Morning News

# Market Overview and Key News

Source: Wall Street CN

## Market Overview

Investors have doubts about the Federal Reserve's interest rate cut prospects, and the market failed to rebound from the sell-off triggered by Powell yesterday. In addition, Meta has sparked widespread concerns in the market about the input-output ratio of AI. All three major U.S. stock indexes fell across the board, with technology stocks leading the decline and the Nasdaq dropping nearly 1.6%.

Meta plummeted 11%, Alphabet rose 2.5%, and eBay slumped 15.88%. The Nasdaq China Golden Dragon Index fell nearly 1.9%. After the market closed on Thursday, Amazon soared 13% and Apple rose 3% following the release of their earnings reports, boosting Nasdaq futures to a 1.2% gain in early Asian trading on Friday.

Yields on major U.S. Treasury maturities extended yesterday's gains, with the 10-year Treasury yield rising 2.32 basis points. After the European Central Bank's (ECB) decision, the euro against the U.S. dollar once fell 0.78% from the daily high, while the U.S. dollar rose 0.4% to stand above the 99 mark. Digital currencies tumbled sharply: Bitcoin fell for the third consecutive session, breaking below the $110,000 mark with a daily drop of 3.5%; Ethereum once slid 6.9%.

Spot gold rose 2.38%, rebounding above $4,000. Crude oil fluctuated within a narrow range. New York copper futures fell more than 4% intraday.

During the Asian session, stocks fell across the board in the afternoon. The Shanghai Composite Index lost the 4,000-point mark, rare earth permanent magnet stocks rose, leading CPO (Coherent Pluggable Optics) stocks plummeted, the Hang Seng Tech Index dropped 0.7%, and national bonds rebounded.

## Key News

Xi Jinping held a meeting with U.S. President Trump in Busan. Ministry of Commerce: China-U.S. economic and trade teams reached consensus on three areas of outcomes.

Yellen stated that a candidate for Federal Reserve Chair may be selected before Christmas, and she does not like the wording of this interest rate cut.

The European Central Bank (ECB) kept interest rates unchanged for the third consecutive time, maintaining the deposit rate at 2%, as economic resilience resists trade headwinds; Lagarde said that core inflation indicators are consistent with the 2% target, and the inflation outlook is more uncertain than ever. The euro zone's Q3 GDP grew by 0.2% quarter-on-quarter, exceeding expectations, with France's growth rate hitting a near three-year high and Germany remaining stagnant.

The Bank of Japan maintained interest rates unchanged, with two members continuing to vote against the decision.

Strong services business drove Apple's revenue to a record high for the same period last quarter; however, its revenue in China unexpectedly declined, and iPhone sales were weak in the off-season, but double-digit growth is expected this quarter.

AWS achieved its fastest growth in three years, with capital expenditures exceeding expectations, driving Amazon's 14% gain after the market close.

Tesla's $1 trillion compensation package for Elon Musk was opposed by major shareholders.

Reports indicate that OpenAI is considering filing for an IPO as early as the second half of 2026 and going public in 2027, with a valuation of $1 trillion.

Following Jefferies, BlackRock also suffered a blow, being exposed as involved in a "shocking" fraud case by a lender.

Sales of Zepbound tripled after price cuts; Eli Lilly's Q3 results exceeded expectations, and it raised its full-year performance guidance.

Driven by high-end optical modules, the company's performance surged. InnoLight Technology's Q3 net profit reached 3.137 billion yuan, a year-on-year increase of 124.98%.

BYD's Q3 revenue was 195 billion yuan, with a net profit attributable to shareholders of 7.82 billion yuan.

Seres Group's Q3 revenue increased by 15.75% year-on-year, while net profit decreased by 1.74%.

North Huachuang's Q3 net profit was 1.92 billion yuan, a year-on-year increase of 14.60%, with sustained growth in the domestic market.

## Market Closing Quotes

### U.S. and European Stock Markets

- S&P 500: Fell 0.99% to close at 6,822.34 points.

- Dow Jones Industrial Average: Dropped 0.23% to close at 47,522.12 points.

- Nasdaq Composite Index: Declined 1.58% to close at 23,581.144 points.

- Europe's STOXX 600 Index: Closed down 0.10% at 574.83 points.

### A-Shares

- Shanghai Composite Index: Fell 0.73% to close at 3,986.90 points.

- Shenzhen Component Index: Dropped 1.16% to close at 13,532.13 points.

- ChiNext Index: Declined 1.84% to close at 3,263.02 points.

### Bond Market

- U.S. 10-year Treasury yield: Rose 1.35 basis points to 4.0892%.

- U.S. 2-year Treasury yield: Increased 1.02 basis points to 3.6082%.

### Commodities

- COMEX Gold Futures: Rose 0.73% to close at $4,030 per ounce.

- WTI Crude Oil Futures (December): Closed up 0.15% at $60.57 per barrel.

- Brent Crude Oil Futures (December): Closed up 0.12% at $65.00 per barrel.

# Details of Major News

## Global Heavyweights

Xi Jinping held a meeting with U.S. President Donald Trump in Busan. Xi Jinping pointed out that the economic and trade teams of the two countries have in-depth exchanges of views on important economic and trade issues and reached a consensus on resolving the problems. The teams of both sides should refine and finalize the follow-up work as soon as possible, safeguard and implement the consensus well, and deliver tangible results to give China, the United States and the world economy a "reassurance". The heads of state of the two countries agreed to maintain regular exchanges. Trump looks forward to visiting China early next year and invited President Xi Jinping to visit the United States.

Ministry of Commerce: China and the United States economic and trade teams reached consensus on three aspects of achievements.

The U.S. side will cancel the so-called "fentanyl tariff" of 10% imposed on Chinese goods (including those from the Hong Kong Special Administrative Region and the Macao Special Administrative Region), and the 24% reciprocal tariff imposed on Chinese goods (including those from the Hong Kong Special Administrative Region and the Macao Special Administrative Region) will continue to be suspended for one year. The Chinese side will correspondingly adjust the countermeasures against the above-mentioned tariffs of the U.S. side. Both sides agreed to continue extending some tariff exclusion measures.

Ministry of Commerce: The U.S. side will suspend the implementation of the 50% penetration rule for export controls announced on September 29 for one year. The Chinese side will suspend the implementation of relevant export control and other measures announced on October 9 for one year and will study and refine specific plans.

Ministry of Commerce: The U.S. side will suspend the implementation of its Section 301 investigation measures against China's maritime, logistics and shipbuilding industries for one year. After the U.S. side suspends the implementation of relevant measures, the Chinese side will also correspondingly suspend the implementation of countermeasures against the U.S. side for one year.

South Korea announced details of its investment in the United States: $200 billion in installments, with $150 billion invested in the shipbuilding industry. South Korea agreed to make $200 billion in cash payments in installments and set up a number of protective measures in the investment agreement to reduce the impact on its foreign exchange market. The annual cash payment cap of $20 billion is one of the key arrangements. The remaining $150 billion will be used for shipbuilding cooperation, including guarantees, investments by South Korean enterprises and ship financing.

U.S. Senate passes resolution to terminate Trump's comprehensive tariff policy. It is reported that these resolutions still need to be voted on by the House of Representatives next. However, House Republicans have repeatedly blocked legislative actions to override the tariffs before, and these resolutions are expected to have difficulty obtaining a vote in the House of Representatives.

Bessent: Fed chair candidate may be selected before Christmas, dislikes the wording of this interest rate cut. The second round of interviews for the Federal Reserve chair is about to start.

Michael Barr, Vice Chairman of the Federal Reserve responsible for bank supervision, announced that it will cut about 30% of the members of its bank supervision department. Barr announced plans to restructure the agency's supervision and examination departments, with the reduction mainly achieved through natural attrition, retirement and voluntary departure incentives. Barr expects the overall size of the Supervision and Regulation (S&R) department to be reduced to about 350 employees, a decrease of about 30% from the previously approved staffing of nearly 500, and this goal will be completed by the end of 2026.

ECB keeps policy unchanged for the third time, maintains deposit rate at 2%, economic resilience resists trade headwinds; Lagarde: Core inflation indicator in line with 2% target, inflation outlook more uncertain than ever.

The European Central Bank kept its key interest rate unchanged at 2% for the third consecutive time, believing that inflation has reached the target level and is not in a hurry to adjust policy for the time being. Although the economic growth of the euro zone is better than expected, showing certain resilience, geopolitical tensions and uncertainties over U.S. tariffs still pose risks. The market expects the European Central Bank to cut interest rates again in the first half of next year, the euro fell in the short term, and German government bonds continued to decline.

ECB President Christine Lagarde pointed out that the service sector and artificial intelligence are driving growth, but the manufacturing sector is dragged down by the trade situation. Future monetary policy will adhere to data-driven and will not preset the interest rate path. At the same time, the digital euro project has entered a new stage. The inflation outlook is still highly uncertain, and attention needs to be paid to wage, trade and geopolitical risks.

The euro zone's GDP grew by 0.2% quarter-on-quarter in the third quarter, exceeding expectations. France's growth rate hit a three-year high, while Germany continued to stagnate. France's GDP grew by 0.5% quarter-on-quarter in the third quarter, the fastest growth rate since 2023. Germany's GDP was flat quarter-on-quarter in the third quarter. Although it avoided a technical recession, it has been in a state of low growth, zero growth or economic contraction for 14 consecutive quarters.

Bank of Japan keeps interest rates unchanged, two members continue to vote against. The Bank of Japan kept interest rates unchanged for the sixth consecutive time, in line with market expectations. Two policy board members continued to vote in favor of raising interest rates to 0.75%. This is the first monetary policy meeting since the new Prime Minister Sanae Takaichi took office. The central bank raised its economic growth forecast for the current fiscal year to 0.7%, and core inflation remained unchanged at 2.7%. A survey shows that about 50% of observers expect an interest rate hike in December, but political uncertainty may lead to a delay.

Services drive Apple's revenue to a new high in the same period last quarter, with unexpected decline in China revenue. iPhone sales were weak in the off-season, but are expected to see double-digit growth this quarter. Service revenue has continued to hit a new quarterly high in the past three years, increasing by 15% year-on-year in the third quarter; iPhone sales increased by more than 6% in the third quarter, a growth rate that slowed by more than half from the previous quarter. Sales in the Greater China region fell by 3.6%, while analysts expected an increase of more than 9%. The $1.1 billion cost from tariffs was in line with the company's expectations, nearly 40% higher than the previous quarter. CEO Tim Cook said that the fourth quarter will be Apple's best performance quarter, with revenue expected to increase by 10%-12%, the Greater China region will resume growth, and the response to the iPhone 17 has exceeded expectations. The revenue guidance set a new high for growth rate in at least four years. The CFO said that iPhone sales will also increase by 10%-12% in the fourth quarter. Apple's stock fluctuated after hours, first falling and then rising, with an increase of more than 5% at one point.

AWS achieves fastest growth in three years, capital expenditure exceeds expectations, Amazon's stock rises 14% after hours. Amazon announced third-quarter results that exceeded market expectations. Benefiting from AWS's accelerated growth to 20%, the largest increase in three years, the stock price soared by 14% after hours at one point. The company is fully stepping up AI infrastructure construction. It is expected that the capital expenditure in 2025 will be about $125 billion, higher than the analysts' forecast of $118.76 billion, and the capital expenditure in 2026 will further increase. The company also said that it has strengthened cooperation with Anthropic through the $11 billion "Project Rainier", and the self-developed AI chips are in short supply.

Tesla's $1 trillion compensation package for Musk opposed by major shareholders. California Public Employees' Retirement System (CalPERS), the largest public pension plan in the United States, is planning to vote against Musk's $1 trillion compensation agreement with Tesla, which hinders Tesla's attempt to grant Musk one of the most generous compensation packages in U.S. corporate history. Musk has been promoting this compensation plan, hoping to get approval at the company's annual general meeting to be held in Austin on November 6.

Tech giants' capital expenditure surges this year: Google aims for $93 billion, Meta raises to $72 billion, Microsoft spends $34.9 billion in a single quarter. The surge in capital expenditure has become a common thread running through all financial reports. Both Google and Meta raised their 2025 capital expenditure guidance and announced that the investment will further "significantly" increase in 2026. Google raised its 2025 capital expenditure guidance to $91 billion-$93 billion, Meta raised it to $70 billion-$72 billion, and Microsoft's capital expenditure in the just-concluded fiscal quarter reached a record $34.9 billion, far exceeding the market expectation of $30 billion.

Is the timetable for the "climax" of AI coming? Reports say OpenAI is considering filing for IPO as early as the second half of 2026 and listing in 2027 with a valuation of $1 trillion. According to Reuters citing people familiar with the matter, although OpenAI's listing plan is still in the early stage and may be adjusted according to business growth and market conditions, the preliminary planned financing scale is at least $60 billion.

AI bubble "weather vane": Market closely watches Oracle's bonds - the "weakest link" of AI leverage. The cost of Oracle's five-year CDS has risen to near the highest level since October 2023. Market attention is shifting to the large amount of debt needed to maintain the AI bubble. It is crucial to closely monitor the trend of Oracle's CDS - the performance of corporate bonds may become a key indicator of whether the entire AI investment boom can continue.

OpenAI and Oracle announce plans to build StarGate data center park in Michigan, expected to start construction in early 2026. OpenAI, Oracle and project developer Related Digital plan to build a super-large data center park with a power generation capacity of over 1 gigawatt in Saline, Michigan, USA. This project is part of the cooperation plan previously announced by OpenAI and Oracle, aiming to add 4.5 gigawatts of "StarGate" computing capacity, and is expected to start construction in early 2026.

After Jefferies, BlackRock also suffers, exposed to be involved in a "shocking" fraud case of lenders. Following the explosion of Jefferies' financing client First Brands, BlackRock also exposed the "black box" of private credit. Lenders such as HPS acquired by BlackRock this year sued Brahmbhatt, the owner of telecom service companies Broadband Telecom and Bridgevoice, claiming that their bankrupt companies owe more than $500 million. The investigation found that every customer email provided by the company in the past two years to verify invoices was forged, and its fake customer contracts can be traced back to 2018.

$30 billion evaporated in one day! How did the rare "bloodbath" in the history of U.S. fintech happen? Fiserv's stock plummeted 44% in one day, the largest drop since its listing nearly 40 years ago. On the surface, this collapse was caused by the new CEOs withdrawing the previous performance guidance, but in essence, it exposed management failures: incorrect pricing strategies, overcommitting to growth, and a corporate culture that is slow to respond to customer needs. The warning to investors is: even the most entrenched companies in the digital economy may collapse due to management mistakes.

Zepbound's sales triple after price cut, Eli Lilly's Q3 results exceed expectations and raises full-year performance guidance. Eli Lilly's third-quarter earnings per share were $7.02, and revenue reached $17.6 billion, both exceeding analysts' expectations. It raised its 2025 fiscal year revenue forecast to $63 billion-$63.5 billion. Weight loss drug sales were strong in the third quarter, with Mounjaro's revenue increasing by 109% year-on-year and Zepbound's revenue surging by 184%.

High-end optical modules drive performance explosion, Zhongji Innolight's Q3 net profit reaches 3.137 billion yuan, a year-on-year increase of 124.98%. Benefiting from the growth of computing power infrastructure construction and related capital expenditure, which has led to an increase in sales of high-end optical modules such as 800G, Zhongji Innolight's third quarterly report shows that both revenue and profit have increased. The net profit in Q3 was 3.137 billion yuan, a year-on-year increase of 124.98%. It is worth noting that the financial report shows that the construction in progress soared by 1766%, and the company explained it as "the increase in investment in equipment to be installed and plant infrastructure".

BYD's third-quarter revenue reaches 195 billion yuan, net profit attributable to parent company is 7.82 billion yuan. BYD's third-quarter revenue was 195 billion yuan, a year-on-year decrease of 3.05%; the net profit attributable to the parent company was 7.82 billion yuan, a year-on-year decrease of 32.6%. The construction in progress was 48.8 billion yuan, a sharp increase of 144.51% from the beginning of the year, indicating large-scale capacity expansion.

Seres' Q3 revenue increases by 15.75% year-on-year, net profit decreases by 1.74%. Seres' Q3 revenue increased by 15.75% year-on-year, but the net profit fell slightly. Since the beginning of the year, Seres' profitability has continued to strengthen, and the net profit has achieved a steady growth of more than 30%. The financial report attributed this to "adhering to the technical route of software-defined vehicles, firmly taking the market orientation of user-defined vehicles, and enriching the product layout", which has led to an increase in gross profit margin.

North Huachuang's Q3 net profit reaches 1.92 billion yuan, a year-on-year increase of 14.60%, domestic market continues to grow. Against the backdrop of the continuous growth of the domestic integrated circuit equipment market, North Huachuang has achieved double-digit high growth in both revenue and profit in Q3 and the first three quarters. The operating income in the first three quarters was 27.301 billion yuan, a year-on-year increase of 32.97%; the net profit was 5.13 billion yuan, a year-on-year increase of 14.83%. At the same time, the company increased R&D investment. North Huachuang's R&D expenses in the first three quarters reached 3.29 billion yuan, a year-on-year increase of 48%.

## Domestic Companies

ICBC, the "Universal Bank", releases third quarterly report, achieving double growth in revenue with 53 trillion yuan in assets.

China Construction Bank's third quarterly report shows that the net profit attributable to the parent company is 257.360 billion yuan, a year-on-year increase of 0.62%.

Agricultural Bank of China, the large state-owned bank with the highest annual increase, releases third quarterly report, with net profit exceeding 220 billion yuan and sequential growth acceleration. Net fee and commission income increased by 13.34%.

Bank of Communications' third quarterly report shows double growth in revenue and net profit, with continuous improvement in asset scale and provisions.

Shanghai Pudong Development Bank releases third quarterly report, with net profit of 38.8 billion yuan, achieving double-digit growth year-on-year again.

Shanghai Rural Commercial Bank, the "largest" rural commercial bank, releases third quarterly report, focusing on "refinement" in retail business and "larger-scale" customers. Net profit increased by 0.78% year-on-year, while revenue decreased by 3.18% year-on-year.

China Life's first three quarters investment "account book" exposed, with investable assets of 73 trillion yuan and recorded income of 368.6 billion yuan.

China Pacific Insurance's first three quarters net profit surges by 19.3%, significant results in life insurance transformation, and total investment return rate improves.

Amidst record high stock prices, New China Life Insurance's first three quarters net profit increases by nearly 60% year-on-year.

PICC's third quarterly report "bursts out", with investment income exceeding 80 billion yuan, total investment return rate of 5.4%, and total investment assets of 183 million yuan.

China Securities Co., Ltd.'s net profit increases by 80%, investment income doubles, and investment banking business data improves.

GF Securities' Q3 revenue increases by 51.82% year-on-year, net profit surges by 86%, driven by investment and brokerage businesses.

Luxshare Precision's Q3 revenue increases by 31.03% year-on-year, net profit increases by 32.49%, AI and automotive businesses become new growth engines. Luxshare Precision achieved operating income of 96.411 billion yuan in Q3, a year-on-year increase of 31.03%; the net profit attributable to the parent company was 4.874 billion yuan, a year-on-year increase of 32.49%. The company said that the explosion of generative AI applications is driving the demand for hardware such as AI phones and AI servers, and the intelligent transformation of the automotive industry has also opened up space for the company's core component business.

Gree Electric's Q3 revenue decreases by 15% year-on-year, net profit drops by more than 6% year-on-year, and gross profit margin improves through effective cost reduction.

Sanhua Intelligent Controls' Q3 net profit increases by 43.81% year-on-year, revenue increases by 12.77%.

Longi Green Energy's Q3 revenue decreases by nearly 10% year-on-year, losses narrow by 30%, and BC module shipments exceed 14GW.

Conch Cement's Q3 revenue decreases by 11.42% year-on-year, net profit increases by 3.41%, and cost control achieves results.

Inspur Information's Q3 revenue and net profit both decline, accounts receivable surge by 147.62%.

SF Holding's Q3 revenue increases by 8.2% year-on-year, net profit attributable to parent company is 2.57 billion yuan, and total shipment volume reaches 4.31 billion pieces.

China Tourism Group Duty Free's third quarter net profit decreases by 28.9% year-on-year, proposing to distribute 2.50 yuan per 10 shares.

# Overseas Macro

The "AI Bubble" is trending! What were the peak signals of the 2000 "Dot-com Bubble" and what was the trend at the "top"? UBS warns that conditions for an AI bubble are maturing, but key peak signals have not yet appeared, and the market is still in the early stage. The peak signals of the Dot-com Bubble included: extreme valuation, peaking profit momentum, a sharp economic slowdown, and frequent mega-mergers and acquisitions. The trend at the top was not a one-way decline; instead, after a sharp drop, a rebound formed a "double top", and finally, it continued to decline under the pressure of economic recession.

The Federal Reserve has reasons for hawkish remarks, but it will turn dovish over time. This Federal Reserve interest rate meeting reversed the market's narrative logic, shifting from "strong economy + interest rate cut expectations" to "strong economy + interest rate rebound", leading to the strengthening of the US dollar and US Treasury yields, and putting pressure on gold. Although interest rates are currently maintained unchanged, considering the possible deterioration of the job market in the future and the temporary impact of tariffs, the Federal Reserve may still continue to cut interest rates in December to balance the dual risks of inflation and unemployment.

Goldman Sachs CEO Warns: If US Economic Growth Does Not Accelerate, Debt Will Face "Liquidation". David Solomon, CEO of Goldman Sachs Group, pointed out that fiscal stimulus and proactive fiscal policies have actually been deeply integrated into the operation of these democratic economies. Moreover, over the past five years, this situation has intensified significantly in the United States and other developed economies. However, the Wall Street leader also said that the possibility of an economic recession in the near future is "low".

A "Shot in the Arm" for the US Economy in 2026? Leading Indicators of the US Construction Industry Show: A "Data Center Construction Boom" is Coming. A construction wave led by data centers is brewing! The US Dodge Momentum Index shows that the index soared by 60% year-on-year in September, with institutional projects increasing by 75% and commercial projects by 53%. Since it takes more than 12 months for construction projects from planning to construction, this indicates that 2026 will usher in a construction peak, which coincides with the midterm elections and is expected to provide key support for the US economy and the Trump administration.

World Gold Council: Central Banks Accelerated Gold Purchases in Q3, Gold ETF Inflows Hit a Record High. Between July and September, central banks around the world purchased 220 tons of gold, an increase of 28% from the previous quarter. The National Bank of Kazakhstan became the largest single buyer, while Brazil's central bank purchased gold for the first time in more than four years. During the same period, gold ETF inflows hit a record high, with global inflows reaching 260 billion US dollars. The World Gold Council expects that geopolitical tensions, inflationary pressures, and uncertainties in global trade policies will continue to support gold demand for the rest of the year.

Dalio: Gold is the Safest Currency. Ray Dalio, founder of Bridgewater Associates, pointed out in a recent article that historically, gold has performed well especially in two types of situations: one is high tax rates and asset expropriation caused by financial or debt crises; the other is economic and financial war conditions (such as sanctions or asset freezes). In such stages, gold surges, which is not exactly "appreciation" but maintaining its value, while other currencies decline. He believes that gold is undoubtedly a "currency" and the form of currency that is least likely to be devalued or confiscated.

# Overseas Companies

NVIDIA's "10-Bagger Journey": 3 years ago, when ChatGPT was first launched, its market value was 400 billion US dollars; today, it is the first "5-trillion-dollar company"! NVIDIA's market value has reached 5.03 trillion US dollars, a figure that not only surpasses the sum of the market values of its competitors AMD, Arm, ASML, Broadcom, Intel, Lam Research, Qualcomm, and TSMC but also exceeds the size of entire industries such as utilities, industrials, and consumer staples in the S&P 500 Index, and even surpasses the sum of the market values of major stock indexes in Germany, France, and Italy.

Guo Mingji of TF Securities: NVIDIA's AI Server Power Supply Planning Roadmap. Guo Mingji said that NVIDIA's next-generation AI server power supply strategy "Kyber" is advancing on two fronts, and the reference design of the project incorporates the power supply and infrastructure of the entire data center into the plan. This move means that starting from the Kyber era, the importance of power supply architecture within NVIDIA has been elevated to a strategic position equal to that of semiconductors. NVIDIA has extended its technological moat from chip computing power to the power architecture of the entire data center, aiming to define the standards for future AI factories.

Google's Dramatic Reversal: From AI "Victim" to AI "Pioneer". Google's Q3 financial report showed strong performance, with advertising business growing beyond expectations. YouTube and search advertising revenues both achieved a 15% growth rate, and the backlog of cloud business orders increased by 43% year-on-year to 155 billion US dollars. Empowered by AI, the company drove performance through the increase in Shorts ad load rate and the growth in Gemini ecosystem activity. Meanwhile, the management's prudent expectations for 2026 capital expenditures highlight the advantages of its full-stack AI strategy.

What Does SK Hynix's "Sell-Out" Mean? Morgan Stanley: Approaching the 2017-2018 "Memory Super Cycle", Raising DRAM Price Expectations. The "sell-out" of SK Hynix's HBM (High Bandwidth Memory) is regarded as a signal that the AI-driven memory market has entered a new "super cycle". Morgan Stanley raised its DRAM price expectation to +30% year-on-year and expects the supply shortage to last until 2026. Analysts believe that this trend is repeating the 2017-2018 memory boom cycle, and SK Hynix will have HBM dominance and pricing power.

Porsche's Electric Strategy "Fails" + Tariff Impact, Volkswagen Unexpectedly Loses 1.3 Billion Euros in Q3. Volkswagen warned that achieving this year's financial goals requires sufficient semiconductor supply, suggesting that the chip shortage may exacerbate its predicament.

Merck's Q3 Revenue Exceeds Expectations, New Pneumonia Vaccine Capvaxive Sells Strongly. Merck's Q3 sales reached 17.28 billion US dollars, exceeding market expectations. The adjusted earnings per share reached 2.58 US dollars, significantly higher than Wall Street's expectations and the 1.57 US dollars in the same period last year. The company's pneumonia vaccine Capvaxive performed strongly, and it coped with the expiration of Keytruda's patent by cutting costs.

# Industries/Concepts

1. Duty-Free | Five ministries and commissions including the Ministry of Finance and the Ministry of Commerce issued a notice, clarifying that the duty-free shop policy will be improved starting from November 1, 2025. The notice specifies optimizing the management of domestic goods tax refund (exemption) policies, actively supporting port departure duty-free shops and downtown duty-free shops to sell domestic products, encouraging duty-free shops to introduce more high-quality characteristic products that can reflect the excellent traditional Chinese culture, and increasing the sales of domestic products in duty-free shops. At the same time, it will further expand the business categories of duty-free shops, include more portable consumer goods into the business scope, add hot-selling products such as mobile phones, micro-drones, sports goods, health food, over-the-counter drugs, and pet food, so as to enrich tourists' shopping choices. The notice also clarifies improving the facilitation and supervision measures of duty-free shops, supporting port departure duty-free shops, port arrival duty-free shops, and downtown duty-free shops to provide online booking services, allowing tourists to book at downtown duty-free shops and pick up goods at port arrival duty-free shops, so as to continuously improve tourists' duty-free shopping experience.

Comment: The improvement of the duty-free shop policy by five ministries and commissions including the Ministry of Finance and the Ministry of Commerce focuses on expanding the sales of domestic products, enriching commodity categories, optimizing approval and facilitation measures. It is an important measure to promote domestic consumption, cultivate brands, enrich tourists' shopping experience, and optimize the layout of the duty-free industry. After the adjustment, the duty-free shop policy encourages the centralized display of domestic products and "products with characteristics of excellent traditional Chinese culture" in duty-free channels, which is expected to drive the upgrading of related industrial chains and brand internationalization, and have a long-term positive promoting effect on the international development of Chinese local brands. The expansion of commodity categories and the development of new consumption scenarios will further cultivate tourists' shopping habits in the pre-departure link, helping to form consumption reflow and new consumption growth points.

2. Rare Earths | On October 30, China and the United States reached consensus on economic and trade consultations, the sentiment in the rare earth market improved significantly, and the prices of major varieties jumped sharply. According to Baichuan Yingfu, on October 30, the average price of praseodymium-neodymium oxide rose to 540,000 yuan/ton, an increase of 4.35% from the previous day; the price of praseodymium-neodymium metal rose to 655,000 yuan/ton, with a daily increase of 3.97%; the current mainstream tax-included average price of neodymium-iron-boron N35 is 132.5 yuan/kg, an increase of 3.92% from the previous day. In addition, the prices of praseodymium-neodymium-dysprosium-terbium and magnetic materials have also been adjusted upwards, low-priced spot supply has tightened, and the market sentiment is good.

Comment: With the continuous positive signals from China-US talks, the market expects that overseas demand for rare earth purchases from China will gradually recover in the future, and praseodymium-neodymium holders have a significantly stronger willingness to support prices. At the same time, rare earth purchases have picked up recently, and the enhanced expectation of inventory replenishment is expected to support prices. According to SMM, after entering October, downstream procurement demand is weak, and inquiries remain sluggish, with only a small amount of rigid demand for inventory replenishment, which is also the core reason for the sharp drop in praseodymium-neodymium prices. With the recovery of overseas demand, rare earth prices are expected to continue to recover. In the context of strengthened control over rare earth supply in the future, the release rate of overseas supply may be slowed down, while the willingness to replenish inventory will be further enhanced, and the central level of rare earth prices may continue to rise.

3. Gene Editing | According to China Securities Journal, a cross-disciplinary research team from Inner Mongolia University and Tongji University has recently successfully bred the world's first cattle and sheep produced from haploid stem cells and constructed a new haploid breeding strategy for ruminants. This technology shortens the traditional breeding cycle by 95% and is expected to comprehensively promote the leapfrog upgrading of the animal breeding industry.

Comment: The report points out that gene editing technology is like a "molecular scissors", showing great potential in curing diseases, solving food crises, and protecting the ecological environment. The breeding technology of ruminants such as cattle and sheep is the key to ensuring global meat and milk supply and improving the efficiency of the animal husbandry industry. However, traditional biological breeding technology has complex processes, long time-consuming, and extremely low survival rate of cloned embryos, which seriously restricts the efficiency of new variety breeding and becomes a key bottleneck in the upgrading of the animal husbandry industry. In the future, this technology system can also be used for targeted editing of disease resistance, milk production and other genes, and is expected to breed comprehensive excellent varieties with "high yield, high quality, and high disease resistance", laying a technical and material foundation for ensuring national meat and milk supply.

4. Autonomous Driving | According to IT Home, Tao Lin, Global Vice President of Tesla, recently said that Tesla's Cybercab autonomous taxi will debut at the 8th China International Import Expo opening on November 5, which is also the Asia-Pacific premiere of Cybercab. Tesla Cybercab was launched in October 2024, and it is the brand's first model fully designed for autonomous driving. According to previous plans, the car will be put into production in 2026. Tesla CEO Elon Musk said that the vehicle cost of Cybercab is expected to be less than 30,000 US dollars (213,000 yuan).

Comment: China Securities Journal said that 2020-2030 is the "golden decade" for the development of autonomous driving, and global autonomous driving technology is expected to develop rapidly driven by policies. Relevant data show that by 2030, 50% of cars in China will achieve unmanned driving, and the number of global level 4/5 autonomous driving cars will reach about 80 million. Institutions expect that autonomous taxis will achieve large-scale commercialization in 2026. By 2030, the cost of domestic autonomous taxis will be lower than the cost of manned ride-hailing services, and the market size will reach nearly 500 billion yuan.

5. Semiconductors | On October 30, the China Securities Regulatory Commission issued an announcement saying that it agreed to the registration of the initial public offering of shares of Muxi Thread Intelligent Technology (Beijing) Co., Ltd. (referred to as "Muxi Thread"). The company plans to raise 8 billion yuan to sprint for an IPO on the Science and Technology Innovation Board. Muxi Thread has launched four generations of GPU architectures and has a 10,000-card cluster intelligent computing center solution. At the chip level, based on the independently developed MUSA architecture, the company released four generations of GPU architectures namely Su Di, Chun Xiao, Qu Yuan, and Ping Hu from 2021 to 2024. Its product line covers government and enterprise-level intelligent computing, data centers, and consumer terminal markets, and can meet the differentiated needs of governments, enterprises, individual consumers, etc. in different markets.

Comment: Research institutions believe that the company adheres to the advanced manufacturing process and localized technology path, and at the same time, advanced design feeds back the progress of core technologies in the upstream domestic supply chain. Currently, domestic advanced manufacturing process technology is continuously iterated, AI chips are expected to gradually shift to domestic wafer foundry, and packaging and testing have also ushered in full localization. Core assets in the industry that take the lead in deploying advanced manufacturing processes are expected to usher in broad localization space in the AI era.

# Today's News Preview

- China's official manufacturing, non-manufacturing, and composite PMI for October.

- Tokyo CPI for October in Japan.

- Eurozone CPI for October.

- The APEC Economic Leaders' Informal Meeting will be held in South Korea from October 31 to November 1.

- Speeches by Logan, President of the Dallas Fed; Bostic, President of the Atlanta Fed; and Harker, President of the Cleveland Fed.

- Earnings reports from ExxonMobil and Chevron.

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