The Zhitong Finance App learned that CICC released a research report predicting that the domestic demand growth rate may improve slightly in September, and the export growth rate will remain high. Among them, on the consumer side, consumption of durable goods is still under pressure, while offline consumption activity is picking up. In terms of investment, driven by manufacturing and infrastructure, there was a cumulative year-on-year decline or marginal narrowing. Exports benefited from the boom driven by AI and maintained rapid growth. Inflation may rise further in September. Among them, the PPI growth rate may rise to around 4.5%, exceeding the high growth rate during the year in June. The bank expects GDP growth in the third quarter to be 4.5% year on year (previous value 4.3%).
CICC's main views are as follows:
There may be a slight increase in the growth rate of the total amount of social zero. Sales of automobiles and home appliances show that the growth rate of durable goods consumption may be under pressure in September. Passenger Transport Federation predicts that retail sales of passenger cars in the narrow sense of the word in September were -24.7% year-on-year, up from the -23.6% drop in August; according to Aowei data, the decline in retail sales of major electronics in September also increased. However, offline consumption activity may have improved in September. For example, the year-on-year decline in revenue per saleable hotel room (4WMA) was narrower than in August, and the year-on-year increase in traffic in urban business districts increased. Considering the gradual decline in the zero growth rate of society during the same period last year, it is expected that the total growth rate of the zero social network growth rate may rise slightly to 0.5% in September (0.4% in August).
Investment in fixed assets declined or narrowed slightly. The bank expects fixed asset investment growth to be -7.0% in January-September (-7.2% in January-August). Export momentum continues, and new types of financial policy finance and ultra-long-term special treasury bonds are supported or implemented at an accelerated pace. The bank expects cumulative manufacturing investment in January-September to be -2.0% year-on-year (-2.3% in January-August). The Development and Reform Commission is speeding up project supervision, and the year-on-year decline in infrastructure may have narrowed. In September, the issuance of special bonds accelerated in August, and new government financial instruments began to be launched. At the same time, the construction industry PMI index rebounded to 50.3% from 46.9% in August. The bank expects infrastructure investment to continue to improve in September, and infrastructure investment in the previous 9 months may narrow to around -3.8% year on year or from -4.0% in the previous August.
Real estate sales weakened year-on-year or marginally, and development investment is expected to continue to be under pressure. In terms of sales, with the optimization of demand-side policies in some cities in the early stages, the transaction area of new homes in the city stopped falling and rebounded on September 30, but the restoration was still limited. The year-on-year decline increased to 10.8% from 6.3% last month. In terms of land, against the backdrop of an extension of the capital occupation cycle for some projects after the 8.28 New Deal, housing enterprises still have financial restrictions and are more cautious in acquiring land. In September, the planned construction area for residential land transactions in 300 cities decreased to 34.6% year on year, and the transaction amount also fell to 19.7% year on year. In terms of investment, as the land market cools down, combined housing companies' sales repayments are weak, and new construction starts continue to be weak, the bank expects that the cumulative real estate development investment in September may drop further to around -21.4% year on year (-19.9% in August).
The year-on-year growth rate of exports was or basically the same in August. In terms of demand, the overall manufacturing boom in overseas economies is high. The US S&P manufacturing PMI rose 3.1 percentage points month-on-month to 57.0% in September. In particular, emerging industries such as AI continued to maintain a high level of prosperity, supporting China's exports to maintain a high growth rate. In September, the PMI new export orders for the Chinese procurement manufacturing industry fell 0.1 percentage points month-on-month to 50.0%. Judging from other high-frequency data, South Korea's average daily exports in the first 20 working days of September were +89.7% YoY (+72.6% in August), and the average daily semiconductor exports and imports were +282% and +101% YoY (+216% and +75% in August), and the growth rate accelerated. Instead of the base increase in the same period last year, or a slight drag on the year-on-year export growth rate, the bank expects China's exports and imports to be 24.9% and 19.8% year-on-year in September (25.0% and 28.2% in August).
Driven by the end of the quarter effect, industrial value added may have increased at a year-on-year rate. High-frequency operating rate data for major industries showed mixed year-on-year growth rates. The PMI production segment rose 1.3 percentage points to 51.7% month-on-month in September. On the one hand, it may or partially reflect the centralized scheduling and delivery of some companies at the end of the quarter, and on the other hand, it may also be related to the easing of negative impacts on energy supply such as coal from month to month. The bank expects a 6.2% year-on-year growth rate of industrial value added in September (5.2% in August).
Taken together, the bank expects GDP growth of 4.5% year-on-year in the third quarter (4.3% in the second quarter).
CPI may have rebounded to around 1.0% year on year in September (0.8% in August). In terms of food, pork prices in 22 provinces and cities rebounded slightly from last month, when the supply of pork was still sufficient and consumption improved seasonally, and the year-on-year decline narrowed from 20.9% last month to 16.9%; as hot and rainy weather disturbances gradually subsided, the average vegetable price increase in September was or weaker than the same period last year, driving the year-on-year decline or expansion; the overall supply of fresh fruit was sufficient; prices continued to weaken month-on-month, and the year-on-year decline may also widen. On the energy side, due to the rise in international oil prices, domestic refined oil prices were raised twice on September 11 and 24. The bank expects fuel prices for vehicles to continue to rise month-on-month. Combined with the low oil prices in the same period last year, energy prices may have rebounded significantly year-on-year in September. In terms of core inflation, prices of services such as air tickets, travel, and hotel accommodations faced seasonal downward pressure after the summer season ended in September, but prices of industrial consumer goods such as consumer electronics still had some support. The bank expects the core CPI to remain stable overall year on year.
PPI may have further rebounded to around 4.5% year-on-year in September (3.8% in August). The PMI purchase price index for main raw materials and the ex-factory price index for September reached 60.8% and 54.0% respectively, up 4.2 and 3.6 percentage points from the previous month, corresponding to implied PPI of around 0.7% month-on-month (0.4% in August). On the energy side, the Middle East geopolitical conflict repeatedly boosted the risk premium on crude oil supply. In September, the average price of Brent crude oil rose to around 100 US dollars/barrel, driving the domestic price of petroleum products such as diesel to rise simultaneously. The sluggish recovery of domestic coal supply and port depots drove coal prices to strengthen. The bank expects energy chain-related prices to be the main factor in the month-on-month increase in PPI; on the non-ferrous side, copper prices mainly fluctuate at high levels, and PPI in non-ferrous industries may still be high year-on-year; on the black side, coking coal, coke, etc. Higher prices supported steel costs, but real estate and infrastructure Terminal demand recovery was relatively limited, and rebar prices fluctuated and weakened after rebounding at the beginning of the month; in terms of building materials, rising coal prices combined with marginal seasonal improvements in construction demand stabilized cement prices, and float glass prices also rebounded slightly due to demand for stock replenishment, etc.
Strong policies may lead to marginal stabilization of financial data for September.
The net issuance of government bonds in September was 1.59 trillion yuan, an increase of about 350 billion yuan over the previous year. Both the absolute amount of net issuance and the year-on-year increase reached new highs since this year, which will form an important support for social finance. Furthermore, since late September, the China Stock Bank's 3M rediscount interest rate has been rising steadily since the beginning of the month, closing at 0.7% on September 30, while in the last 10 days of March and June, the 3M rediscount interest rate of the China Stock Bank all fell by about 30 bp. This also made the third quarter the first quarter of this year to end with interest rates on notes. Combined with the launch of new policy financial instruments, the probability of credit investment expansion in September improved compared to August, and the year-on-year decline narrowed. Taken together, the bank expects to add about 1.2 trillion yuan in loans and 3.6 trillion yuan in social finance in September. The social finance stock may remain at 7.2% year on year, and M2 may remain flat at 7.5% year on year.
Market Watch
Global equity was divided this week. The US debt curve was steep, the dollar strengthened, and copper, gold, and oil declined. In terms of equity, China's manufacturing PMI rebounded 0.3 percentage points to 50.1% in September, returning to the expansion range, and the economy improved marginally. As of before the National Day, the Shanghai and Shenzhen 300 fell 1.8%, leading the way in real estate, pharmaceuticals and banking. Non-farm payrolls in the US added 29,000 new jobs in September, down from 133,000 after the August revision. The unemployment rate rose from 4.1% to 4.2%, and the employment margin cooled. The S&P 500 fell 0.3%, and Nasdaq rose 0.5%; the Hang Seng Index fell 2.2%, Nikkei 225 rose 2.9%, and Germany's DAX fell 0.7%. In terms of bonds, China's 1-year and 10-year treasury yields fell 1.3 bps, up 0.8 bps to 1.22%, and 1.68%, respectively; US 2-year and 10-year treasury yields rose 2 bps, 11 bps to 4.83% and 5.28%, respectively, and term spreads widened by 9 bps; Japanese and German 10-year treasury yields rose 2.1 bps, 3 bps to 3.09% and 3.66%, respectively. In terms of exchange rates, the US dollar index rose 1.0% to 101.93, the RMB appreciated 0.1% against the US dollar to 6.71, appreciated against the euro and depreciated against the yen. In terms of commodities, Luntong, Lunjin, and Brent crude oil fell 2.5%, 3.3%, and 1.7% respectively; inner glass and pigs fell 2.4% and 1.3%, respectively, and rebar rose 0.2%.
Recently, the Chinese and US stock markets have simultaneously diverged with long-term interest rates, reflecting differences in economic fundamentals between the two countries.
Since 2025, under the leadership of the AI sector, the Chinese and US stock markets have resonated upward, and the overall trend has remained consistent. However, the trend began to diverge in July. Compared with the end of June, the S&P 500 rose slightly by 3%, and the Shanghai and Shenzhen 300 fell 12% during the same period. Among them, the US Mag 7 index rose 13%, while the domestic AI index fell 24%. At the same time, long-term interest rate differentiation between China and the US has further intensified. Long-term interest rates in China and the US have gradually diverged since 2021, and widened further in the third quarter of this year. Since the end of June, 10y US Treasury yields have risen 85bps to 5.29%, and 10Y Treasury yields have declined 5.3 bps to 1.71%. The simultaneous differentiation between the Chinese and US stock markets and long-term interest rates reflects the misalignment of the fundamentals of the Chinese and US economies. AI-driven investment cycles and inflationary risks are driving up expectations for neutral interest rates and policy interest rates in the US, and support for profits has caused US stocks to rise at the same time as interest rates. However, in terms of domestic demand, Social Security Zero increased by only 0.4% year on year in August. Fixed asset investment fell 7.2% in the first 8 months. The recent supply recovery has not yet translated into a broad recovery in demand. Looking ahead, compared to China and the US experiencing similar stock market and long-term interest rate differentiation in 2023, this may indicate a recent domestic countercyclical adjustment policy or phased acceleration. Interest rates on eligible first home loans, PSL interest rate cuts, and reloan increases were introduced at the end of September. If bond funds and policy financial instruments accelerate the formation of physical workload in the future, it is expected to support domestic demand and the expected recovery of Chinese assets.
Weekly economic activity tracking
In the 5th week of September, overall food prices fell. The 200 wholesale price index for vegetable basket products fell 1.1% from week to week. Among them, fruit rose 1.5% from week to week, while pork and vegetable prices fell 0.1% and 4.0% from week to week, respectively. Commodity prices continued to fall. The South China Industrial Products Index fell 1.0% from week to week, +13.5% year on year. Among them, silver, coking coal, pigs, and pulp fell significantly from week to week.
Affected by the misalignment of the Mid-Autumn Festival holiday, the number of visitors to the city's business district increased by 16.3% year-on-year, and the growth rate changed from negative to positive. Consumption of durable goods weakened, with retail sales of 4 types of household appliances -17.6% year-on-year, and passenger car retail sales volume of 4WMA -29.3% year-on-year. Both declines increased. Real estate sales were generally weak. The commercial housing transaction area in the sample city was -18.9% year-on-week, and the second-hand housing transaction area in the sample city was -18.9% year-on-week. Both declines increased.
In terms of the physical workload of construction investment, cement shipments of 4WMA were -15.4%, and concrete shipments were -9.3% year-on-year, and the decline continued to narrow; direct supply of infrastructure cement was -4.8% year-on-year, and the decline increased slightly. Export activity continued to improve. Port container throughput of 4WMA increased 10.4% year on year, and the growth rate accelerated. In terms of production activities, railway freight volume 4WMA increased 2.2% year on year, and the growth rate accelerated.
Property market sentiment tracking
The CICC Real Estate Sentiment Index declined somewhat (94.0 vs. previous weekly value 94.6). Among them, the sales index (89.9vs previous weekly value 90.1) declined slightly, the supply index (97.1 vs. previous weekly value 97.1) remained flat, and the financing index (95.1 vs. 96.5 previous weekly value) declined.
In terms of demand, sales of new homes declined marginally year on year, while sales of second-hand housing increased year on year. In terms of new housing, from September 26 to October 2, the year-on-year decline in the sales area of newly built commercial residential homes in 30 cities widened (-24.6% vs. previous weekly value -6.3%). Among them, the first-tier year-on-year decline was slightly wider (-3.7% vs. previous weekly value -2.6%), second-tier (-30.2% vs. previous weekly value 1.4%) changed from positive to negative, and third-tier (-40.7% vs. previous weekly value -27.5%). In terms of second-hand housing, from September 26 to October 2, the year-on-year decline in second-hand housing sales area in the 15 sample cities widened (-18.7% vs. previous weekly value -3.8%).
In terms of supply, the volume of transactions in the land market remains sluggish. In terms of transactions, the year-on-year decline in the planned construction area of residential land in 300 cities increased from September 21 to September 27 (-60.2% vs. previous weekly value -56.9%). In terms of popularity, from September 21 to September 27, the average land premium rate in 300 cities rebounded (5.6% vs. previous weekly value 4.5%). Judging from the energy level of cities, the average land premium rate in first-tier cities was 5.9%, second-tier cities 4.3%, and third- and fourth-tier cities 6.9%. 170 land lots were launched this week (vs. 181 in the previous week), and the auction rate was basically the same (0.6% vs. 0.6% in the previous week).
In terms of financing, the net financing amount of domestic credit bonds in real estate changed from positive to negative. From September 28 to October 4, the net financing amount of domestic credit bonds of housing enterprises was -03 billion yuan (vs. previous weekly value of 8.21 billion yuan).