SHANGHAI, Nov. 7 (SMM) -
Xiangcai Securities believes Premier Li Keqiang's idea of economic development is to change economic development method, stabilizing the job market and pushing urbanization and bonus reform.
Chinese government increased investments on environmental protection and infrastructure construction, so as to relive the impact on the job market resulting from slower growth of real estate sector and manufacturing investment. Growth of investment in 3Q reached 25%.
Urbanization can help push investment. Growing investments on infrastructure construction will boost investment in manufacturing and relevant sectors.
Bonus reform will be mainly implemented in the income distribution, financial and taxation system, private investment, household registration system and land system.
On the credit side, new loan injection by China's four largest banks was only RMB 182 billion in October, down nearly RMB 40 billion YoY. Market players expected loans in October will be RMB 500-600 billion. Negative deposit growth and low loans in 4Q is believed the major factor leading to slow loan growth in October.
Banks are confronted with capital crunch in October. That is because they paid taxes in early 4Q, causing deposit balance to decrease. Besides, although forex receipts increased significantly, net withdrawal by China's central bank was RMB 157.5 billion in the first three weeks of October. In addition, the adjustment of finance products account entrance method also negatively affected deposit.
Zinc Prices Expected to Rebound
Zinc prices will likely see increases soon since zinc concentrate is expected to fall short in the future. As China's zinc demand grow with rising housing starts, zinc prices should advance.
With uncertainties of China's zinc concentrate supply growth and global demand for zinc concentrate, it is unsure whether global zinc concentrate will fall short in the following three years. SMM believes concentrate supply overseas will become tight, while supply growth will also slow, which will help ease oversupply and boost zinc prices.