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ICBC Financial Market Daily Review - November 8, 2018

International News
1. Democrats wrested control of the U.S. House of Representatives from Trump’s Republicans in midterm elections. The outcome gives the opposition party new powers to block Trump’s domestic agenda and step up inquiries into the suspected links between his presidential campaign and Russia. But on foreign policy, Trump’s power to set the agenda remains largely intact. While House Democrats could push for a tougher approach towards Saudi Arabia and Russia, they are unlikely to move the dial on his biggest agenda items: the trade conflict with China and hardline course with Iran. Several European diplomats and analysts said they expected Trump to keep the conflict with China alive, or even intensify it, as his domestic agenda stalls.
2. The U.S. Department of Commerce on Wednesday said it would impose final anti-dumping and anti-subsidy duties on Chinese common alloy aluminum sheet products of 96.3% to 176.2%. The decision marks the first time that final duties were issued in a trade remedy case initiated by the U.S. government since 1985. The final aluminum sheet duties, however, were reduced from those first imposed in April and July. The U.S. Department of Commerce said it had found that China and India unfairly subsidized and dumped large-diameter welded steel pipe in the United States. The department found the two countries had sold the pipe at less than fair value at rates ranging from 50.55% to 132.63%. It also found the two countries had subsidized the products at rates of 198.49% to 541.15%.
3. The U.S. Federal Reserve convened its policy meeting on Wednesday facing a shifting political landscape. But the recent economic data will hardly alter its plans for an interest rate hike in December and next year. The Fed is not expected to raise rates at the end of its two-day session on Thursday, a meeting that follows reoccurring volatility in stock prices, tightening credit markets, and spreading expectations for U.S. economic slow-down next year.
4. The European Union would have to see a breakthrough on Brexit within a week if its leaders are to endorse any deal with Britain in November, according to several official and diplomatic sources. An EU summit, tentatively scheduled for Nov. 17-18, is no longer on the cards due to a lack of the “decisive progress” towards a final deal on the Irish border, the sources told Reuters. Bloomberg reported on Wednesday that Prime Minister Theresa May invited Cabinet ministers to read the almost-complete draft of the Brexit agreement. However, it is unclear whether the negotiations have made sufficient progress so that agreements can be signed at the emergency summit of European leaders in November.
5. TASS reported that, one anonymous OPEC source said that Russia and Saudi Arabia had started bilateral discussions over possible curbs to oil output in 2019. TASS quoted the source as saying that Saudi Arabia suggested reducing production.
6. The Reserve Bank of New Zealand (RBNZ) on Thursday kept its official cash rate (OCR) on hold at a record-low 1.75% and said rates would stay at this level during 2019 and 2020. The New Zealand dollar initially spiked but then retreated to USD0.6775. “There are both upside and downside risks to our growth and inflation projections. As always, the timing and direction of any future OCR move remains data-dependent,” said governor Adrian Orr in a statement accompanying the rate decision.

Domestic News
7. Chinese Premier Li Keqiang said that China will carry out greater tax cuts and help small enterprises with difficulties in financing while broadening the channels for private enterprises to enter the infrastructure sector. He said that China does not seek competitive currency depreciation and has the ability to maintain the RMB exchange rate basically stable. He reiterated that China will not adopt strong stimulus measures to boost the economy.
8. Wang Tongsan, Member of the Chinese Academy of Social Sciences, said in an article on the People’s Daily that high attention should be paid to the new changes and problems in Chinese economical structure, efforts should made in comprehensively deepening reform and promoting development, and focus should be placed on SOE and income distribution system reform to reasonably allocate more macro incomes to consumption.
9. The Economic Daily commentary said that “completely wrong” arguments (such as “Private Sector Should Leave the Field”) fail to understand basic economic systems and recognize the status and role of the private sector in the socialist market economy. This leads to misjudgment and misinterpretation. This is mainly because of unclear awareness, conceptual rigidity, confusion of public opinions and deliberate act.
10. Xinhuanet reported that, the investigation of Lai Xiaomin, the former Party Committee Secretary and BoD Chairman of China Huarong Asset Management Co., Ltd. by National Supervisory Commission was ended. He was transferred to the procuratorate for examination and prosecution. The Supreme People’s Procuratorate designated No. 2 Branch of Tianjin Municipal People's Procuratorate to conduct examination and prosecution. Recently, No. 2 Branch of Tianjin Municipal People’s Procuratorate decided to arrest Lai Xiaomin in accordance with the law. The case is being further handled.