China Holds Financial Support Briefing; US Bans on Chinese Tech in Cars Addressed

**Chinese A-Shares on September 23rd**

On September 23rd, the market experienced a rise and fall throughout the day, with the Shanghai Composite Index achieving four consecutive days of gains, while the ChiNext Index closed lower. By the end of the trading session, the Shanghai Composite Index rose by 0.44%, the Shenzhen Component Index increased by 0.10%, and the ChiNext Index fell by 0.40%. In terms of sector performance, Huawei-related concept stocks collectively strengthened, with more than 10 stocks including Changshan Beiming, Guohua Netcom, Faben Information, and Furi Electronics hitting the daily limit up. Intelligent driving concept stocks also surged during the trading session, with stocks such as Guangting Information, Siwei Tuxin, Suo Ling Shares, and Datang Telecom hitting the daily limit up. State-owned enterprise reform concept stocks remained active, with more than 20 stocks including Baobian Electric, Baota Industry, Datang Telecom, and Yili达 hitting the daily limit up. Bank stocks fluctuated and rebounded, with Huaxia Bank and Ningbo Bank both rising by more than 3%. On the downside, photovoltaic concept stocks entered an adjustment phase, with Deye Shares hitting the daily limit down. Overall, the number of rising and falling stocks was roughly equal. The total transaction volume of Shanghai and Shenzhen stock markets was 551 billion yuan, a reduction of 23.7 billion yuan compared to the previous trading day.

In terms of sectors, banks, Huawei concepts, connected vehicles, and CRO sectors led the gains, while wind power, photovoltaics, ophthalmology medical, and pork sectors led the declines.

**Overseas Markets Overnight**

On the 23rd, the three major stock indices in New York rose. By the close of the trading day, the Dow Jones Industrial Average increased by 61.29 points from the previous trading day, closing at 42,124.65 points, a rise of 0.15%; the S&P 500 Stock Index rose by 16.02 points, closing at 5,718.57 points, a gain of 0.28%; the Nasdaq Composite Index increased by 25.95 points, closing at 17,974.27 points, a rise of 0.14%.

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The main European stock indices closed higher on the 23rd. By the close of the trading day, the German DAX 30 Index rose by 0.6%, the UK FTSE 100 Index increased by 0.36%, the French CAC 40 Index rose by 0.1%, and the Euro Stoxx 50 Index increased by 0.3%.

International oil prices fell on the 23rd. By the close of the trading day, the US oil November contract fell by 0.38%, reporting $70.73 per barrel. The Brent oil December contract fell by 0.19%, reporting $73.55 per barrel.Breaking News

① The State Council Information Office will hold a press conference today to introduce the financial support for high-quality economic development

According to China.com, the State Council Information Office will hold a press conference at 9 a.m. on September 24, 2024. The Governor of the People's Bank of China, Pan Gongsheng, the Director of the State Financial Regulatory Administration, Li Yunze, and the Chairman of the China Securities Regulatory Commission, Wu Qing, will introduce the financial support for high-quality economic development and answer questions from journalists.

② The US Department of Commerce plans to propose a ban on the use of Chinese software and hardware in US smart connected vehicles, and the Ministry of Foreign Affairs responds

According to The Paper, a reporter asked, according to some media reports, the US Department of Commerce plans to propose a ban on the use of Chinese software and hardware in smart connected vehicles and vehicles with autonomous driving technology on the US mainland on the 23rd. The US side claims that this is for national security reasons. Has the Chinese side communicated with the US side on this matter? The spokesperson of the Ministry of Foreign Affairs, Lin Jian, said that for the specific issue you mentioned, it is recommended to ask the competent departments of the Chinese side. As a principle, I want to emphasize that the Chinese side opposes the US side's generalization of the concept of national security and discriminatory practices against Chinese enterprises and products. We urge the US side to respect market principles and provide Chinese enterprises with an open, fair, transparent, and non-discriminatory business environment. The Chinese side will resolutely safeguard its legitimate rights and interests.

③ 300 billion yuan of national debt funds to support the "two new" work have been fully allocated

According to CCTV News, the National Development and Reform Commission held a special press conference on September 23 to introduce the overall progress and effectiveness of the large-scale equipment renewal and consumer goods replacement policy. Zhao Chenxin, a member of the Party Group and Deputy Director of the National Development and Reform Commission, introduced that the national debt funds have been fully allocated. In terms of equipment renewal, the National Development and Reform Commission, together with relevant departments, optimized the support method and simplified the approval process according to the principle of "local review and national review", and selected more than 4,600 equipment renewal projects that meet the conditions. The 150 billion yuan of national debt funds in the field of equipment renewal have been allocated to the projects in two batches according to relevant regulations and procedures. In terms of consumer goods replacement, the National Development and Reform Commission, together with the Ministry of Finance, reasonably determined the scale of fund support by comprehensively considering factors such as the permanent population of each region, regional gross domestic product, and the ownership of vehicles and home appliances. The 150 billion yuan of national debt funds in the field of consumer goods replacement have been fully allocated to localities since the beginning of August.④ China's elderly care service system has been preliminarily established; institutions believe that the field of smart elderly care services will develop rapidly.

According to The Paper, on September 23, Minister of Civil Affairs Lu Zhiyuan introduced at a press conference held by the State Council Information Office that population aging is a realistic issue that must be faced in the modernization with Chinese characteristics. In recent years, civil affairs departments have focused on the elderly care service needs of the public and have preliminarily established China's elderly care service system. In terms of elderly care services, Lu Zhiyuan introduced that four aspects of work will be emphasized: first, to improve the elderly care service network; second, to optimize the service supply pattern; third, to promote the coordinated development of the elderly care cause and industry; fourth, to strengthen the comprehensive supervision of elderly care services.

Ping An Securities stated that smart elderly care services are rapidly developing through policy support and pilot demonstrations. This includes internet elderly care service platforms, big data, cloud computing, and Internet of Things technologies. In recent years, government departments have organized multiple batches of demonstration projects to promote the widespread and in-depth application of smart elderly care services. In the future, this field will continue to use technological innovation to improve service efficiency and quality to meet the elderly care needs of the elderly.

⑤ Who will be the next to take a stake in the company? Huawei responds for the first time in public: There is no clear plan, and we are in contact with all car companies.

According to the Economic Daily, who will be the next car company to take a stake in the company? Huawei's rotating chairman Xu Zhijun recently accepted a media interview and responded to the question about the company for the first time in public. Currently, including BAIC BluePark, JAC Motors, FAW, and Dongfeng, are all subjects of speculation. "At present, the company is still in the first stage, starting to operate in the form of an independent company, and has also introduced the first two car companies, including AITO and Seres, to invest. By the end of this year, we hope to complete the first step and load all assets and personnel into the company. When the second batch of car companies will come in, there is no clear plan. But we are in contact with all car companies." However, Xu Zhijun emphasized, "If car companies want to participate, they cannot just make financial investments without buying products and solutions. The company hopes to establish a solid strategic cooperative relationship with partners. This is the basis for sharing risks and sharing benefits, and it is also a prerequisite for building an open platform for electrification and intelligence."

⑥ Nanjing: Achieve full opening of road testing and demonstration applications by 2026; institutions believe that suppliers of vehicle-road-cloud equipment are expected to benefit first.

The official microblog of Nanjing stated that the municipal cloud control platform currently being built in Nanjing will not only help autonomous driving but also allow ordinary vehicles to share the convenience of "vehicle-road-cloud integration" through technological innovation. The person in charge of Nanjing City Transportation Group introduced that it is expected that by the end of 2024, the cloud control platform will take shape preliminarily and integrate existing perception data; by 2026, it will gradually connect the four core demonstration areas and other areas of the city to the platform, achieving full opening of road testing and demonstration applications. At that time, not only will autonomous driving vehicles at level L2 and above be able to enjoy the information dividend of "vehicle-road-cloud" integration, but ordinary cars will also be able to enjoy it.Haitong International believes that the current construction of the car-road-cloud infrastructure is an essential safeguard for the substantial road deployment of high-level autonomous driving vehicles in China. On the policy front: there is encouragement for pilot programs, a clear path, strong support, and high-level involvement; on the industry level: the technology has been fully validated, the industrial ecosystem is well-established, and the development of standards is continuously deepening; on the application level: applications under demonstration construction are becoming increasingly mature, with clear demonstration applications and a strong likelihood of practical application. Equipment suppliers are expected to benefit first, followed by software and cloud providers, operators, and other related segments. Focus should be on companies with ample technical reserves, extensive project experience, and relevant state-owned enterprises.

Institutional Insights

Zheshang Securities: China's waste incineration market has entered a mature phase, with listed companies experiencing a slowdown in project construction and a significant decrease in capital expenditures. As a result, the free cash flow of most companies is expected to turn positive in 2023. Moreover, the scale of ongoing and planned projects for each company continues to decrease year by year, which is expected to further reduce capital expenditures and improve free cash flow. As the domestic incineration market matures, going global is likely to become the next development direction for domestic leading companies. (1) ASEAN countries such as the Philippines, Vietnam, Indonesia, Thailand, and Malaysia still have relatively rudimentary waste disposal methods, which are increasingly at odds with the growing solid waste output in these regions; (2) These countries have a high population density, and the government is supportive of incineration projects, providing the necessary conditions for project implementation; (3) The combined investment space in these countries exceeds 70 billion yuan, with considerable project profitability, making them ideal destinations for going global. Going global may become the development direction for the incineration industry in the next phase, with leading companies expected to benefit.

Dongguan Securities: From January to June, the production of pig feed同比下降ed mainly due to the reduction in pig production capacity; the production of pet feed实现了较快增长 mainly thanks to the recovery of exports and the continuous expansion of the domestic market scale. Entering the third quarter, due to the ongoing reduction in pig production capacity, it is expected that the production of pig feed will同比下降; the production of pet feed is expected to maintain a good development momentum. The pressure of raw material costs has decreased somewhat. Since the beginning of this year, the prices of major feed raw materials such as corn and soybean meal have continued to fall, further reducing the cost pressure of feed raw materials. In the short term, attention should be paid to the marginal improvement in demand for feed products brought about by the recovery of the downstream breeding industry. In the medium to long term, the scale of China's feed industry is still expected to rise, and there is still a large room for improvement in the concentration of feed industry leaders.

Focus Announcements

Yonghui Supermarket: Shareholders plan to transfer 29.40% of the company's shares to the controlling company of Miniso, and the largest shareholder will change to Juncai International.

Haitong Securities: Continue to suspend trading to advance the share exchange and absorption merger of Guotai Junan.

Guotai Junan: The current reorganization still needs to go through the necessary internal decision-making procedures, and the stock will continue to be suspended.Yanzhou Energy: Plans to Merge and Acquire Highland Resources

Guangdong Rongtai, with three consecutive trading day limits: The company still has restricted intangible assets, investment real estate, and construction in progress with a total book balance of about 179 million yuan.

Baodian Electric, with ten trading day limits in 14 days: Currently not involved in matters such as company asset injection, business restructuring, and significant business cooperation.