This week's important agenda: The highly anticipated key meeting in the Chinese market is coming

From December 9 to December 15, a summary of major financial events, all in Beijing time:

This week's key focus: As per tradition, the Central Economic Work Conference is expected to be held in mid-December. China will release November inflation, financial, and import-export data, the European Central Bank will announce the December interest rate decision, and the United States will release November inflation data.

In addition, the Reserve Bank of Australia, the Bank of Canada, and the Swiss National Bank will announce interest rate decisions, OPEC and IEA will release monthly reports, and Japan will announce the revised GDP for the third quarter.

Central Economic Work Conference Expected in Mid-December

CITIC Securities stated, the Central Economic Work Conference for 2024 is expected to be held in mid-December. Although traditionally, the conference does not usually announce specific targets such as economic growth rate and deficit ratio, it is believed that this year's meeting will still maintain a positive tone for increasing counter-cyclical adjustments, with the continuation of real estate policies and support for domestic demand remaining the focus of market attention.

China's November Inflation, Financial, and Import-Export Data

• On Monday (9th), China will release November CPI and PPI data.

Last month's data showed that the national CPI in October rose 0.3% year-on-year, compared to a previous value of 0.4%; it fell 0.3% month-on-month, with the month-on-month decline slightly widening compared to the previous value. The core CPI, excluding food and energy prices, slightly rebounded in October, rising 0.2% year-on-year, an increase of 0.1 percentage points compared to the previous month.

In October, the national PPI fell 2.9% year-on-year, deepening from the previous value of -2.8%, and fell 0.1% month-on-month, significantly narrowing from the previous value of -0.6%.

Guo Lei from GF Securities stated, from a positive perspective, the core CPI cycle may have bottomed out:

"Of course, bottoming out itself does not correspond to a high slope; CPI is essentially a reflection of consumption momentum, which depends on the subsequent nominal GDP recovery slope, the impact of lower existing mortgage rates, and potential population consumption policies next year."

• From Monday to Sunday, the central bank will intermittently release financial data such as November social financing and new RMB loans.

Last month's data showed that the growth rate of social financing and RMB loans in October slowed down, M1's decline narrowed, and M2's increase expanded. The negative scissors difference between M1 and M2 growth rates has somewhat narrowed.

Shenwan Hongyuan believes that the stabilization and improvement of M1 growth in October is due to the boost from real estate transactions and the accelerated pace of fiscal spending. With the implementation of debt reduction plans, it is expected that the private sector's balance sheet repair may further boost financial data performance On December 2nd, the People's Bank of China announced that starting from the statistics of January 2025, it will implement the newly revised narrow money (M1) statistical caliber. The revised M1 includes: currency in circulation (M0), corporate demand deposits, personal demand deposits, and customer reserve funds of non-bank payment institutions.

• On Tuesday (the 10th), the General Administration of Customs of China released the import and export data for November.

Last month's data showed that in dollar terms, China's exports in October increased by 12.7% year-on-year to USD 309.06 billion, reaching a 27-month high, compared to a previous increase of 2.4%; imports decreased by 2.3% year-on-year to USD 213.34 billion, compared to a previous increase of 0.5%; the trade surplus was USD 95.73 billion, compared to a previous value of USD 81.71 billion, marking the third highest in history.

Guo Lei from GF Securities pointed out that the current macroeconomic fundamentals can be summarized as "overseas interest rate cuts but no recession + external demand temporarily stable + domestic demand preliminarily bottoming out + counter-cyclical policies continuing to be implemented," which overall is favorable for risk assets.

ECB's December interest rate decision is about to be revealed! Will it cut rates by 25 basis points as scheduled?

On Thursday (the 12th), the European Central Bank will announce the main refinancing rate, marginal lending rate, and deposit facility rate for the Eurozone.

Subsequently, ECB President Christine Lagarde will hold a monetary policy press conference.

In the face of inflation close to the 2% target and weak economic growth, the market is eagerly awaiting whether the ECB will cut rates by 25 basis points as scheduled or make an unexpected large cut.

Currently, the market generally expects the ECB to continue to cut rates by 25 basis points this week, marking the fourth rate cut since June of this year.

Several members of the ECB's Governing Council also support a rate cut, with Kazaks stating that the committee will discuss the possibility of a larger rate cut at this week's meeting; Stournaras indicated that the tariff policies of U.S. President-elect Trump complicate the inflation outlook for the Eurozone, but the ECB still has a good chance of cutting rates; Lane agreed that if the latest data meets expectations, the ECB will have reason to cut rates this week.

JP Morgan has brought forward its expectation of a 50 basis point rate cut by the ECB from January next year to December, due to the slowdown in economic activity in the Eurozone. Subsequently, the market raised the probability of a 50 basis point rate cut by the ECB in December from 10% to 20%. Analysts pointed out that given the sharp decline in PMI, the slowdown in service sector inflation, ongoing trade uncertainties, and the existing restrictive rates, the reasons for a rate cut seem very sufficient. Although ECB doves do not appear to be explicitly pushing for a half-point cut, "data is changing too quickly," thus more decisive action is needed.

On the 5th, just before the "silent period" ahead of the ECB's rate decision, Lagarde pointed out at a hearing in the European Parliament:

"Our fight against inflation is nearing its end, but the job is not done. Despite the progress made, we still have some work to do, but we are close to the target, which means we need to focus more on the future than we have in the past few years."

U.S. to release November inflation data

On Wednesday, the U.S. will release the November CPI data, followed by the PPI data on Thursday. Last month's data showed that the U.S. nominal CPI year-on-year growth rate accelerated to 2.6% in November from October, meeting expectations but reaching a three-month high, halting a "six-month decline." The core inflation month-on-month growth rate has not seen a decline for three consecutive months. PPI has rebounded, with both year-on-year and month-on-month figures mostly exceeding expectations, and rebounding from September's data.

Sarah House, Managing Director and Senior Economist at Wells Fargo, and Economic Analyst Aubrey Woessner stated that the U.S. November CPI may indicate that progress against inflation is stalling. It is expected that the unadjusted CPI annual rate will rise from 2.6% to 2.7%, and the unadjusted core CPI annual rate will remain in the narrow range of 3.2%-3.3% for the sixth consecutive month.

Analysts believe that although some inflation factors, such as an overheated labor market, continue to fade, new resistances that are unfavorable to inflation decline have emerged, including the possibility of imposing tariffs and tax cuts.

Bank of America analysts, including Jonathan Pingle, noted that several Federal Reserve officials have recently released cautious signals, with only Federal Reserve Governor Waller explicitly stating a "tendency to support a rate cut in December," while Powell reiterated his previous stance. Other Federal Reserve officials, such as San Francisco Fed President Daly and Fed Governor Cook, were also "evasive" like Powell, with Daly stating that "a rate cut in December is possible," and Cook stating that "policy is not operating on a preset path ."

One week after the CPI data is released, the Federal Reserve will announce its December interest rate decision. Currently, the futures market is pricing in a 25 basis point rate cut by the Federal Reserve.

Other Important Data, Meetings, and Events

• This week, several important countries will announce their interest rate decisions.

On Tuesday (10th), the Reserve Bank of Australia will announce its interest rate decision; on Wednesday (11th), the Bank of Canada will announce its interest rate decision; on Thursday (12th), the Swiss National Bank will announce its interest rate decision.

In November, the Reserve Bank of Australia maintained its interest rate at a thirteen-year high of 4.35%, in line with expectations. The decision not to cut rates aims to continue applying pressure on stubborn inflation and to wait for the results of the U.S. elections.

The Reserve Bank of Australia's decision-making committee stated that their policy does not "rule out any possibilities"—the current international outlook and geopolitical risks present "high uncertainty," and it will take some time for CPI to sustainably remain within the target range, thus vigilance against inflationary upward risks is still necessary.

• On Wednesday (11th), OPEC will release its monthly oil market report, and on Thursday (12th), the IEA will release its monthly oil market report.

On the 5th, OPEC+ stated at the 57th OPEC+ Joint Ministerial Monitoring Committee meeting that it has agreed in principle to postpone the planned production increase in January and will gradually lift oil production cuts starting from April 2025 until September 2026. This is a full year later than the original plan.

On November 14th, the IEA released a monthly report stating that if OPEC+ continues to push forward with its production recovery plan, the global oil supply surplus will further worsen. The IEA expects global oil consumption to increase by 920,000 barrels per day this year, less than half of the growth rate in 2023. In 2025, demand is expected to grow by 990,000 barrels per day Citigroup and JP Morgan predict that even if OPEC+ continues to limit production, crude oil prices will continue to slide to $60 next year.

• Japan announces revised GDP for the third quarter.

On Monday (9th), Japan announced the revised GDP for the third quarter.

The Bank of Japan is scheduled to announce its policy decision on December 19, and there are still differences in the market regarding whether there will be an interest rate hike at this meeting.

Kazuo Ueda stated in an interview with the Nikkei last week that as the economy aligns with the central bank's forecasts, the timing for the next interest rate hike is "approaching."

Meanwhile, this week, Japan's Jiji Press reported that there is an increasing number of policymakers at the Bank of Japan who are cautious about an early interest rate hike, adding uncertainty to the possibility of a rate hike in December.

Nomura also believes that due to the turmoil in South Korea, the yen exchange rate has fluctuated significantly recently, with the USD/JPY sharply dropping below 149. In the context of significant external uncertainty, the Bank of Japan may be more inclined to act cautiously.

The market consensus from a Bloomberg survey shows that over 80% of economists predict that the Bank of Japan will raise interest rates again before the end of January next year, slightly higher than the majority of economists who expect a rate hike in December.

IPO Opportunities

During the week (December 9-13), there are 3 new stocks available for subscription in the A-share market, with 0 new stocks listed.

A total of 36 new funds (combined statistics for Class A and Class C) were issued during the week, including 6 mixed funds, 2 equity funds, 16 index funds, and 1 REIT.