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Market Overview
Before the blockbuster CPI was announced, the S&P rebounded, hitting a two-year high, the Nasdaq rose four consecutive days, Microsoft rose nearly 2% to a record high, and the chip stock index fell, TSMC fell more than 1% after the earnings report, but Nvidia hit a record high on the third day, closing up more than 2%, and rising for five consecutive days.
The yield on the 10-year Treasury note recovered slightly to 4.0%. The U.S. dollar index retreated.
Bitcoin fell below $45,000 intraday, down more than $3,000 from the previous day's high, and after the revision of the relevant rules of spot ETFs was approved in the United States, ETF listing was in sight, and Bitcoin once rose more than $2,000.
U.S. oil inventories rose more than expected, and crude oil erased more than 1% of intraday gains and turned down, closing down at least 1%. U.S. natural gas stopped six consecutive days, falling from a nearly two-month high. Gold fell three times in a row, closing at a four-week low. London copper stopped eight consecutive declines.
In the Chinese market, the three major A-share indexes bottomed out in the morning and rebounded, weakened in the afternoon, and finally closed down, shipping was at a low level throughout the day, the Beijing Stock Exchange 50 closed up more than 1%, and the big consumption rose in the afternoon, and liquor and photovoltaic rose first. During the U.S. stock market, the Chinese concept stock index fell for five consecutive years, with Dada falling more than 5% and Li Auto falling more than 2%. The offshore yuan fell more than 100 points intraday, falling to 7.19 for the first time in four weeks.
News
According to the media, China's local governments plan to reserve ultra-long-term special treasury bond projects to support food security, energy security, industrial chain security, new urbanization, rural revitalization and other fields.
Shanghai has put forward 32 measures to support venture capital: expanding the scope of the pilot project of in-kind distribution of shares and vigorously developing S funds; Beijing SASAC: making great efforts to make a good start in the first quarter and further promoting the reform of state-owned assets and state-owned enterprises.
Goldman Sachs is bullish on Chinese equities and expects the CSI 300 Index to return 19% in 2024.
The slowdown in Japan's wage growth weighed on the central bank's tightening expectations, and the Japanese stock index rose more than 2% to a new high.
Digital Currency Milestone Moment: The US SEC approved changes to the rules related to Bitcoin spot ETFs, and ETFs traded on Thursday.
OpenAI was released in the New Year, GPT Store was launched, and new products for enterprise customers are also coming.
The market closes
U.S. stocks: The Dow rose 0.45%, the S&P 500 rose 0.57%, and the Nasdaq rose 0.75%.
European stocks: The European STOXX 600 index closed down 0.18%. Germany's DAX 30 index closed up 0.01%. France's CAC 40 index fell 0.01%. Britain's FTSE 100 index fell 0.42%.
A-shares: The Shanghai Composite Index closed at 2877.70 points, down 0.54%. The Shenzhen Component Index closed at 8922.79 points, down 0.55%. The GEM index closed at 1743.20 points, down 0.43%.
Bond market: By the end of the bond market, the yield on the benchmark 10-year Treasury note was about 4.03%, up about 2 basis points on the day, and the yield on the two-year Treasury note was about 4.36%, roughly unchanged from the same period on Tuesday.
Commodities: WTI crude oil futures for February delivery closed down $0.87, or 1.20%, at $71.37 a barrel. Brent crude oil futures for March delivery closed down $0.79, or 1.02%, at $76.80 a barrel. COMEX gold futures for February delivery closed down 0.26% at $2,027.8 an ounce.
Highlights
Domestic macro
Securities Times: The yield on 10-year treasury bonds broke 2.5% again, and the policy of stabilizing expectations should be more and early. Huatai Securities believes that the yield of 10-year treasury bonds falling below 2.5% means that interest rate cuts will lead to a downward trend in the funding rate; the cost of bank liabilities is still high, and the deposit interest rate needs to continue to be lowered; the probability of a gradual decline in the US bond interest rate is high, and the interest rate gap between China and the United States is compressed.
Local governments plan to reserve ultra-long-term special treasury bond projects. The media learned that the project support directions that these places are planning are food security, energy security, industrial chain security, new urbanization, rural revitalization and other fields. These areas are also the focus of economic work in 2024. The Central Economic Work Conference held at the end of 2023 proposed that in 2024, it is necessary to do a good job in "three overall plans", that is, to coordinate the expansion of domestic demand and deepen the supply-side structural reform, to coordinate the comprehensive revitalization of new urbanization and rural areas, and to coordinate high-quality development and high-level security.
Zheng Shajie, director of the National Development and Reform Commission, presided over the symposium and continued to communicate with private enterprises on a regular basis. Zheng Shajie said that in the next step, the National Development and Reform Commission will carefully sort out the opinions and suggestions of the participating entrepreneurs, establish a mechanism for cross-regional and cross-departmental coordination and problem solving, based on the overall situation, draw inferences from one case, and work with relevant departments to increase the protection of the property rights of private enterprises and the rights and interests of entrepreneurs in accordance with the law.
The National Development and Reform Commission (NDRC) issued the "Special Administrative Measures for Investment in the Central Budget for the Construction of Urban and Rural Cold Chain and National Logistics Hubs". Among them, it is mentioned that the logistics infrastructure makes up for the shortcomings of the project. Focus on supporting the projects that have been included in the annual construction list of national logistics hubs, national backbone cold chain logistics bases and national demonstration logistics parks to make up for the shortcomings of basic, public and public welfare facilities.
Shanghai has proposed 32 measures to support venture capital: expand the scope of the pilot project for the in-kind distribution of stocks, and vigorously develop S funds. The "Measures on Further Promoting the High-Quality Development of Shanghai's Equity Investment Industry" initiated by the Shanghai Municipal Government emphasizes that it is necessary to promote the innovation of the QFLP pilot, expand the investment fields and investment methods, optimize the pilot application and change process, and facilitate the investment of institutional investors such as sovereign funds, pension funds, endowment funds, and university funds through the QFLP pilot.
Beijing State-owned Assets Supervision and Administration Commission: Make great efforts to make a good start in the first quarter and further promote the reform of state-owned assets and state-owned enterprises. Other key tasks highlighted at the meeting of the Beijing SASAC include: this year's systematic governance of corruption in state-owned enterprises, focusing on common and prominent problems, deepening the application of achievements, making up for the shortcomings of the system, and making full use of information technology to strengthen the supervision of state-owned assets.
Changzhou officially announced that it has entered the "trillion club", and Jiangsu has become the first province to have five cities with a GDP of more than one trillion yuan.
A new generation of meteorological supercomputing system was completed, and the computing power was increased by 6.5 times.
The launch of Chang'e-6 is scheduled for the first half of this year.
China and the United States held the 17th National Defense Work Meeting. The Chinese side expressed its willingness to develop healthy and stable military-to-military relations with the United States on the basis of equality and respect, and to jointly implement the important consensus reached at the San Francisco summit between the two heads of state. The Chinese side stressed that it will never compromise or make concessions on the Taiwan issue, and demands that the US side abide by the one-China principle, earnestly implement the relevant commitments, stop arming Taiwan, and oppose Taiwan's "independence." China urges the US to reduce its military deployments and provocative actions in the South China Sea, and to stop providing support for the infringement and provocation of certain countries.
Goldman Sachs is bullish on Chinese equities and expects the CSI 300 Index to return 19% in 2024. Goldman Sachs also expects the MSCI China Index to return 17% in 2024, with the return forecast for both indexes stemming from the expectation that corporate earnings will grow by about 10% and that China's policies are being implemented effectively.
Domestic companies
Supported by the demand for AI chips, TSMC's fourth-quarter revenue was higher than expected, on par with historical highs. TSMC announced that its revenue in December 2023 fell by 8.4% year-on-year, continuing the double-digit month-on-month decline in November, and its full-year revenue fell by 4.5%.
Zhou Hongyi, Feng Lun and other entrepreneurs organized a group to find Dong Yuhui to learn about the Internet celebrity economy. The day before Zhou Hongyi posted on Weibo to reveal the group study, on January 9, Dong Yuhui's personal studio's official "Walking with Hui" Douyin account opened the first live broadcast, and 3 hours after the broadcast, the sales volume of the live broadcast room has exceeded 150 million yuan, ranking first on the overall list of Douyin with goods, and the number of likes in the live broadcast room has exceeded 1.1 billion. The number of fans increased by more than 3 million on the same day compared with before the broadcast.
Dong Yuhui's new account premiered with more than 100 million yuan, and the supply chain was separated from Dongfang Selection's self-operation. On the surface, the live broadcast rooms of "Oriental Selection" and "Walking with Hui" have the meaning of "internal horse racing", however, because "Walking with Hui" is 100% controlled by Oriental Selection Company, this competition does not have much impact on the performance of Oriental Selection Company itself. Dong Yuhui revealed in the live broadcast that "Walking with Hui" will explore the possibilities of books, culture, and tourism. According to people familiar with the matter, the field of knowledge payment may also be explored in the future.
The first share to be delisted at the beginning of the year was born: *ST Huayi is about to be delisted. *ST Huayi announced that the Shanghai Stock Exchange has decided to terminate the listing of the company's shares, and the company's shares will not enter the delisting period for trading, and will terminate the listing and delisting on January 16, 2024.
The first Alzheimer's disease biologic drug in China was approved, and the annual treatment cost of the drug exceeded 100,000 yuan for a patient overseas.
Overseas macro
The slowdown in Japan's wage growth weighed on the central bank's tightening expectations, and the Japanese stock index rose more than 2% to a new high. The year-on-year growth rate of Japanese workers' cash income slowed sharply to 0.2% in November, and real wages fell more than expected by 3% in the month. The reasons for the Bank of Japan to remain on hold this month have increased, and the probability of a rate hike this month has decreased. The Nikkei 225 continued to close at all-time highs, with the Topix closing at its highest level since 1990.
Japanese stocks have experienced a "30-year cycle": from "38916 to 7054" fell for 20 years, and it took 15 years to rise to a new high. As Japan's inflation continues to rise, the "ridiculously cheap" Japanese stocks have attracted the attention of foreign investors such as Warren Buffett, the "god of stocks", and Japanese stocks have repeatedly refreshed historical records in the past year. BofA believes the Nikkei 225 is on track to rise 13% this year, hitting a record high.
ECB Vice President: The eurozone economy will fall into a downturn again. ECB Vice President De Guindos believes that the eurozone economy will shrink in the fourth quarter, and two consecutive quarters of economic contraction mean a technical recession, and the economic outlook is weak in the near future. Another ECB official, Isabel Schnabel, a member of the central bank's executive board, said that the near-term economic outlook remains weak, in line with the central bank's forecast. Both reiterated that the ECB's decision is data-dependent. According to the media, the European Central Bank previously hinted that it would keep policy unchanged this month, and both of them made statements in line with this hint.
The Red Sea shipping crisis fermented: container capacity fell by 20% in December, and the weekly freight rate rose by 115%. Analysts expect that the Red Sea crisis may continue to ferment, and in the short term, routes will still have to be delayed, and freight rates will generally remain high and fluctuate.
Howard Marks' latest statement: The era of easy money is over, and it has become harder to make money. Howard Marks, co-founder of Oaktree Capital, bluntly said that the market should not continue to invest with a "Goldilocks mentality", and that the benchmark interest rate will be around 2% to 4% in the next few years, rather than 0 to 2%, and the investment environment has changed dramatically.
Digital Currency Milestone Moment: US SEC Approves Bitcoin Spot ETF, Trading on Thursday. For the first time in history, the U.S. Securities and Exchange Commission (SEC) approved changes to the rules related to Bitcoin spot ETFs, authorizing 11 ETFs to start trading on Thursday. The approval was a rare compromise by the SEC, after Gensler, the SEC's current chairman, and his predecessor, Clayton, refused to allow such a product to be launched for a decade.
Overseas companies
The worst layoffs in Amazon's history have expanded again: the media and game live streaming divisions laid off hundreds of people in the New Year. Among them, the Twitch live streaming platform laid off about 500 people, accounting for 35% of the total number of employees. Amazon executives admitted that they would reprioritize business investments, saying that "many companies in the tech sector are right-sizing their organizations based on conservative forecasts of future growth."
Microsoft is introducing a new display experience with all voice access features available on multiple monitors. Users of the Windows 11 operating system can not only interact with the screen they are currently using, but also quickly switch to another display. Users can also use drag-and-drop functionality to move files, apps, and documents from one display to another. These new features will be implemented under Windows 11 Build 22635.2915.
OpenAI was released in the New Year, GPT Store was launched, and new products for enterprise customers are also coming. OpenAI's GPT Store is equivalent to Apple's App Store in the field of large models, and ChatGPT Team is aimed at small business customers. This highlights that OpenAI is sparing no effort to maintain its leading position over its competitors. If successful, it will mark a new moment – where AI technology has become more approachable, useful, and profitable.
THOSE
CES 2024 First Day Express: XR New Products are Full of Highlights, and Domestic Brands Perform Brilliantly. There are more than 4,000 exhibitors at this year's CES. Chinese exhibitors accounted for more than a quarter of the total, second only to U.S. companies. Among the domestic XR brands exhibited, Thunderbird Innovation focused on the "X2" series of AR glasses with greatly improved AI capabilities, the Thunderbird X2 Lite, Xreal launched the flagship model of its AR glasses Air 2 series, XREAL Air 2 Ultra, and Pimax, the industry's first 8K dual-mode VR headset that previously won the honorable mention in the "XR Technology and Accessories" category of the CES 2024 Innovation Awards Crystal: Skyworth XR exhibited three products: PANCAKE 2 with Micro OLED screen and 4K resolution per eye, PANCAKE 1, a productivity tool, and AR A1, a smart screen mirror.
CES 2024 shows a new trend in the automotive industry: the popularity of electric vehicles is weakening, and AI is becoming a trend. In addition to the hot AI sector this year, automotive automation and intelligent technology are still one of the "star tracks" of CES, and AI intelligent cockpit has become the focus. At CES 2024, more than 700 exhibitors in the automotive and mobility technology fields will be presented, including leading OEMs such as Mercedes-Benz, BMW, Honda, and Hyundai-Kia, as well as supply chain giants such as Bosch, Continental, Hyundai Mobis, and Valeo.
Microsoft: PC partners can run Xbox games, and Walmart will work with Walmart to launch AI personalized shopping features.
Industry/Concept
1. Fuel cell| Hydrogen technology is constantly evolving. Recently, the Yixiang hydrogen-powered UAV team under the Chongqing Research Institute of Harbin Institute of Technology completed a single continuous flight test of the Qingou 30B hydrogen-powered composite wing UAV, successfully breaking the domestic test record of the same type of hydrogen-powered UAV, and the endurance has reached the international advanced level. Not long ago, the team of Professor Jiao Kui of Tianjin University successfully developed an ultra-high power density proton exchange membrane fuel cell, whose performance was nearly twice that of mainstream similar products, and the relevant results have been published in the international authoritative energy research journal Joule.
Comments: According to the statistics of the China Association of Automobile Manufacturers, the sales of fuel cell vehicles in China in November 2023 totaled 1,000, a year-on-year increase of +172.5%, and the sales of fuel cell vehicles in the first three quarters of 2023 were 4,291 units, a year-on-year increase of +55.4%, which has exceeded the annual sales in 2022.
2. High-speed rail | According to the information released by China Railway Group, in 2023, the national railway will complete the dispatch of 3.68 billion passengers and 3.91 billion tons of goods, both reaching a record high. Benefiting from this, the operating efficiency of the railway has been greatly improved, and the total transportation revenue of the national railway has reached 964.1 billion yuan, a year-on-year increase of 39%, and the total profit has reached the best level in history.
Comments: As a large-capacity, fast, safe, environmentally friendly and low-cost mode of transportation, railways play an important role in promoting economic development. In terms of passenger transport, with the increase of people's travel demand, railway transport can provide more convenient and comfortable travel options, and promote the development of tourism, business and other industries; in terms of freight transport, railway transport plays an irreplaceable role in ensuring the circulation of materials and promoting industrial cooperation, especially in the logistics supply chain.
3. AI chip| It is reported that Intel announced at the CES 2024 exhibition on January 10 that it will enter the automotive market. Intel will release a series of AI software-defined automotive system-on-chips (SDV SoCs) to compete with Qualcomm and Nvidia and gain a foothold in the automotive chip market. Intel said that their new automotive chips will use the latest AI PC technology to meet the durability and performance requirements of the vehicle and enable the most desirable in-vehicle AI functions. The first batch of automotive AI chips is expected to be launched by the end of 2024, and Intel is currently actively negotiating with several OEMs.
Comments: With the rapid development of the smart car market, automotive AI technology has become the focus of competition among major chip manufacturers. Intel's move to enter the automotive AI chip market will further promote the development of intelligent vehicles and provide consumers with a more intelligent, safe, and efficient driving experience. At the same time, the automotive chip standard recently formulated by the Ministry of Industry and Information Technology will provide a unified specification for the entire industry and promote the innovation and progress of automotive chip technology.
4. Railway| The 2024 China State Railway Group Co., Ltd. Work Conference proposed to strengthen the cross-regional and cross-mode integration of comprehensive transportation channels, hubs and networks, continue to expand effective investment in railways, moderately advance investment in railway infrastructure, innovate investment and financing mechanisms, and strive to promote railway transformation and upgrading. We will continue to deepen the innovation and industrial application of key core technologies in key areas such as railway engineering construction, equipment manufacturing, safety assurance, and operation management, and promote the application of new energy, energy conservation and environmental protection technologies in railways. This is good for core components and materials suppliers, as well as related infrastructure leaders.
Comments: The railway projects among the 102 major projects identified in the 14th Five-Year Plan are progressing in an orderly manner, and the investment in railway construction has played a significant role. It is reported that in 2024, the railway department will focus on the railway projects among the 102 major projects identified in the "14th Five-Year Plan", increase the implementation of national strategic corridor projects such as Xinjiang and Tibet, and border railways, and actively promote the construction of key projects such as coastal high-speed railways along the Yangtze River and new land-sea corridors in the west, and complete and put into operation high-quality projects such as Shanghai-Suzhou-Huzhou high-speed railway, Hangzhou-Yiwu-Wenzhou high-speed railway, etc., to ensure the completion of annual investment and production tasks and physical workload.
5. Wind power According to China Electric Power Engineering Consulting Group Corporation, on January 7, the "Jixi High-altitude Wind Power Generation New Technology Demonstration Project" jointly constructed by China Energy Construction China Power Engineering and Zhonglu Co., Ltd., and contracted by China Power Engineering Anhui Institute, successfully generated electricity, becoming the first megawatt-level high-altitude wind power generation demonstration project in mainland China that can be connected to the grid.
Comments: High-altitude wind power generation is an innovative technology that makes full use of high-altitude wind resources, using a unique combination of equipment to complete the capture and absorption of high-altitude wind energy, converting the captured wind energy into mechanical energy, and driving the generator set to rotate to achieve continuous and stable power generation. The altitude of high-altitude wind energy is generally between 500-10,000 meters. Compared with offshore and onshore wind energy, high-altitude wind energy has the advantages of high power density and stable wind direction, and has great potential for development and utilization.
6. Energy storage It is reported that in 2023, the installed capacity of new energy storage in mainland China will reach a new high. According to the statistics of the Zhongguancun Energy Storage Industry Technology Alliance, as of the end of December 2023, the cumulative installed capacity of new energy storage in China has reached 34.5 GW/74.5 GWh, with a year-on-year increase of more than 150% in both power and energy scale. Among them, the newly installed capacity of new energy storage in 2023 will reach 21.5 GW/46.6 GWh, three times the level of new energy storage capacity in 2022. Yue Fen, deputy secretary-general of Zhongguancun Energy Storage Industry Technology Alliance, expects that the scale of the domestic energy storage market will maintain rapid growth in 2024, with more than 35 GW of new installed capacity throughout the year, and the new installed capacity in a single year will exceed the cumulative installed capacity for three consecutive years.
Comments: From the demand side, global front-of-meter energy storage is still strong, and in 2023, China, the United States, and Europe will successively announce the increase in renewable energy construction, and China and the United States will still be the most important markets for global front-of-meter energy storage in the future. Among them, driven by technological innovation and continuous cost reduction, the LCOE of lithium battery energy storage is close to pumped storage, and the application scale will continue to expand, and the industry leader is expected to benefit.
7. Intellectual Property Rights It is understood that at the level of this round of local institutional reform, the intellectual property offices of Beijing, Shanghai and Chongqing are directly under the corresponding municipal people's governments, and the intellectual property offices of Jiangsu, Hubei, Hainan, Shaanxi, Liaoning and Henan provinces are directly under the corresponding provincial people's governments. It fully shows that the local management attaches great importance to intellectual property work, and other provinces and cities will not be excluded from following up and adjusting in the future.
Comment: "2024 is a crucial year for the implementation of the 14th Five-Year Plan, and it is of great significance to do a good job in intellectual property work. Shen Changyu, director of the State Intellectual Property Office, said at the meeting of the heads of the National Intellectual Property Office at the beginning of the year that it is necessary to thoroughly implement the outline for the construction of an intellectual property power and the "14th Five-Year Plan", based on the protection of intellectual property rights, guided by transformation and application, and taken institutional reform as an opportunity to comprehensively strengthen the creation, protection, management and service of intellectual property rights, strengthen international cooperation in intellectual property protection, strive to create a new situation in the development of intellectual property rights, and better serve the construction of a modern socialist country.
Today's news preview
The Bank of Korea announced its interest rate decision.
Australia's Goods-as-a-Services Trade Balance (November).
Italy's industrial production (November).
Speech by Boris Vujcic, member of the ECB Governing Council.
瑞典央行副行长杨松（Per Jansson）讲话。
The 2024 edition of the International Consumer Electronics Show (CES) continues.
US CPI for December.
New York Fed President John Williams, the Fed's third-in-command, spoke.
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