[Anatomy Board]

The two markets finally raised their eyebrows and both surged. The three major A-share indices all rose by more than 4%, and the Shanghai Index recorded the biggest one-day increase since July 6, 2020. Today's turnover of the Shanghai and Shenzhen markets was 971.3 billion, up 420.3 billion from the previous trading day. Hong Kong stocks surged 4.13%, and the volume increased to 242.4 billion, which also recorded the largest trading volume in the past two years.

Yesterday, I mentioned that the Information Office of the State Council will hold a press conference at 9:00 a.m. on September 24, 2024 (Tuesday). Pan Gongsheng, Governor of the People's Bank of China, Li Yunze, Director of the State Administration of Financial Supervision and Administration, and Wu Qing, Chairman of the China Securities Regulatory Commission, introduced the situation relating to financial support for high-quality economic development and answered questions from reporters. The press conference was full of information and brought many benefits, some of which greatly exceeded expectations. As a direct result, the RMB exchange rate soared. On September 24, the offshore RMB exchange rate hit a high of 7.028, which was only one step away from recovering the 7.03 mark, and appreciated by more than 300 points during the day. FTSE China A50 futures increased to 5%.

Let's look at conventional benefits first. 1. The deposit reserve ratio will be lowered by 0.5 percentage points in the near future to provide long-term liquidity to the financial market by about 1 trillion yuan. 2. In terms of real estate, reduce interest rates on existing mortgages and unify the minimum down payment ratio for mortgages. Guide commercial banks to lower interest rates on existing mortgages to close to interest rates on newly issued mortgages. The average decline is expected to be about 0.5 percentage points. Reduce the minimum down payment ratio for a two-home loan at the national level from 25% to 15%, and unify the minimum down payment ratio for first and second home mortgages. After the interest rate on existing mortgages was reduced by 50 basis points, the 1 million yuan mortgage was reduced by 0.1 million yuan over 30 years. Including the 300 billion yuan affordable housing reloan previously established by “517,” the central bank increased its support from 60% to 100%, extended 16 operational property reloans and financial policy documents due at the end of the year until the end of 2026, and support the acquisition of existing land by housing enterprises. This will boost real estate sales to a certain extent. Real estate categories such as R&F Real Estate (02777), Sunac China (01918), and Lujing China Real Estate (00095) all increased by more than 13%. Bank stocks also benefited from the downgrade and stronger expectations for real estate, and China Merchants Bank (03968) also surged 10.82%. 3. Guidance on promoting the entry of medium- to long-term capital into the market and six measures to promote mergers, acquisitions and restructuring will be issued to improve the institutional environment for long-term investment and support eligible insurance institutions to establish private equity investment funds. This is a big benefit for insurance companies. Yesterday, it was mentioned that they already have the capital to lay out insurance stocks in advance. Today's outstanding performance is that China Taibao (02601) mentioned in it has surged 12.47%.

Furthermore, beyond expectations, the People's Bank of China created structural monetary policy instruments to support the capital market for the first time. Eligible securities, funds, and insurance companies are supported to use their own bonds, stock ETFs, and Shanghai and Shenzhen 300 constituent shares as collateral to exchange highly liquid assets such as treasury bonds and central bank notes from the central bank. This policy will greatly increase relevant institutions' access to capital and stock holdings. Funds obtained by institutions through this instrument can only be used to invest in the stock market. The first phase of the swap is easy to operate at a scale of 500 billion yuan. As long as this matter is done well, the scale can be expanded in the future according to circumstances. This principle is equivalent to providing capital indirectly to securities companies. For large brokerage firms, for example, they can revitalize their own securities assets, and the key capital obtained can only be invested in stocks. It is estimated that the most used place is for customers to finance and own business. These two businesses will increase dramatically; anyway, they are all flowing into a large pool of stocks. As a result, the inflow of money has increased, so is the market going to rise? It is estimated that the initial 500 billion will soon be used up. After a virtuous cycle is formed, a steady stream of follow-up support will be provided, as opposed to starting an unlimited loan model. That's very imaginative. As the standard-bearer of the bull market, brokerage stocks actually received policy support this time. Among them, large brokerage firms such as CITIC Securities (06030) and CICC (03908) all rose by more than 10%. Other CITIC Construction Investment (06066), HTSC (06886), and China Galaxy (06881) are also above 9%.

In addition, create reloans to repurchase shares and increase holdings. The first 300 billion installment can be added later, and the interest rate is 1.75%. This policy is also quite aggressive. Many listed companies will actively increase their holdings and buy back, because this interest rate is really reasonable. If you raise it as much as you like, you can pay back the cost, and you can also add more. What's great about it is that it will guide many large off-market investors to enter the market with listed companies.

Another thing worth looking forward to is that the Equalization Fund is studying. This should be underpinned. If so many benefits still don't work, simply equalize the fund's direct entry. It's quite straightforward.

Favorable policies have been introduced. Apart from the full explosion of big finance, the market's biggest expectation is big consumption. Recently, Kweichow Moutai (600519.SH) issued an announcement stating that the company plans to use 3 billion yuan to 6 billion yuan of its own capital to implement the share repurchase plan. The repurchase price will not exceed 1795.78 yuan/share, and the repurchase of the shares will be used to cancel and reduce the company's registered capital. This is also the first time Kweichow Moutai has implemented a buyback in 23 years since it went public. On September 23, Wuliangye (000858.SZ) stated on an interactive platform that it is actively studying stock repurchases or special dividends. The main liquor category in the Hong Kong stock market is Zhenjiu Li Du (06979), which surged more than 10% today. The beer categories China Resources Beer (00291) and Tsingtao Brewery (00168) all rose more than 7%. The food category most intuitively reflects consumption. For example, Jiumaojiu (09922) surged nearly 15%, while Nai Xue's tea (02150) and Haidilao (06862) both rose more than 9%.

Automobiles, as the bulk consumption of automobiles after real estate, are also the direction of capital-intensive layout. Despite various tariff shortfalls, competitive advantage cannot be stifled by negative policies. For example, the “connected cars and autonomous vehicles that drive on US roads are prohibited from using Chinese software and hardware” introduced by the US. The logic of the current hype is based on sales volume, such as data released by Ideal Auto (02015). In the 38th week of 2024 (9.16-9.22), Ideal Auto's weekly sales volume reached 0.012 million vehicles. Today, it surged more than 10%. Furthermore, the NIO (09866) sub-brand Ledao L60 went on sale last week. The battery rental price was only 0.1,499 million yuan, which is very competitive against the Tesla Model Y. The current feedback order is good. Today, it also surged more than 11%. Upstream lithium salts were also driven. For example, Ganfeng Lithium (01772) and Tianqi Lithium (09696) both increased by 8%.

Today, the overall market has generally risen, but there are also those that have dropped significantly, such as Mingchuang Premium (09896). The company announced that it successfully acquired 29.4% of Yonghui supermarket's shares at a high price of about 6.3 billion yuan. As a result, the A-share Yonghui supermarket (601933.SH) directly hit the market, while Mingchuang Premium plummeted 23.86%. The reason was that large investments did not bring strong synergy. Yonghui did not necessarily bring the expected benefits after being adjusted by Fat Donglai, and it is likely that this purchase will have to be raised from the market. This incident fueled Gaoxin Retail (06808), and the company's same-store sales grew positively from April to August. At the same time, it follows the Costco and Sam's membership store model. Currently, the offline retail model is relatively reliable because it can compete with online prices, and at the same time, the shopping experience and service are better than online. Today it surged 16.78%.

With so many benefits, it directly sends a signal of counterattack. It is estimated that foreign investment will continue to be attracted to the market. Apart from big finance, the main direction is to increase holdings and buy back at the bottom, big consumer categories.

[Sector Focus]

The Information Office of the State Council held a press conference at 9:00 a.m. this morning. Chairman Wu Qing of the Securities Regulatory Commission stated today: “(Market value management) guidelines require long-term broken companies to formulate value enhancement plans, evaluate implementation results, and require public disclosure.”

Looking at fundamentals, domestic steel production fell sharply year on year in August, and social steel inventories continued to decline in mid-September. Downstream reserves were boosting demand before the holiday season, and the relationship between supply and demand in the industry showed signs of marginal improvement. In terms of exports, a total of 70.58 million tons of steel were exported from January to August 2024, an increase of 20.60% over the previous year, and exports remained at a good level.

In the afternoon, major black commodities such as rebar rose across the board, and the price increase was significantly higher than that of other internationally priced futures varieties. By the close, the 2501 contract, the main force of rebar, had risen 3.21%, and the 2501 contract, the main force of Hot Rolls, had risen 3.48%.

Steel stocks are the base for “breaking” individual stocks. By September 10 of this year, more than 60% of steel stocks had fallen below net assets per share. The characteristics of low stock prices and undervaluation in this sector are very obvious.

The main types of Hong Kong stocks: Maanshan Iron and Steel (00323), Angang Steel (00347), Chongqing Iron and Steel (01053).

[Individual Stock Nuggets]

Jubail Express - W (01519): Signed a memorandum of understanding on logistics services with Saudi Arabia's Jubail and Yanbu Royal, and Southeast Asia's advantages continue to expand

Jubail Express recently announced that it has signed a memorandum of understanding on logistics services with Saudi Jubail and the Yanbu Royal Commission to formally establish a cooperative relationship. They will work together to promote logistics and supply chain development in Saudi Arabia in the future. The two sides will carry out in-depth cooperation within the special economic zone under the jurisdiction of the Jubail and Yanbu Royal Commission, using Jubail's technology and experience in the field of express logistics to enable logistics infrastructure construction within the special economic zone and attract more e-commerce and logistics upstream and downstream industries to the local layout.

Comment: The signing of a memorandum of understanding on logistics services with Saudi Jubail and Yanbu Royal meant that the company's layout in the Middle East was raised to another level. Furthermore, on May 8, J&T Express announced that J&T Express had completed an important milestone. Yida Capital and the Middle East Foundation joined hands to increase its capital by tens of millions of dollars. It can be seen that the Middle East consortium has confidence in the company. In terms of interim results, revenue was 4.86 billion US dollars, up 20.6% year on year; the Group's net profit reached 0.03 billion US dollars, turning a loss into profit for the first time. In terms of market share, in the first half of 2024, the company's market share in Southeast Asia was 27.4%, up 2.0 percentage points from 25.4% in 2023; the market share in China was 11.0%, up 1.1 percentage points from 9.9% in the first half of 2023; and the market share in the new market was 6.1%, up 0.1 percentage points from 6.0% in 2023. Overall, the company's advantages in the Southeast Asia region have expanded. On the Chinese side, the large-scale effect of early investment in logistics infrastructure gradually became apparent. In the first half of this year, when the company's single ticket revenue in the Chinese region remained relatively stable, the decline in single ticket costs led to a marked recovery in domestic business profitability.