Next week's heavy schedule: The 2024 Financial Street Forum opens! China's third-quarter GDP, ECB interest rate decision

A summary of major financial events from October 14th to October 20th, all in Beijing time:

Key focus this week: 2024 Financial Street Forum keynote speeches, China's third-quarter GDP, ECB announces latest interest rate decision, US bank stocks Q3 earnings reports, TSMC, ASML earnings reports reveal latest developments in the AI industry chain.

In addition, China will also release economic and import/export data for September, the US will release September retail sales data, and global consumer giants Volvo, Johnson & Johnson, and Procter & Gamble will announce their latest financial reports.

2024 Financial Street Forum on Friday! CSRC Chairman Wu Qing's keynote speech

According to Xinhua Finance, with the approval of the State Council, the 2024 Financial Street Forum annual meeting, jointly organized by the Beijing Municipal People's Government, the People's Bank of China, the China Banking and Insurance Regulatory Commission, the China Securities Regulatory Commission, Xinhua News Agency, and the State Administration of Foreign Exchange, will be held in Beijing Financial Street from October 18th to 20th, under the theme "Trust and Confidence - Collaborative Financial Openness, Cooperation, and Shared Economic Stability".

Shanghai Securities News reported that previous Financial Street Forum annual meetings have been important windows for understanding financial policy signals. During the 2024 Financial Street Forum annual meeting, Li Yunze, Director of the China Banking and Insurance Regulatory Commission, Wu Qing, Chairman of the China Securities Regulatory Commission, and several leaders from the People's Bank of China and relevant bureaus will attend the forum and deliver speeches.

CSRC will host the main forum on the afternoon of October 19th, with the theme "Promoting the High-Quality Development of the Capital Market through Comprehensive Capital Market Reform". This main forum will cover two topics, "Enhancing the Function of the Capital Market to Support the Development of New Quality Productivity" and "Adhering to Investor-Centric Principles and Improving Investor Services".

The People's Bank of China will host two events: the China People's Bank main forum of the 2024 Financial Street Forum annual meeting, to be held in the afternoon of October 18th under the theme "Improving the Modern Central Bank System to Enhance Macroeconomic Governance"; and the Global Financial Technology Conference Chengfang Financial Technology Forum, to be held from October 18th to 20th under the theme "Empowering Financial Technology to Achieve Five Major Goals".

In addition, CSRC will host two forum events. One is a parallel forum hosted by the North Exchange on the afternoon of October 18th, with the theme "Supporting Small and Medium Enterprises to Specialize and Innovate, Better Serving the Development of New Quality Productivity". The other is the Capital Market Financial Technology Forum in the Financial Technology Conference, to be hosted by the CSRC Technology Supervision Department, China Securities Technology Company, and China Securities Data Company on the morning of October 21st, under the theme "Dual Drive of 'Data Elements + AI' for High-Quality Digital Transformation of the Capital Market".

China's September Economic and Import/Export Data

On Monday (October 14th), the General Administration of Customs of China released China's September import/export data. The data released last month shows that in August, China's exports increased by 8.7% year-on-year to $308.65 billion, while imports increased by 0.5% to $217.63 billion. The trade surplus for the month expanded from $84.65 billion to $91.02 billion. From January to August, the import volume of iron ore, coal, and natural gas increased, while the import volume of crude oil decreased.

In August, China's export growth rate increased significantly by 1.7 percentage points year-on-year, but the import growth rate fell sharply by 6.7 percentage points.

Institutions believe that the sharp decline in import growth in August is partly due to the high base effect of the same period last year, as well as the weak recovery of domestic market demand and the impact of falling commodity prices, which continue to drag down import volume growth due to insufficient domestic demand.

On Friday (October 18), China released economic data including third-quarter GDP growth rate.

Previously released data shows that the country's GDP in the first half of the year was 61.6836 trillion yuan, with a year-on-year growth of 5.0% at constant prices. By quarter, GDP grew by 5.3% in the first quarter and 4.7% in the second quarter. Quarter-on-quarter, GDP in the second quarter grew by 0.7%.

Minsheng Macro Analysis pointed out that there are three important features of the economy in the second quarter: weaker than Q1 on a quarter-on-quarter basis, weaker in nominal terms than in real terms, and weaker domestic demand compared to external demand.

Minsheng Macro Analysis stated that to ensure the annual economic growth rate is above 5%, the quarter-on-quarter GDP growth rate in the second half of the year should not be lower than 1.4%. Assuming that the quarter-on-quarter GDP growth rates in the third and fourth quarters are both 1.4%, the corresponding year-on-year growth rates will be 4.9% and 5.0%, respectively, achieving an annual economic growth rate of exactly 5.0%. Considering that the GDP growth rate in the second quarter was only 0.7% on a quarter-on-quarter basis, there may be room for macroeconomic policy release in the second half of the year to boost economic growth, especially in domestic demand.

Will the ECB cut rates again in October?

On Thursday (October 17), the ECB will announce its interest rate decision.

Currently, the market generally expects the ECB to cut rates six times by the end of 2025, from the current 3.5% to 2%, with rate cuts expected at the October and December meetings this year.

However, recent comments from senior ECB officials have dampened the optimistic expectations of rate cuts. On October 8, ECB Governing Council member and Governor of the Bank of Slovenia, Bostjan Vasle, in an interview with Bloomberg, stated that even if there is a rate cut in October, it does not necessarily mean there will be one in December, describing the rate cut this month as "an option."

Vasle warned that despite the weakness in the European economy, this bet may be a natural reaction, but the ECB will not be forced to take any action.

At the end of September, ECB President Christine Lagarde stated that she is increasingly confident in the target of inflation returning to 2%. She stated at the hearing of the Economic and Monetary Affairs Committee of the European Parliament: "Looking ahead, with the significant previous drop in energy prices, the inflation rate may temporarily rise in the fourth quarter of this year, but the latest developments have strengthened our confidence that the inflation rate will promptly return to the target."

Data shows that the euro area's inflation rate in September was 1.8% on an annual basis, lower than the 2.2% in August, the first time in three years that it has fallen below the European Central Bank's target level of 2%.

On September 27, Deutsche Bank released a report predicting that the ECB will start cutting interest rates by 25 basis points from December, until reaching a final rate of 2%-2.5%. At the same time, the possibility of the ECB directly cutting interest rates by 50 basis points in December cannot be ruled out.

After a strong start by Morgan Stanley, bank stocks' financial reports are coming out

On Tuesday (October 15), Bank of America, Goldman Sachs, and Citigroup will successively announce their Q3 financial reports; on Wednesday (October 16), Morgan Stanley will announce its Q3 financial report.

Previously, Morgan Stanley took the lead in the bank stock earnings season "first shot", due to unexpected growth in net interest income and excellent performance in investment banking, Q3 revenue and profits both exceeded expectations.

However, Morgan Stanley CEO Jamie Dimon has a somewhat dim view of the economic outlook. He believes that despite inflation slowing down, the U.S. economy remains resilient, but there are issues such as massive fiscal deficits, infrastructure needs, trade restructuring, etc. Most importantly, geopolitical risks are escalating continuously, which may have far-reaching impacts on short-term economic outcomes and even historical processes.

Previously, Morgan Stanley's President Daniel Pinto also warned investors, stating that analysts' expectations for Morgan Stanley's net interest income in 2025 are overly optimistic.

Latest performance of two major companies in the AI industry chain

On Wednesday (October 16), the lithography giant ASML announced its Q3 financial report.

Previously, the lithography giant ASML achieved a net sales of 6.2 billion euros in the second quarter, an 18.0% increase quarter-on-quarter and a 9.6% decrease year-on-year; net profit reached 1.6 billion euros, a 28.92% increase quarter-on-quarter and an 18.7% decrease year-on-year; gross margin was 51.5%, basically flat year-on-year.

In terms of profit guidance, the company expects Q3 revenue of 6.7-7.3 billion euros (market expectation 7.455 billion euros) and a gross margin of 50-51% (market expectation 51.12%). Driven by the AI, storage, and other industry chains, although revenue is expected to rebound quarter-on-quarter, it is still below market expectations.

On Thursday (October 17), the chip manufacturing giant TSMC announced its Q3 financial report.

TSMC's previously announced September revenue data showed that the sales revenue in September was 251.87 billion New Taiwan dollars, exceeding expectations with a 39.6% year-on-year growth and a 0.4% increase quarter-on-quarter As of this year, TSMC's total sales amount to NTD 2,025.85 billion, an increase of 31.9% compared to the same period last year.

According to Reuters' calculations, TSMC's revenue in the third quarter was NTD 759.69 billion (USD 23.62 billion), higher than market analysts' expectations of NTD 750.36 billion (USD 23.33 billion), indicating a year-on-year sales growth of 36.5% in the third quarter, exceeding TSMC's own forecast in July.

Other Important Data, Meetings, and Events

• Monday (October 14), Nobel Prize in Economics Announced.

The Nobel Prizes for 2024 have been gradually revealed, with only the Economics Prize awaiting to be unveiled next Monday. According to the "Citation Laureates," which is known as a predictor of the Nobel Prize trends, this year's Economics Prize may be awarded to one of the following three economists:

Janet Currie, Professor of Economics at the Princeton School of Public and International Affairs in the United States - Award Reason: Groundbreaking economic analysis on child development;

Partha Dasgupta, Honorary Professor of Economics at the University of Cambridge in the UK - Award Reason: Outstanding contributions in the field of ecological economics;

Paolo Mauro, Director of Economics and Market Research at the International Finance Corporation under the World Bank - Award Reason: Empirical research on the impact of corruption on investment and economic growth.

• Thursday (October 17), U.S. Releases September Retail Sales Data.

Data released last month showed that U.S. retail sales unexpectedly rose in August, with August retail sales increasing by 0.1% month-on-month, surpassing the expected decline of 0.2%, and the July data being revised up by 0.1 percentage points to 1.1%. This indicates that U.S. consumer demand may still be strong, providing new evidence of a soft landing for the U.S. economy.

It is worth noting that this week will also see the latest financial reports from Johnson & Johnson and Procter & Gamble, two major global consumer giants, which may to some extent reveal the progress of the recovery in the U.S. consumer market.

IPO Opportunities

There are 3 new IPOs available for subscription in the A-share market this week (October 14-20).

A total of 27 new funds (combined statistics for A-class and C-class) will be issued this week, including 4 bond funds, 14 hybrid funds, 6 equity funds, 3 index funds, and 3 REITs