To The Moon

1. China’s regional banks could face a $300 billion capital shortfall from exposure to local government financing vehicles (LGFVs).

The #LGFVs are investment companies formed by local governments for the sole purpose of borrowing money in the form of bonds to finance infrastructure and real estate development projects. These LGFVs are said to hold a cumulative $9 trillion in debt and about $1.67 trillion of that is linked to regional banks, which may not have enough access to capital to withstand a sizable markdown. And without a firm recovery seen yet in China’s real estate market, the pressure becomes greater for local governments to carry on more debt to shore up the capital of these regional banks, lest they risk a bank run that could undermine the stability of the financial system. $iShares China Large-Cap ETF(FXI)$ $Global X China Financials ETF(CHIX)$ $KraneShares Bosera MSCI China A 50 Connect Index ETF(KBA)$ $iShares MSCI China ETF(MCHI)$

2. While the real estate market in China remains fragile, its biggest cities are starting to respond to measures meant to stimulate demand.

Average monthly new home prices in China fell 1.4% in September, which was better than the 2.8% fall registered in August. Prices fell in 45 out of 70 large and medium-sized cities, while prices of existing homes fell in 67 of those cities. But prices in Beijing and Shanghai climbed for both new and existing homes, rising less than 1% compared to the previous month. It’s not surprising given the pent-up demand for homes in top-tier cities, which were held back by purchase restrictions to limit speculation. This sector is arguably the most critical right now for Beijing to focus its efforts to straighten out and return to growth. $Country Garden Holdings Co., Ltd.(CTRYF)$ $COUNTRY GARDEN(02007)$ $China Resources Land Ltd.(CRBJF)$ $Global X MSCI China Real Estate ETF(CHIR)$

3. The US Commerce Department’s latest move to widen the scope of its tech export ban against China risks backfiring.

Companies like #Nvidia and #Intel will no longer be able to export chips meant to power artificial intelligence devices and technology to Chinese customers or their surrogates overseas. While it remains unclear whether China can find suitable alternatives for these chips in the short- to medium-term, preventing US tech firms from accessing the enormous Chinese market will risk hindering development and innovation. Losing a major customer without the prospect of finding a replacement (China is the world’s biggest importer of chips) will curtail returns at US firms and limit R&D spending. The economics of chip manufacturing, which needs to scale for profitability, changes dramatically when this happens. $NVIDIA Corp(NVDA)$ $Intel(INTC)$ $ASML Holding NV(ASML)$ $SENSETIME-W(00020)$

4. China’s leading EV battery maker posts weaker than expected earnings as the company flags slowing industry growth.

Contemporary Amperex Technology Co. Ltd. (#CATL) reported a 10% increase in 3rd quarter profits on the back of an 8.2% growth in revenue. However, analysts were expecting earnings growth of about 37%. As a supplier of #EV batteries to major carmakers like Tesla, Volkswagen, and Hyundai, CATL’s results show slowing growth in the industry that remains one of the few bright spots in the global economy. Moreover, the company’s market share fell to 39.4% in the quarter, the lowest in 17 months. But rival BYD, which produces the Blade Battery, has managed to maintain its market share at 27%. BYD recently gave a bullish profit outlook for the 3rd quarter on the back of strong EV sales and consumer electronics assembly business. $BYD Co., Ltd.(BYDDF)$ $BYD COMPANY(01211)$ $NIO Inc.(NIO)$ $NIO Inc.(NIO.SI)$ $NIO-SW(09866)$ $Li Auto(LI)$ $XPeng Inc.(XPEV)$ $XPENG-W(09868)$ $GEELY AUTO(00175)$ $Geely Automobile Holdings Ltd.(GELYY)$ $Tesla Motors(TSLA)$ $Volkswagen AG(VWAGY)$

5. Alibaba’s soon-to-be-listed logistics arm Cainiao Logistics expands its “just-in-time” delivery services to 18 cities in China.

This move is meant to support inventory management for multinational sellers ahead of the much-anticipated Singles’ Day shopping event that starts next week and ends on November 11. It’s the biggest online shopping event the world has ever seen and, while growth has waned over the past couple of years, is still expected to generate more than RMB 1 trillion in transactions this year. Another e-commerce player http://JD.com reports that the number of merchants participating in this year’s Singles’ Day festival is 50% more than a year ago. $Alibaba(BABA)$ $Alibaba(09988)$ $JD.com(JD)$ $JD-SW(09618)$ $Bilibili Inc.(BILI)$ $BILIBILI-W(09626)$ $Pinduoduo Inc.(PDD)$ $Tencent(00700)$ $Tencent Holding Ltd.(TCEHY)$ $MEITUAN-W(03690)$ $MEITUAN(MPNGY)$

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