CMSC: Financial Street Holdings Forum Annual Meeting Convened; U.S. Intensifies Mediation Efforts Between Russia and Ukraine

CMSC released a research report stating that on the domestic policy front, it recommends focusing on the Financial Street Holdings Forum Annual Meeting, changes in export tax rebate policy, intensified coal supply guarantee policy, and the State Council Executive Meeting's focus on AI+, among other aspects. On the overseas policy front, the United States has recently intensified mediation efforts in the Russia-Ukraine conflict, aiming to stabilize international energy prices. CMSC's main views are as follows: Domestic Policy Topic 1: Financial Street Holdings Forum Annual Meeting convened. On October 19, the Financial Street Holdings Forum Annual Meeting was held, with several key points. On monetary policy, it recommends focusing on two aspects. First, the interest rate regulation framework reform is further deepened, with the policy rate switching from 7-day to overnight. The bank believes that the policy rate anchor shift is expected to produce a certain rate-cut-like effect. From current interest rate levels, the 7-day OMO rate is 1.40%, and DR001 on October 19 was 1.26%, a difference of about 14BP. However, under the requirement of choosing the right timing, implementation still takes time. In addition, considering that the recent DR001 trading range has moved down from the previous 1.35%-1.45% to 1.25%-1.35%, this means that part of the anchor shift expectations has already been reflected in market pricing in advance. Second, the liquidity support mechanism for non-bank institutions is further clarified. The bank believes this arrangement is mainly targeted at the bond market. It is expected that this support tool may be similar to SFISF in specific operational mechanisms, with focus on the scope of eligible collateral and discount rate arrangements. On capital market policy, it recommends focusing on two aspects: the regulatory authorities' assessment of risks and the Beijing Stock Exchange reform. According to Chairman Wu Qing's remarks, the market is currently facing multiple challenges from unexpected external risks, specifically including geopolitical conflicts, tight overseas monetary policy, AI-derived risks, and global market contagion risks. Regarding the Beijing Stock Exchange, reform is expected to further accelerate, with focus on three directions: expanding the supply of investment tools, optimizing the issuance mechanism, and improving the quality of listed companies. Domestic Policy Topic 2: Export tax rebate policy faces another adjustment. On October 12, the Ministry of Finance and the State Taxation Administration issued the "Announcement on Adjusting Export Tax Rebate Policies for Certain Products," clarifying that starting from April 1, 2027, the VAT export tax rebate rate for new energy vehicles will be reduced from 13% to 9%, while VAT export tax rebates for products such as electronic cigarette devices will be canceled. The bank reviewed changes in export tax rebate policy adjustments since 2024 and found that, by industry, export tax rebate policy adjustments are mainly concentrated in the "new three" products, building materials, chemicals, non-ferrous metals, non-metallic minerals, petroleum and petrochemicals, and electronic cigarettes. Domestic Policy Topic 3: Coal supply guarantee policy is further intensified, with the policy focus shifting to accelerating coal mine resumption and reaching full production. On October 16, the National Development and Reform Commission, the National Energy Administration, and other departments held a meeting in Taiyuan, Shanxi, on accelerating coal mine resumption, production increase, and supply guarantee, requiring acceleration of resumption and production of suspended coal mines, increasing coal supply through measures such as formulating resumption plans on a mine-by-mine basis, optimizing resumption acceptance procedures, and promoting resumed coal mines to reach full production as soon as possible. The contraction of coal supply was the main reason for the earlier rise in coal prices, and the recovery in demand during the summer peak further strengthened price support. Looking ahead, after the coal production increase and supply guarantee policy is implemented, the supply-side support for continued coal price increases may gradually weaken. Overseas Policy Topic 1: The United States intensifies mediation efforts between Russia and Ukraine. On October 11, Trump proposed a ceasefire arrangement for Russian and Ukrainian energy facilities and demanded that Ukraine stop striking Russian refining facilities. Previously, the United States and Russia reached relevant arrangements on diesel supply. On October 16, the White House announced a temporary suspension of certain new sanctions and tariff measures against Russia. On October 19, according to Reuters, a U.S. special envoy plans to travel to Norway to participate in talks on the Ukraine issue and then go to Russia to meet with Putin. Considering the recent high international oil prices and the approaching U.S. midterm elections, the impact of energy prices on inflation and household living costs has increased somewhat. The United States' recent diplomatic mediation and energy policy adjustments both reflect policy considerations of easing energy supply pressure and stabilizing oil prices. Risk warning: Policies and economic data falling short of expectations, overseas policy tightening beyond expectations, and incomplete understanding of policies.