and the participants unanimously agreed to announce the reduction of asset purchase.
China Watch:
Upstream: crude oil prices fell month on month, while the average prices of thermal coal, coking coal, copper and aluminum all fell month on month.
Midstream: the operating rate of blast furnace decreased month on month, the cement price index increased month on month, the price of rebar decreased month on month, and the inventory decreased year on year. Downstream: the decline of commercial housing transaction area narrowed, the year-on-year growth rate of land supply area decreased, and the prices of pigs, vegetables and fruits increased month on month. Liquidity: the yield of ten-year Treasury bonds fell.
China Policy:
The national Standing Committee called for an overall plan to link up the management policies of special bonds this year and next; The central bank said to appropriately improve risk tolerance and increase medium – and long-term loans for manufacturing; The State Council Taiwan Affairs Office responded that Taiwan’s far east group was investigated and dealt with in the mainland: those who support “Taiwan independence” will never be allowed to make money in the mainland; The maternity leave in Shanghai was extended from 30 days to 60 days.
Next week’s financial calendar: China’s manufacturing PMI (Tuesday); new non-agricultural employment in November (Friday)
