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Chen Maobo: Multi-fund managers in Hong Kong are deployed in great numbers.

Photo: With the promotion of a series of positive factors, Hong Kong's financial industry will usher in more development opportunities this year. The 2024 year of the loong Chinese New Year party in Hong Kong's financial services sector was held at the Hong Kong Stock Exchange yesterday, attended by many political and business people, wishing Hong Kong a "golden stock" and a "dragon" in year of the loong. The Financial Secretary, Chen Maobo, said at the ceremony that some fund managers are considering redeploying their investments in the Hong Kong market and are negotiating with the Mainland to launch treasury bonds futures. Shi Meilun, chairman of HKEx, predicted that the Hong Kong market will have better development opportunities this year. Li Weihong, a member of the financial services sector of the Legislative Council, pointed out that the financial services sector needs to explore new markets and continue to reform in order to overcome difficulties and reach new heights.  Guests attending the Spring Festival group worship included Yin Zonghua, Deputy Director of the Liaison Office of the Central Government in Hong Kong; Andrew Leung, President of the Legislative Council; Xu Zhengyu, Director of the Finance Bureau; Liang Fengyi, Chief Executive Officer of the Hong Kong Securities Regulatory Commission; Ou Guansheng, Chief Executive Officer of the Hong Kong Stock Exchange; and many legislators and people from the financial services sector. "The dragon is a symbol of good luck, full of energy and good at flexibility. Chen Maobo said that referring to the past performance of year of the loong market, the Hang Seng Index rose by 15% in 2012, and even more than 33% in 1988. I believe the market has expectations for year of the loong today. Chen Maobo believes that the market already has relatively favorable conditions, for example, the peripheral interest rate has peaked. Even though the market may not agree on the time and speed of interest rate reduction, the general direction is clear and definite. Some fund managers are already thinking about how to make corresponding arrangements and invest in the local market. In addition, the stable and positive economy in the Mainland is also a positive factor. "Although geopolitics continues to bring challenges, the new situation and new challenges remind and inspire us to understand and grasp new opportunities in the midst of change. Chen Maobo said that in the future, it is necessary to develop new products, attract new funds and open up new markets. Promote the listing of Hong Kong stock ETFs in the Middle East This year marks the 10th anniversary of the implementation of Shanghai-Hong Kong Stock Connect. Chen Maobo pointed out that the continuous incremental expansion and implementation of interconnection have brought more mainland and international investors to Hong Kong and brought greater capital flows to the market. Chen Maobo revealed that he is currently discussing with the mainland regulatory authorities to further deepen the interconnection between the two markets, including launching treasury bonds futures, joining RMB trading counters in Southbound Connect, and bringing more international enterprises into the target scope of Southbound Connect. In terms of international funds, Chen Maobo said that the Hong Kong Stock Exchange had incorporated the Saudi Arabian and Indonesian stock exchanges into the recognized exchanges last year, so as to facilitate the listed companies of the other side to make a second listing in Hong Kong. At present, we are also making every effort to promote the listing of exchange traded funds (ETFs) tracking the Hong Kong market in the Middle East market, so as to attract more overseas funds to Hong Kong. On the other hand, the chairman of HKEx, Shi Meilun, pointed out that although the recent external environment has put pressure on the Hong Kong market, the market has shown a very strong side thanks to the concerted efforts of Qi Xin in the industry. With the promotion of a series of positive factors, Hong Kong's financial industry will usher in more development opportunities this year. Shi Meilun: Continue to promote new products to attract foreign investment. Smellen also said that in the future, more capital will be attracted to participate in the local market, and the HKEx will continue to introduce new products to enhance the market mechanism and consolidate Hong Kong's attractiveness and competitiveness as an international financial center. Li Weihong, a member of the Legislative Council's financial services sector, pointed out that the financial services sector, facing challenges, needs to start from three aspects: exploring new markets, continuing reforms and promoting diversified development, so as to overcome difficulties and reach new heights. Li Weihong pointed out that as a member of Guangdong-Hong Kong-Macao Greater Bay Area, the total economic scale of the whole region is close to the tenth largest economy in the world, and it has huge financial development potential. As a "super value-added person" connecting the country with the world, Hong Kong is believed to attract different overseas funds such as the Belt and Road Initiative, the Middle East and ASEAN to revitalize the market.

The US stock market is closed, the Pan European stock index has hit a new two-year high, Germany and France have temporarily halted their gains, and crude oil has hit a new high for three consecutive months

Monday is President's Day holiday and the US financial markets are closed. Blue chip stocks AstraZeneca and Novo Nordisk in the medical sector led the way in supporting the continued rise of the Pan European stock index, while mining stocks led the decline and technology stocks fell, all of which suppressed the overall upward trend due to the decline of various basic metals such as iron ore and copper. Among commodities, international crude oil continues to hit a three-month high. Commentary suggests that geopolitical tensions have overwhelmed market concerns about demand and continue to fuel oil prices. On Monday, the tense situation in the Red Sea escalated, with Hussain militants claiming to attack two American ships and the British cargo ship "Ruby" completely sinking. German stocks have fallen to record highs, with Novo Nordisk hitting a new historical high in five consecutive days The Pan European stock index rose for four consecutive trading days. The European Stoxx 600 index closed up nearly 0.2%, hitting its closing high since January 5, 2022 for three consecutive trading days. The performance of major European stock indices varies. German and Italian stocks, which have been rising for three consecutive days, have fallen back. German stocks are temporarily breaking away from the historical closing high they set for two consecutive days, while the Spanish stock index has fallen for two consecutive days. French stocks have closed slightly higher and roughly flat, breaking new historical closing highs for three consecutive trading days, while British stocks have risen for four consecutive days. Among the various sectors of Stoke 600, medical revenue rose by over 0.9%, benefiting from the approval of its star anti-cancer drug Tagriso combined with chemotherapy to treat lung cancer by the US FDA. UK listed pharmaceutical company AstraZeneca rose by 3.2%, supporting the rise of the UK stock market. In addition, Danish listed European pharmaceutical company Novo Nordisk rose by 0.8%, reaching a new closing high for five consecutive trading days, helping the Danish stock index reach a new closing high for four consecutive days; The underlying resources of mining stocks led the decline by about 1%, while the technology sector fell by more than 0.8%. Among its constituent stocks, ASML, the highest market value chip stock in Europe listed in the Netherlands, closed 1.7% lower, taking back all gains from last Friday and failing to continue approaching the historical closing high set on Monday. Among other stocks, after announcing a new stock repurchase plan of 1.57 billion euros and increasing dividends by about 50%, Spain's largest bank Santander rose 1.8%, supporting a rebound in the Spanish stock index; After announcing plans to open an ammunition factory locally with Ukrainian partners, German military enterprise Rheinmetall rose 4.1%; JD.com stated that Curries, a UK listed electronics retailer, surged 36.4% after evaluating a possible acquisition offer. The yield of 10-year German bonds is close to a high of over two months When the US market was closed, the prices of European treasury bond bonds that had fallen for two days in a row showed different performances. The yield of British bonds rose and fell, while the yield of 10-year German bonds kept rising. By the end of the bond market, the yield of the benchmark 10-year British treasury bond was about 4.11%, roughly unchanged from the level of last Friday, approaching 4.13% when it hit a new high, which was still far from the high since December 4, 2023 when it hit 4.17% after the US CPI was announced last Tuesday; The yield of the 2-year UK bond was approximately 4.60%, a decrease of about 1 basis point within the day, breaking the daily high and breaking through 4.67%, not approaching the high since the end of November 2023 that broke through 4.71% last Tuesday. By the end of the bond market, the yield of benchmark 10-year German treasury bond was about 2.41%, up about 1 basis point within the day, close to the high since December 1 when the US PPI broke 2.42% after the announcement on Friday; The yield of the 2-year German bond is about 2.81%, which is basically the same as last Friday's level, and is not far from the high since December 1st, when the US PPI was released last Friday and was close to a refresh of 2.84%. The US dollar index stabilized, and the offshore RMB rose above 7.21 during trading, but fell by over 100 points at one point The ICE US dollar index (DXY), which tracks the prices of a basket of six major currencies including the US dollar against the euro, hit a new low of 104.14 before European stock trading, falling more than 0.1% during the day. It continued to rebound, and continued to rise after turning higher in the previous US stock trading session. In the early morning session, the US stock market was close to a new high of 104.40 to 104.373, and rose nearly 0.1% during the day. It has not yet approached the high since November 14, 2023, which was hit by 105.00 on Wednesday. By the usual Monday closing of the US stock market, the US dollar index was above 104.20, with a slight decline during the day and two consecutive trading days of slight decline, failing to completely reverse the continuous decline trend of last Wednesday and Thursday; The Bloomberg US dollar spot index, which tracks the exchange rate of the US dollar against ten other currencies, fell slightly and stabilized after stopping two consecutive declines last Friday. Among non US currencies, the Japanese yen, which fell last Friday, rebounded slightly. After falling below 150.00 in the early Asian market, the US dollar against the Japanese yen fell below 149.90, with a intraday decline of over 0.2%. The majority of the decline gradually narrowed during European and American trading hours; The euro against the US dollar was close to a daily low of 1.0760 during the usual morning session of the US stock market, falling more than 0.1% within the day, and then slightly rising, not close to the low since November 14, 2023 where it broke below 1.0700 last Wednesday; The pound against the US dollar has fallen below a daily low of 1.2590 since the European stock market turned lower, and is still far from the low since December 23rd, which broke through 1.2520 on Monday, February 5th. The offshore Chinese yuan (CNH) rose to 7.2040 against the US dollar in the early trading session of the Asian market. After reaching a new intraday high since February 9th last Friday, it hit a new intraday high on February 8th and continued to decline. European stocks fell from 7.21 in the early trading session and then fell to 7.2162, down 122 points from their daily high, before rebounding. At 5:59 am Beijing time on February 20th, the offshore RMB/USD was at 7.2114 yuan, up 14 points from last Friday's late trading in New York, for four consecutive trading days. Bitcoin (BTC) hit a new daily high of $52400 before the European stock market, but then fluctuated and fell back. As usual, the US stock market fell below $52000 to below $51700 by midday, falling more than $800 or more than 1% from its daily high. After falling more than 1% in the oil market, it turned higher for three consecutive days and rose for two consecutive days, reaching a new high for three months International crude oil futures rose during the trading session. When European stocks hit a daily low in the morning, US WTI crude oil fell below $78.70, down nearly 0.7% for the day, Brent crude oil fell below $82.60, down 1.1% for the day, and the usual US stock market continued to rise after turning up. When the US stock market hit a daily high in the morning, US oil rose above $79.70, up 0.7% for the day, and crude oil rose to $83.60, up nearly 0.2% for the day. In the end, Brent's April crude oil futures rose by $0.09, or nearly 0.11%, to $83.56 per barrel, rising for three consecutive trading days and hitting a high since November 6, 2023 for two consecutive trading days. If the US oil company, which had no closing price on Monday due to holidays, maintains its upward trend, it will also rise for three consecutive days on Tuesday, and is expected to continue to hit a new closing high since November 6, 2023. Lunxi fell 2%, Luncopper fell to a two-week high, Lunaluminum fell three times in a row, and gold continued to rise London base metal futures mostly fell on Monday. Lunxi, which led the decline, fell by about 2% for four consecutive trading days, breaking the one week low set last Friday. Lun lead fell by about 1%, bidding farewell to the over a week high set by three consecutive days of gains. Lun Aluminum fell nearly 1%, falling for three consecutive days and hitting a low since late January for two consecutive days. Last Friday, London Copper, which rose more than 2% and led the way, fell to a two-day high since February 1st, but failed to close close close to $8500. Last Friday, the London nickel rebounded to its highest level since the end of January and slightly declined. And Lun Zinc rose for three consecutive days, continuing to reach a new high of over a week. New York gold futures continued the rebound momentum from last Friday on Monday. COMEX April gold futures, which had no closing price due to holidays on Monday, rose to $2034.30 in early Asian trading, breaking the intraday high since last Tuesday on February 13th, with a 0.5% intraday increase. If the trend continues to rise until the close on Tuesday, futures will continue to rise for three consecutive trading days, expected to reach a new closing high since February 12, far from the closing low since December 13, 2023, which was refreshed by consecutive declines on Wednesday and Friday last week. Spot gold rose above $2023 before the European stock market on Monday, up nearly 0.5% on the day and hitting a new intraday high since February 13th.

How did NVIDIA invest?

As a global leader in GPU technology, NVIDIA not only limited its vision to the hardware field, but also set up a venture capital department, NvAdventures, to enter the venture capital market and deepen its influence in the AI industry. Nventures was established in early 2022, and its investment scope covers many fields such as health, enterprise and logistics. Among them, NVIDIA focused on investing in top start-ups in the AI field (such as Cohere, etc.), and thus stood out among a number of technology giants. NVIDIA has incomparable advantages over traditional venture capital companies. It not only provides funds for start-ups, but also pays more attention to technical support and resource sharing, including high-performance computing resources, technical expertise and in-depth understanding of the AI field, so as to build the long-term strategic value of enterprises. In addition, NVIDIA CEO Huang Renxun's personal participation and guidance became the "bright spot" of his venture capital. Analysts believe that although NVIDIA is currently in a leading position in the technology industry, in Silicon Valley, industry change is the norm. Once brilliant companies such as Yahoo, MySpace and even AMD, the former employer of NVIDIA CEO Huang Renxun, were once giants in the technology industry. However, over time, they have been surpassed by emerging technologies and competitors. If NVIDIA's GPU is no longer dominant in the future, NVIDIA may think that investing in start-ups is a forward-looking investment strategy, so as to diversify its business and maintain its competitiveness. The three founders of Nventures Portfolio Company told the media that they thought NVIDIA's investment strategy might be based on such considerations. NVIDIA surpasses the advantages of traditional venture capital. 1) Technical support and resource sharing: NVIDIA's investment strategy is not only to provide funds, but also to pay attention to technical support and resource sharing. Due to its deep accumulation of technology and leading position in AI field, NVIDIA can provide technical support, professional knowledge sharing, market orientation, strategic planning and connection with NVIDIA's extensive technology and business ecosystem for investment companies. These are the incomparable advantages of traditional venture capital companies. Such cooperation enables start-ups (such as Terray Therapeutics) to make direct use of high-performance computing resources in NVIDIA, get in touch with technical experts in NVIDIA, and get direct guidance from CEO Huang Renxun and important brand endorsement. Sid Siddeek, vice president of NVIDIA and head of Nventures, stressed in an interview with the media that NVIDIA's investment strategy is diversified, aiming at promoting the growth of start-ups by providing financial, technical and professional support. Siddeek also pointed out that another major goal is to ensure that these investments can bring positive financial returns to NVIDIA. 2) NVIDIA CEO Huang Renxun's personal participation and guidance is very attractive to start-ups. NVIDIA's internal corporate culture emphasizes efficiency and cooperation. This culture is reflected in the support for internal projects and portfolio companies. It is reported that the founders of NVIDIA's portfolio companies mentioned that they could get the answer to the problem quickly from NVIDIA. For example, Outlider is a company that focuses on automated freight and logistics. Bob Hall, Chief Technology Officer of Outlider, pointed out that the internal staff in NVIDIA responded very quickly to the help request of the Nventures team, which greatly promoted the development of their company. Besides responding very quickly, Huang Renxun's direct guidance also helps enterprises to make rapid progress. For some companies, such as Imbue and Utilidata, Huang Renxun participated in the solicitation process and personally met the founders. Qiu, CEO of Imbue, said that Huang Renxun has been easy to contact since then. She once sent an email to Huang Renxun asking how the company should set the salary for its senior management team, and Huang Renxun responded quickly. Huang Renxun's participation not only reflects NVIDIA's emphasis on investment projects, but also sends a strong signal to start-ups, that is, they will be able to directly benefit from the experience and insights of NVIDIA's leadership. However, this opportunity is not equally available to all portfolio companies. Some founders of portfolio companies said that they had never met Huang Renxun. Siddeek mentioned that Huang Renxun is very busy, but he still leads the investment committee that approves every transaction. According to media reports, when asked about Huang Renxun's criteria for meeting with the founder during the transaction, NVIDIA chose not to comment. NVIDIA's investment covers top AI startups. 1) Scope of investment: Siddeek mentioned that NVENTERES has made a number of investments in the new year, and the NVENTERES website has been launched recently, which indicates that NVIDIA has formally and actively participated in the field of venture capital. According to public information, since the beginning of 2023, NVIDIA has announced 14 investments, covering many fields such as health, enterprise and logistics. NVIDIA not only pays attention to AI technology itself, but also applies AI technology to many industries to solve specific problems. Among them, NVIDIA has invested in top start-ups in the AI field, such as Cohere, Hugging Face and Influence. NVIDIA is an emerging player in the field of venture capital. It stands out among the technology giants such as Alphabet, Microsoft and Salesforce by investing in top AI startups in a short time. 2) Fair and transparent cooperative relationship: Although start-ups may expect special preferential treatment, NVIDIA treats all customers and portfolio companies equally and does not provide special access rights. NvAdNventuress, a venture capital department in NVIDIA, made it clear to the media that it would not provide priority access to GPUs because of its investment relationship. In the current field of artificial intelligence, companies are competing to develop the most powerful AI model, which makes GPUs a new "currency". Nevertheless, NVIDIA does not provide a special way to acquire chips just because the company has an investment relationship with it. Jorge Torres, CEO of MindsDB, a startup company, mentioned that although being a member of NVIDIA's portfolio does not mean getting any special preferential treatment (so-called "VIP pass"), this cooperative relationship does bring positive effects to MindsDB, such as improving brand awareness, obtaining technical guidance or broadening business network. In addition, the founders of NVIDIA and its portfolio companies all said that for start-ups, there is no requirement or designation that they must use their investment capital to buy chips or other products in NVIDIA. NVIDIA's investment is more based on the trust in the technology and business potential of the invested company, rather than to promote its own products or services. 3) Financial strength supports investment activities According to Omdia, a research company, NVIDIA accounts for over 70% of the AI chip sales market, and NVIDIA's strong financial strength provides a solid foundation for its investment activities. The company's revenue in the first three quarters reached $38.82 billion, especially in the third quarter, its sales increased by more than 200% year-on-year. NVIDIA's market value also rose rapidly to $1.79 trillion, making it the third largest company in the US stock market. This enables Nvidia to use its own funds to invest in start-ups. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.

March Drama is getting closer! The balance of reverse repurchase by the Federal Reserve has fallen below the $500 billion mark

The balance of the Federal Reserve's reverse repo has fallen below the $500 billion mark for the first time in over two years, and market liquidity has once again lit up a red light. The risk of a liquidity crisis erupting in March is increasing. The latest data released by the Federal Reserve shows that on February 15th local time, the balance of overnight reverse repurchase (RRP) by the Federal Reserve decreased by $82 billion to $493 billion from the previous day, marking the first time since June 2021 that it has fallen below $500 billion. This is also the largest non month end decline since October last year, which is quite shocking because the use of reverse repo has been relatively stable recently. As Curvature analyst Scott ED Skyrm pointed out: Considering the loose financial situation, this is even more surprising. When the repurchase rate is at a low level, the usage of reverse repurchase often decreases less, as a 5.3% reverse repurchase rate is more competitive compared to market rates. Wall Street has previously mentioned in an article that reverse repurchase may be completely depleted by March this year. At the same time, some people expect the reverse repurchase balance to remain at a "sustained low level" of $200-300 billion. Is there a big play in March? It is worth noting that the depletion of reverse repurchase may only be one part of the "March drama" play. The repurchase rate has jumped several times since the fourth quarter of last year, releasing a price signal of liquidity pressure. In addition, the Bank Term Financing Program (BTFP), an emergency rescue tool launched by the Federal Reserve during last year's banking crisis, will expire in March and will no longer be renewed, forcing banks to fund their $160 billion shortfall through a discount window. This suggests that liquidity risk may erupt in March. At that time, the Federal Reserve will be forced to stand at a crossroads again. What choices will it make in response to the crisis? Is it a rate cut? End QT? Even enable QE? Dallas Fed Chairman Logan pointed out as early as January that as reverse repurchase balances approached lower levels, the Fed should slow down the pace of QT. In the same month, Bill Gross, known as the "old debt king," said that if he were the Chairman of the Federal Reserve, he would stop QT now and start cutting interest rates in the coming months to avoid an economic recession. Some Wall Street strategists have previously hinted that the Federal Reserve should completely stop QT before the reverse repo balance approaches zero. Some analysts also believe that it was too late for the Federal Reserve to stop quantitative tightening at that time, and it was impossible to avoid violent fluctuations in the treasury bond bond market. Hedge funds would become the "fuse" to rapidly reduce market liquidity. The Federal Reserve would end QT and restart QE in the next few months even at the risk of inflation resurgence. However, QE may not be a benchmark option. Although liquidity risk is gathering, it is currently difficult to determine whether and when it will erupt. Despite the depletion of RRP and the expiration of BTFP, the Federal Reserve still has two policy tools, the Domestic Standing Repurchase Facility (SRF) and the International Repurchase Facility (FIMA), to improve the "interest rate corridor" mechanism and prevent overnight interest rates from frequently breaking the interest rate ceiling during the process of tightening liquidity. In addition, Federal Reserve officials have publicly encouraged lending institutions to freely use the central bank's discount window for financing, and hope to use this financing tool as an important tool for maintaining financial stability and monetary policy. Therefore, the volatility of repurchase rates and the significance of BTFP should not be overly exaggerated.

The US stock market has become more concentrated, but the leaders have changed: Berkshire, Lilly, and AMD have replaced Tesla, Apple, and Google

Since the beginning of this year, the overall rise of US stocks has become more concentrated, but the "seven sisters" of US stocks have gone out of the trend of differentiation, and the three companies with poor performance have been replaced by Berkshire, Lilly and AMD. According to media reports on Sunday, the upward trend of the US stock market is more concentrated than in 2023, and compared to the 4% increase of the S&P 500 index, the equal weight version of the S&P 500 index has only risen by 0.2%. Last year, the top seven companies contributed about 60% of the market's growth, and so far this year, they have provided 80% of the market's revenue. Michael Grant, Strategy Director at Calamos Investments, stated: You will see the differences between large stocks further widen, and apart from these companies, the overall profit outlook of the stock market is bleak. According to relevant data, 271 stocks rose and 231 stocks fell in the market this week. According to annual data, half of the stocks in the S&P 500 index have fallen in the past year. At the same time, as the market focus shifted from AI hype to concrete results, giants gradually diverged, with Apple, Tesla, and Alphabet falling behind and being replaced by competitors such as Eli Lilly, Berkshire, and Nvidia, AMD. The top seven US stock market leaders have shifted positions With the release of the latest financial reports, the collective rise of the "seven sisters" (Apple, Microsoft, Google parent company alphabet, Amazon, Nvidia, Tesla, Meta) based on the AI boom has been broken, and the gap between giants has gradually widened. Four out of seven stocks continued to outperform the market, but Alphabet lagged behind, with Tesla and Apple being the biggest drag on the market. The latest financial report showed unexpectedly weak sales for Apple in China, while Tesla was hit by a slowdown in growth. Under the changing circumstances, Berkshire and weight loss drug manufacturer Eli Lilly have surpassed Tesla in market value. Based on the strong demand for new weight loss drugs in the market, Eli Lilly's stock price has performed strongly, almost doubling in the past year. This also highlights that in addition to artificial intelligence, there are other themes that have sparked investor enthusiasm. Analysis indicates that the decline in inflation has sparked hope for interest rate cuts, driving a widespread rebound in US stocks at the end of last year. However, in recent weeks, investors have been lowering their expectations for interest rate cuts. Lower interest rates will increase investors' valuations of stocks, and it is expected that the Federal Reserve will continue to lower interest rates later this year. However, as most of the benefits of rate cuts have already been included in stock prices, most investors believe that the P/E ratio will not further rise, which increases the importance of profits in driving up stock prices. Vishal Vivek, strategist at Citigroup's stock trading division, said: When entering the financial reporting season, investors are already very optimistic about some large cap stocks, so the threshold for outperforming the market is higher. The company needs to provide additional benefits in order to win the favor of investors and drive the stock price up.

Qingkong Bank's sharp decline has uncovered the tip of the iceberg in Japan's "arbitrage trading"

At the beginning of 2024, the banking crisis in the US region has finally spread overseas, with two ominous signs of bond investment portfolio losses and commercial real estate explosions, making foreign small and medium-sized banks investing in US bonds and commercial real estate appear extremely vulnerable. This Friday, due to a performance exceeding expectations and a huge loss of nearly 200 million US dollars, the stock price of Japan's Qingkong Bank plummeted again after the daily limit down. The intraday decline expanded to 19%, and finally closed down nearly 16%. The total market value evaporated by 33% in the two days, shrinking by 870 million US dollars. In addition to unwittingly betting heavily on the US commercial real estate market, another catastrophic move by Qingkong Bank is the yen arbitrage trading. The bank's exposure to foreign bonds was too high, resulting in huge losses after the global central bank raised interest rates. Arbitrage trading is also one of the factors leading to huge losses for Qingkong Bank Arbitrage trading refers to raising funds in countries with lower interest rates and investing the proceeds in assets with higher returns abroad. As is well known, due to the Bank of Japan's long-term negative interest rate policy on excess reserves of commercial banks, the deposit interest rate of commercial banks in Japan is almost zero. Therefore, the cheap Japanese yen is the main source of arbitrage trading. Those involved in arbitrage trading also include Japanese commercial banks, which can take deposits at an average interest rate of 0.001% for regular deposits and then purchase overseas securities with higher yields, such as the five-year US Treasury bond with a yield of 3.8%. After global central banks began raising interest rates, the yields of major bonds such as US Treasury bonds continued to rise, causing huge floating losses for investors holding such "safe assets". Investors facing losses can only choose to either bear the burden and hold the bonds until maturity, or sell this portion of the bonds to reduce losses. Qingkong Bank is one of the commercial banks participating in the arbitrage transaction. Nearly 40% of the investment portfolio of Qingkong Bank is foreign bonds, and Japanese government bonds only account for 2% of the total investment portfolio. As foreign bonds began to plummet, in order to reduce floating losses, the Bank was forced to sell its foreign bonds to reduce losses caused by rising interest rates. The crisis at Qingkong Bank also indicates that it is difficult for the Bank of Japan to quickly turn an eagle The crisis at Qingkong Bank also highlights the dilemma faced by the Bank of Japan. On the one hand, domestic investors in Japan generally have huge exposure to overseas assets. If the Bank of Japan is determined to shift significantly, then arbitrage trading will need to close positions; On the other hand, if the Bank of Japan drags on interest rate hikes and allows arbitrage trading to continue, it will become increasingly difficult to curb inflation and ultimately bring serious financial stability risks, including the risk of a yen collapse. Since the Bank of Japan expanded its monetary easing policy in 2013, Japanese investors have generally increased their overseas investment. However, even if overseas assets have positive returns, a significant increase in Japanese yen borrowing costs may also trigger liquidation risks in Japanese arbitrage trading. Therefore, some analysts point out that even if the Bank of Japan initiates its first interest rate hike since 2007 this year, it is expected that the magnitude of the rate hike will not be too significant. Otherwise, many investors engaged in yen arbitrage trading will be forced to liquidate their positions, causing serious turbulence in Japan's financial system.

From "single point explosion" to "collective panic", commercial real estate concerns have shattered regional banks in the United States

On Wednesday of this week, New York Community Bank (NYCB) unexpectedly reported a loss in the fourth quarter of 2023, with dividends plummeting by more than two-thirds. On the same day, its stock price fell nearly 38%, marking the largest drop in 30 years since its listing; On Thursday, Bank of Japan, Aozora Bank Ltd., also hit rock bottom in its financial report, predicting a net loss of 28 billion yen (191 million US dollars) for the entire fiscal year. The previous forecast was for a profit of 24 billion yen, and the bank's stock price fell more than 20% on the same day. According to the commentary, the sharp decline of these bank shares shows that although the U.S. commercial real estate market has been in turmoil since the outbreak of the COVID-19 epidemic, banks have just begun to feel the pain brought by this market. The huge loan loss reserve is crushing banks Small and medium-sized banks are the main providers of commercial credit. With the continuous downturn of the commercial real estate industry, smaller regional banks have a greater risk exposure to commercial real estate and are facing greater shocks. Wall Street News once mentioned that the culprit behind NYCB's fourth quarter losses was a provision for loan losses of $552 million, far exceeding market expectations and the previous quarter's $62 million, reflecting a deteriorating credit outlook. RBC Capital Markets analyst Jon Arfstrom pointed out that NYCB's management had previously stated strong asset quality, so "their tone has clearly changed" and "this is a substantial negative surprise." Aozora announced on Thursday that its significant losses for the fiscal year were due to additional provisions related to US real estate loans and losses from overseas bond sales. The bank made an additional provision of 32.4 billion yen for non-performing loans related to US office real estate in the third quarter. On Thursday, Germany's largest bank, Deutsche Bank, revealed that its provision for losses in US commercial real estate in the fourth quarter of 2023 increased more than four times year-on-year. The bank's related investment portfolio has set aside 123 million euros (133 million US dollars), far exceeding the 26 million euros set aside in the same period in 2022 and almost double the bank's provision for the third quarter of 2023. On Thursday, NYCB's stock price continued to decline, with an intraday drop of 11% and trading volume exceeding 125 million shares, setting a record for the largest decline in history; The stock price of Qingkong Bank plummeted by 18%. Wall Street is also re evaluating NYCB. Raymond James and Jefferies downgraded the rating of NYCB stocks to "held"; JPMorgan Chase stated that the sharp drop was "excessive" and maintained a buy rating, lowering its target stock price from $14 to $11.5, reaffirming that New York Commercial Bank remains its top choice for 2024, which means there is 78% room for an increase compared to Wednesday's closing price of $6.47. Regional bank stocks weaken across the board Affected by this, US bank stocks continued to plummet on Thursday. The KBW regional bank index fell 2.3%, marking the largest daily decline since the collapse of Signature Bank in March 2023. In addition, the stock prices of several regional banks such as Zions Bancorp, Comerica, Webster Financial, Citizens Financial, Regions Financial, and SouthState have also fallen. According to data and analysis firm Ortex, the decline in US bank stocks on Wednesday brought a book profit of $685 million to short sellers. It is worth noting that JPMorgan analyst Kabir Caprihan wrote on Thursday that Zions Bancorp and M&T Bank have lower loan loss provisions than most of their peers. The data shows that the commercial real estate loan loss reserves of the two banks account for 3.8% and 4.4% of the total amount, respectively, while the proportion of NYCB after provision is 8%. The stock prices of Zions Bancorp and M&T Bank fell 6% and 5% respectively on Thursday. Real estate loan defaults may spread Commercial real estate is not only impacting the banking industry, but also raising concerns in the market about its large-scale defaults. The commentary said that the market's concern about banks reflected that the market value of commercial real estate continued to shrink, and it was difficult to predict which loans might be cancelled, and the refinancing costs of lending banks increased in the context of the COVID-19 that triggered the trend of remote work and the rapid rise of interest rates. Billionaire investor and founder and CEO of investment fund Starwood Capital, Barry Sternlicht, warned on Tuesday that the office market may face losses of over $1 trillion, making it a market that will never recover since the pandemic. He stated that this asset class, which used to have a market value of $3 trillion, may now only be worth $1.8 trillion. The comments suggest that for banks, what is more troublesome is that there may be more defaults on such real estate related loans in the future. Harold Bordewin, an expert in the disposal of non-performing assets and co president of Keen Sumit Capital Partners LLC, a New York real estate brokerage and investment bank, commented this week that commercial real estate loans are a major issue that the market must consider, with a large number of real estate loans not receiving returns at maturity, a fact that banks' balance sheets have not taken into account. According to Trepp, a commercial real estate data provider, by the end of 2025, bank lenders will have a total of approximately $560 billion in commercial real estate debt due, accounting for more than half of the total debt due during the same period. Compared to large banks, regional banks are more vulnerable and heavily impacted because they lack large credit card portfolios or investment banking businesses that can withstand risks.

The US banking stock index experienced its largest decline in ten months, while the NYCB financial report of the bank was lackluster, with a intraday drop of over 40%

The banking crisis triggered by Silicon Valley banks in March last year is still vividly remembered, and the financial report of a US regional bank has raised concerns among investors about the prospects of small banks. Prior to Wednesday, January 30th Eastern Time, New York Community Bank Limited (NYCB) announced a fourth quarter loss of $260 million, or a loss of $0.36 per share, compared to earnings per share (EPS) of $0.27 a year ago. The adjusted EPS loss for the quarter was $0.27, while analysts demanded an EPS profit of $0.26. In the fourth quarter, NYCB recorded a revenue of $886 million, a year-on-year increase of 53.6%, still lower than analyst expectations of $929.5 million. The bank's loan loss provision for the quarter reached $552 million, far exceeding the $62 million in the third quarter. At the same time, NYCB announced that it will significantly reduce its dividends by more than two-thirds in order to accumulate capital to meet US regulatory requirements and meet regulatory capital requirements for Class IV banks with assets ranging from $100 billion to $250 billion. NYCB's CEO Thomas Cagemi stated that after acquiring the assets and liabilities of Signature Bank, which collapsed in March last year, NYCB has managed assets exceeding $100 billion and is adjusting regulatory requirements for large banks to "adhere to higher prudential standards, including risk and leverage based capital requirements, liquidity standards," among others. After the financial report was released, NYCB opened 42.6% lower and fell more than 46% at the beginning of the trading day, closing down 37.7%, marking the largest intraday and closing decline since its listing in November 1993, far exceeding the bank's 13.8% decline on September 22, 2008 during the global financial crisis. After opening on Tuesday, regional banks in the United States generally fell, affected by the heavy decline of its constituent stock NYCB. The KBW Nasdaq Regional Banking Index (KRX) closed down 6%, the largest daily decline since March 13, 2023, and the largest daily decline since the collapse of Silicon Valley banks in March. Among the constituent stocks, Zions Bancorporation (ZION) and Comerica (CMA) closed down 5.7% and 5.4%, respectively. When regional banks fell sharply, the price of US treasury bond bonds rose and the yield curve became steeper. Commentary suggests that the short-term bond yield curve may still be sensitive to a sharp decline in banking stocks, as this raises concerns among investors about a repeat of the banking crisis in March last year and concerns that the US banking system remains vulnerable.

Oil service stocks are filled with grief and sorrow! Saudi Arabia's Unexpected Big Turn Revokes Saudi Aramco's Production Expansion Plan

Due to an unexpected shift in Saudi Arabia's policy to expand production capacity, oil and gas stocks in the Middle East and Europe and America were filled with grief on Tuesday. On Tuesday, Saudi Aramco, the energy giant held by the Saudi government, announced that it has received instructions from the Saudi Ministry of Energy to maintain its maximum sustainable production capacity (MSC) at 12 million barrels per day and will no longer continue to expand to 13 million barrels per day. It also announced that it will release its 2023 financial results in March 2024, along with updated company capital expenditure guidelines based on the latest government instructions. After Saudi Aramco's statement to stop expanding production was announced, several oil and gas stocks in the Middle East, Europe and America fell sharply. In the Middle East, Ades Holding Co. (ADES. AB) in Saudi Arabia closed down about 10%, with data showing that the stock closed all day trading less than half an hour after opening. Arabian Drilling Co. closed down 9.20%, while Saudi Aramco (ARAMCO. AB) closed down 0.48%, remaining stable near its lowest closing level since April 16, 2023. In European stocks, Borr Drilling, listed in Oslo, Norway, closed down 11.65%, Shelf Drilling, 12.34%, and Subsea 7 SA, 4.9%. SPM. IM, listed in Milan, Italy, closed down 12.72%, TEN. IM, closed down 2.00%. VK.FP, listed in Paris, France, closed down 6.26%, and SZG. GR, listed in Frankfurt, Germany, closed down 0.76%. In the United States, the Philadelphia Oil Service Sector Index (OSX) hit a daily low in the morning and fell 5.2%, marking the largest intraday decline since October 4, 2023, closing down 1.9%. WFRD fell over 16% at one point, Schlumberger (SLB) fell about 10% during trading, National Oil Well Huagao (NOV) fell nearly 9%, and Halliburton (HAL) fell over 5%, ultimately closing down 12.5%, 7.2%, 5.5%, and 1% respectively. The latest statement from Saudi Aramco means that Saudi Arabia's capacity expansion plan, which has been ongoing for over two years, has suddenly been halted. Saudi Arabia's current production capacity is 12 million barrels per day, with a daily output of approximately 9 million barrels. Saudi Aramco stated in 2021 that it is striving to expand its production capacity to 13 million barrels per day, and is expected to achieve this capacity expansion goal by 2027. In November 2023, Saudi Aramco also stated that as demand from China and India continued to grow, its multi billion dollar project was progressing "very smoothly", aiming to increase production capacity to 13 million barrels per day by 2027. At that time, Saudi Aramco CEO Amin Nasser stated that although some people called for the cessation of new project development, the energy industry still needed to invest upstream to avoid global energy supply shortages. Earlier this month, Nasser stated at the Global Economic Forum in Davos that he expects the oil market to be in a tight supply as consumers have consumed 400 million barrels of inventory in the past two years, while oil demand is still growing, and OPEC's remaining production capacity will be a major source of additional supply. The media pointed out that Saudi Aramco's change in investment plan coincides with the company significantly increasing its dividend payments to the government. Due to spending billions of dollars to promote economic diversification and expand into sports and tourism, the Saudi government is facing a fiscal deficit. Some comments suggest that traders had previously predicted that global oil supply would be buffered later in the decade ending in 2030, and Saudi Arabia's decision would lead to a significant portion of this expected buffering disappearing, making it difficult for other countries to fill the gap left by Saudi Arabia. When domestic production is far below the maximum capacity level and demand growth may slow down due to the transition to green energy, maintaining new capacity constraints is costly. Biraj Borkhataria, an analyst at Royal Bank of Canada Capital Markets, believes that there may be a lot of speculation in the market about the potential impact of Saudi Arabia's move on global oil demand in the medium to long term. This also marks a change in the attitude of Saudi Arabia, one of the world's largest oil producers, at the government level. Borkhataria predicts that Saudi Aramco's updated capital expenditure budget for the next few years will decrease by approximately $5 billion annually compared to previous guidelines. Some comments suggest that despite long-term large-scale production cuts implemented by OPEC+countries such as Saudi Arabia, international crude oil prices still stubbornly fluctuate in a range. This may be the reason why the Saudi government has issued a directive to withdraw production expansion, or of course, it may also be due to changes in the long-term prospects of oil demand from the Saudi government.

BlackRock: In anticipation of a soft landing in the United States, it upgraded the rating of US stocks to overweight.

Compared with the cautious attitude in the middle of this month, the asset management giant BlackRock began to show optimistic expectations for the US economy and the trend of US stocks. On Monday, January 29th, BlackRock said that it upgraded the rating of US stocks from "neutral" to "overweight" because it expected that the US economy would usher in a "soft landing". BlackRock also said that if inflation and interest rates fall in the next few months, the upward trend of the stock market driven by artificial intelligence will spread to other fields besides technology stocks. The renewed cooling of US inflation data also supports BlackRock's view. On Friday, January 26th, the core PCE price index of the Fed's favorite inflation indicator in December increased by 2.9% year-on-year, the lowest since March 2021. Investors generally expect that the Fed may cut interest rates this spring, given that inflation is falling faster than expected. However, there are still some Fed officials who say that they are worried that they may need to raise interest rates again after cutting interest rates to cope with the rebound in inflation. In the previous rating on January 16, BlackRock held a neutral view on US stocks, preferring artificial intelligence concept stocks, and its strategists thought that US stocks were "overvalued". At that time, BlackRock also warned that the market underestimated the repeatability of inflation, and the "roller coaster-like" rebound of inflation might disrupt investors' beautiful dreams of a "soft landing" of the US economy. Risk warning and exemption clause The market is risky and investment needs to be cautious. This paper does not constitute personal investment advice, nor does it take into account the special investment objectives, financial situation or needs of individual users. Users should consider whether any opinions, viewpoints or conclusions in this article are in line with their specific situation. Invest accordingly at your own risk.


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