周二，中国三大金融监管机构节前聚首，宣布了一系列政策，包括降准50bp、调降政策利率20bp、降低存量房贷利率、创设证券基金保险公司互换便利工具、创设股票回购增持专项再贷款等等。From ah stocks to RMB, and then to overseas listed Chinese concept stocks, ETFs, and options, Chinese assets like iShares China large cap ETF (FXI) have been heavily bought by investors. The trading volume of call options for FXI soared to the highest level since February, while emerging markets also surged to the highest level in two and a half years, and expectations of a significant rate cut by the Federal Reserve once again heated up, further boosting gold to another historic high.
Major events in the global macro markets have been happening constantly in just one week!
First, the Federal Reserve made a bold 50-basis-point interest rate cut, sparking market risk sentiment, followed by China releasing a long-awaited policy gift package, boosting international market confidence, and igniting optimistic sentiment towards Chinese assets.
On Tuesday, the three major financial regulatory agencies in China gathered before the holiday and announced a series of policies, including a 50-basis-point reserve requirement ratio cut, a 20-basis-point reduction in policy rates, lowering existing housing loan rates, creating securities fund insurance company swap tools, establishing special refinancing facilities for share buybacks and shareholdings, and more.
That evening, the China Securities Regulatory Commission took action again, issuingMergerrestructuring, market cap management related policies. The restructuring policy encourages listed companies to strengthen industrial integration, greatly simplify the merger review process, while the market cap management guidelines require listed companies to improve the quality of listed companies as the basis, enhance operational efficiency and profit capabilities, and promote the investment value of listed companies.
With both China and the USA making significant moves, from AH stocks to the renminbi, to offshore-listed Chinese concepts, ETFs, options, and other Chinese assets, investors flocked to buy. Emerging markets were also greatly boosted, while expectations of another substantial Fed rate cut fueled historic new highs in gold prices again.
Chinese assets are booming, and gold prices are soaring!
After China's stimulus policy announcement on Tuesday, the three major A-share indexes surged in trading volume. The Shanghai Composite Index rose by 4.15%, marking the largest single-day gain in over four years, while the Hang Seng Index broke through the 19,000 mark, closing with a 4.13% increase, the largest single-day gain in a year and a half.
Chinese concept stocks that have already taken the lead surged again overnight. The Chinese concept index shined all day, closing up more than 9%, marking the largest increase since 2022 and the highest in four months.$PDD Holdings (PDD.US)$and$XPeng (XPEV.US)$N/A.$NIO Inc (NIO.US)$and$Li Auto (LI.US)$ $Bilibili (BILI.US)$ Up 17%, $JD.com (JD.US)$ Up nearly 14%,$Alibaba (BABA.US)$rose nearly 8%.
$iShares China Large-Cap ETF (FXI.US)$ and $KraneShares CSI China Internet ETF (KWEB.US)$ Both also surged by about 10%, with KWEB trading well above all major moving averages.
The Renminbi continues to strengthen. On Wednesday, according to Bloomberg market data, the offshore Renminbi broke through the 7.0 barrier against the US dollar for the first time since May last year.
In the options market, the call options volume of FXI soared to the highest level since February. The premium for a 1-month contract betting on a 10% increase over a contract betting on a 10% decrease leaped to the highest level since 2015, having been deeply discounted in early August.
In the largest trade of the day, an investor spent $6.75 million to buy FXI options, giving the right to purchase 15 million shares at $33 before mid-November, betting on at least another 12% increase, as reported by Bloomberg.
Optimism has spread to the entire emerging markets. Emerging market stocks rose to their highest level in two and a half years on Tuesday, with the MSCI Emerging Markets Stock Index up 1.9% for the fourth consecutive day. The MSCI Emerging Markets Currency Index rose by 0.2%, with the largest increases in Brazil and Chilean currencies. Market expectations are that Chinese economic growth is likely to support the prices of Latin American commodities exports.
The iShares MSCI Emerging Markets ETF (EEM) closed at its highest level since April 2022, breaking through a significant resistance level.
However, the disappointing overnight US economic data boosted market expectations of a significant rate cut by the Federal Reserve, causing gold to soar to a record high.
The US Conference Board released a report on Tuesday revealing an unexpected sharp decline of 6.9 points to 98.7 in US consumer confidence for September, marking the largest drop since August 2021. This was attributed to concerns about the labor market and overall economic outlook.
Christian Lawrence, cross-asset strategist at Cooperatieve Rabobank, stated that these data have led to expectations of a possible 50 basis point rate cut by the Federal Reserve this year, which will support demand for higher-yielding assets.
Overnight, COMEX December gold futures rose 1.11% to $2682 per ounce at the close, reaching as high as $2689.40 during the session setting an intraday record high. Spot gold rose nearly 1.4% to surpass $2660 at the close, continuing to hit record highs, with a cumulative increase of 29% so far this year.
Editor/Somer
