Mini Program: Daily summary of investment bank/institutional views

foreign

1. JPMorgan: The S&P 500 is expected to approach 6,300 points by the end of the year

Traders at JPMorgan Chase & Co. see further upside ahead for the S&P 500 index by year-end, even after its strongest rally since the early days of the dot-com bubble. The most popular options bets on the U.S. stock benchmark hitting 6,200 to 6,300 this month, according to the bank's derivatives analysts. Based on Friday's close of around 6,032, that means it could rise another 3% to 4% by year-end.

2. MUFG: Political uncertainty intensifies, and the euro faces downside risks at the end of the year

Marine Le Pen, the chair of the far-right National Rally party in France, threatened on Monday that if the government does not meet the party's budget demands, a vote of no confidence will be held against the government in the coming days, causing the euro to drop. MUFG analyst Lee Hardman stated that although political uncertainty in France has so far had a limited impact on the euro, the collapse of the French government poses a downside risk to the euro before the end of the year. The intensification of political uncertainty may support expectations for a further 50 basis point rate cut by the European Central Bank at the December meeting. However, the economic data does not fully support the rationale for a rate cut, and a 25 basis point cut is more likely.

3. HSBC: The European Central Bank may suggest an open attitude towards rate cuts in 2025 at this month's meeting.

HSBC economists Balboni and Wells stated that the European Central Bank may abandon its more policy-restrictive stance at the next meeting and instead signal a more open attitude towards future rate cuts. This will lay the groundwork for further rate cuts next year; however, given that policymakers have recently called for a gradual approach, a significant 50 basis point rate cut in December seems unlikely. However, if economic data continues to disappoint, or if inflation rates decline more rapidly in early 2025, it may mean that the European Central Bank will accelerate rate cuts.

4. Citi: The limited supply of government bonds in the Eurozone in December is consistent with normalcy.

The supply of government bonds in the Eurozone will shrink in December, as sovereign countries have already completed or are about to complete their annual financing plans. Citi research strategist Puja Sawant estimates that the total issuance of government bonds in December will be 20 billion euros, the lowest monthly supply since 2024. This is also consistent with the seasonal decline in supply that typically occurs in December. The net cash demand (-12 billion euros) should support Eurozone government bonds.

5. Barclays: The French banking sector will not face funding pressure before the end of the year.

Barclays analysts stated in a report that despite rising political uncertainty, French banks will not face funding pressure before the end of 2024. Analysts believe that these banks do not pose a risk of violating regulatory capital requirements. French banks do not need to issue bonds in December. French banks have the capacity to postpone bond issuance until February next year after announcing the full-year earnings for 2024.

6. ING: Economic weakness in the Eurozone will hit employment.

Bert Colijn, an economist at ING, wrote in a report that the Eurozone job market will begin to show clear signs of economic slowdown next year. Data released on Monday showed that the unemployment rate in the Eurozone remained stable at a historical low in October. However, Eurozone businesses are becoming increasingly pessimistic about hiring, especially in manufacturing. Due to weak demand, orders are showing continuous worrying signs, and it is generally believed that the Eurozone labor market will cool down next year, with wage growth significantly slowing.

7. ING: The yield spread between 10-year French and German bonds is expected to continue fluctuating between 80 and 100 basis points.

Sonia Renoult, a senior fixed income strategist at ING, stated that in the coming months, the yield spread between 10-year French government bonds and 10-year German government bonds is expected to continue fluctuating between 80 and 100 basis points. Even if the French government does not collapse this week, it is only a matter of time. The basic scenario is that a vote of no confidence will occur either this week or in the first half of 2025, leading to the establishment of a new government in France. However, the new center-right or center-left government nominated by French President Macron is likely to be too weak to last until 2027. Tradeweb data shows that the yield spread between 10-year French government bonds and German government bonds widened by 1.5 basis points to nearly 83 basis points.

Domestic

1. CITIC Securities: After the revision of statistical caliber, the M1 indicator has been optimized, but the credit environment remains weak.

CITIC Securities' research report states that as of 24M10, the M1 balance under the original rules is 63.34 trillion yuan, with a year-on-year growth rate of -6.10%. According to our calculations, if we include residents' demand deposits and customer reserves of third-party payment institutions, the 'adjusted M1 balance' for 24M10 is 105 trillion yuan, with a year-on-year growth rate of -2.3%. The 'absolute value of adjusted M1 growth' has always been higher than the M1 growth under the original rules, and the long-term fluctuations are also more stable. Meanwhile, the growth rate gap between M2 and M1 in 24M10 has decreased from 13.60% to 9.83%. Although the 'adjusted M1' indicator has seen some optimization in absolute terms compared to the original M1, we emphasize that it still cannot hide the overall weak state of the current economic credit environment. Looking back, the 'adjusted M1 growth rate' has shown a continuous downward trend this year and has fallen into negative territory, while the growth rate gap between M2 and M1 remains at a high level. In addition, the adjusted M1 indicator still provides good guidance for PPI, industrial product inventory, and other economic forecasts.

2. CITIC Forex: The trend of the RMB exchange rate will still depend on how the 'Trump trade' progresses.

CITIC Forex believes that the trend of the RMB exchange rate will still depend on how the 'Trump trade' progresses. If the support for the dollar index slows down, and with the advancement of the Fed's interest rate cut cycle, the seasonality of a stronger RMB exchange rate by the end of the year is still possible. Specifically, the current cabinet members of the Trump administration have basically been confirmed, and we need to pay attention to changes in external policy expectations in December, as well as the evolution of risk events such as the Russia-Ukraine conflict. In terms of internal factors, we need to pay attention to the incremental information from important meetings such as the Central Economic Work Conference in December and its boosting effect on market expectations. (Xinhua Finance)

3. CITIC Securities: The update of US semiconductor sanctions against China forces the acceleration of the localization of the entire industry chain.

CITIC Securities' research report believes that the US Department of Commerce updated its semiconductor export control policy and entity list on December 2, 2024, mainly targeting semiconductor companies in mainland China. This round of sanctions still revolves around the advanced process 'small courtyard high wall' strategy, aimed at blocking the advancement of China's advanced semiconductor development. The relevant content is not much different from previous media reports, and the market has already anticipated it. Since the relevant companies have made preparations in advance, CITIC Securities believes that the short-term actual impact is limited, but in the long term, it is necessary to abandon illusions and strive for self-reliance, which is expected to further accelerate the localization process of the entire industry chain.

4. CITIC Securities: The A-share market has not ended, and we remain bullish on the Chinese stock market.

CITIC Securities stated that the A-share market has not ended, and we remain bullish on the Chinese stock market. The core pricing logic of Chinese assets lies domestically; whether it can overcome insufficient demand is the key to the market turning from bear to bull. The anchor for domestic demand lies in real estate, and after three consecutive years of decline (starting from 2022), the sales area this year has fallen below the potential center, showing signs of overselling. This also points to a possibility that as long as the policy direction and intensity are appropriate, real estate can stabilize in the short term. Since the key contradictions have been accurately grasped and the policy direction has been clearly shifted, what is needed for future domestic demand to recover from weakness is only the intensity and rhythm of policies. For this reason, we are optimistic about the Chinese stock market.

5. Huatai Securities: The actual exchange rate of the RMB does not have a basis for significant depreciation.

Yifan, chief economist at Huatai Securities, said that currently, the RMB exchange rate is highly competitive and does not have fundamental support for a significant and disorderly depreciation. Yifan stated that on the one hand, it benefits from the comprehensive efficiency and cost advantage of Chinese manufacturing, which has a more pronounced price advantage compared to major overseas economies. At the same time, Chinese manufacturing continues to upgrade, and the share of mid-to-high-end industrial products in global exports is on the rise. Additionally, since the second quarter of 2022, the RMB's real effective exchange rate has undergone the largest adjustment since the implementation of the managed floating exchange rate system, and there is no basis for a significant depreciation of the RMB. (Xinhua Finance)

6. Everbright Securities: The yield of 10-year government bonds is linked to the RMB exchange rate.

Regarding the direction of the RMB exchange rate, Everbright Securities believes that the yield of 10-year government bonds is linked to the RMB exchange rate. After the 10-year government bond yield falls below 2.0%, depreciation pressure on the RMB exchange rate increases. The core of the current interest rate and exchange rate decision-making is domestic policy, and the economic work conference period is a key point in the policy game. Reasonable market expectations mean that the probability of policies accelerating the current market trend is low, but if the demand for stabilizing the exchange rate increases, monetary authorities may rearrange domestic liquidity, thereby weakening the support for the bond market rally. (Qunzhong News)

Article forwarded from: Jin Ten Data.