China-US Policy Brief (Oct 27): Industrial Profits Up 15.5%, Policy Finance Tools Deployed, Fed Meeting Opens

US Policy

Fed meeting opens: a hold in October, a hike in December is the market's base case. The Federal Open Market Committee began its October 27-28 meeting on October 27. The decision will be announced at 2:00 p.m. Eastern on October 28, followed by Chair Kevin Warsh's press conference; no dot plot will be released at this meeting. In a Reuters poll conducted October 16-20, 94 of 100 economists expected rates to stay at 3.75%-4.00% in October, while all 100 expected a hike in December. Polymarket odds on October 27 put a hold in October at 93.9% and a 25-basis-point hike in December at 74.5%.

Trump campaigns in Texas and conditions acceptance of midterm results on "honest elections." President Trump held rallies in Corpus Christi and Lubbock, Texas, on October 27 to support Republican Senate candidate Ken Paxton. Asked whether he would respect the November 3 midterm results regardless of outcome, he replied: "I will if they're honest elections," adding that he would use his veto frequently if Democrats take both chambers of Congress.

First Venezuelan crude under the US-NABEP deal arrives in Texas (confirmed). Reuters reported on October 27 that the first cargo of Venezuelan crude under the US-NABEP arrangement unloaded in Texas: 1 million barrels, to be sold by the US government to refineries run by Exxon Mobil and Citgo. A White House official said the government received the oil "at no cost." The deal gives Washington a 35% stake in NABEP's parent company and discounted access to its crude.

New York Times: White House weighs lifting sanctions on Russia's sovereign investment fund (unconfirmed). The New York Times reported on October 27, citing an unnamed US official, that the White House is assessing how sanctions on the fund could be lifted to improve relations with Moscow and help end the war in Ukraine. The White House has not confirmed this; treat it as press reporting, not confirmed policy.

Market backdrop: US stocks closed higher on October 27: the Dow rose 0.03% to 52,377.57, the S&P 500 rose 0.60% to 7,722.60, and the Nasdaq rose 1.18% to 26,477.81; the Philadelphia Semiconductor Index gained 3.02%. US consumer confidence rebounded to 91.7 in October, and durable goods orders rose 1.8% in September.

China Policy

Fifth Plenary Session in progress; communique due October 29. The Fifth Plenary Session of the 20th CPC Central Committee opened in Beijing on October 26 and runs through October 29. No communique has been released yet; it is expected after the session closes and is the week's key policy event.

Industrial profits rose 15.5% in January-September (released). The National Bureau of Statistics reported on October 27 that profits of industrial enterprises above designated size totaled RMB 6,033.74 billion in January-September, up 15.5% year on year; September alone rose 14.4%. Mining profits rose 38.2% and manufacturing profits rose 17.0%, while electricity, heat, gas and water supply fell 14.3%. Electronics profits doubled, contributing 9.6 percentage points of the overall profit growth; high-tech manufacturing profits rose 52.0% and now account for more than a quarter of total industrial profits. Within the details, optical fiber manufacturing profits rose 5.7 times, optical cable 1.1 times, electronic materials 2.2 times, semiconductor discrete devices 51.7%, and optoelectronic devices 69.8%.

CDB completes RMB 365 billion, Exim Bank RMB 120 billion in new policy finance deployments (released). Xinhua reported on October 27 that China Development Bank completed its RMB 365 billion deployment, all to replenish project capital, supporting RMB 5.5 trillion in total project investment. Of that, RMB 127.99 billion (35.1%) went to private investment projects, and RMB 179.01 billion (49%) went to AI, digital economy, green and low-carbon, biopharma and consumption projects. The Export-Import Bank of China completed RMB 120 billion covering more than 500 projects and RMB 1.7 trillion in investment. The 2026 government work report set an RMB 800 billion annual target for these instruments.

CSRC Chair Wu Qing: long-term capital inflows exceed RMB 600 billion this year. Wu said at the 2026 Financial Street Forum that regulators will improve long-cycle performance evaluation for long-term investors and deepen mutual fund reform. Social security, annuity and insurance funds have bought more than RMB 600 billion of A-shares net this year, and their holdings of free-float A-share market value are up 12.5% from end-2025, according to the CSRC.

Climate disclosure guidance comment period closed October 26. The Ministry of Finance's application guidance for the climate disclosure standard (trial) and nine sector guides, including power, closed for comments on October 26, completing the "basic standard - specific standard - application guidance - sector guidance" framework.

BNSF follow-up: official clarification calls it a "shock absorber, not a principal guarantee." After the central bank set up the bond-market non-bank large-redemption swap facility (BNSF) on October 26, the Economic Daily clarified on October 27 that the tool is an emergency backstop against redemption-driven fire sales, not a guarantee for wealth management products.

US-Stock Watchlist

Broadcom (AVGO, semiconductors). D.A. Davidson upgraded Broadcom to Buy on October 27, raising its price target to $400 from $350; Rosenblatt maintains a Buy with a $600 target, and Morningstar's fair value estimate is $650. The stock closed October 27 at $342.33, up 4.00%. The catalyst is a $63 billion financing package with Bank of America, Blackstone, Citigroup and Morgan Stanley to support Anthropic's compute buildout; Anthropic's S-1 shows roughly $161 billion in non-cancelable orders to Broadcom. Risk note: Broadcom's peak exposure to the arrangement is $43 billion in year one (William Blair estimate), so a collapse in AI demand or a delayed IPO would hurt the thesis; analyst targets diverge widely.

CoreWeave (CRWV, AI compute infrastructure). The stock closed October 27 at $59.57, up 7.94%. Analyst views are split: Goldman Sachs upgraded to Buy with a $106 target on October 19, while Bernstein cut its target to $51 from $74 and Morgan Stanley cut to $70 from $99. Key data: second-quarter revenue of $2.60 billion, up 112% year on year, with a revenue backlog of $104 billion, up 246%; full-year 2026 revenue guidance of $12.4-13.2 billion and capital expenditure of $35-39 billion. Risk note: the second quarter also brought a net loss of $626 million and interest expense of $640 million; heavy financing needs and a wide target range imply high volatility.

Exxon Mobil (XOM, integrated energy). The stock closed October 27 at $179.91, down 2.51% as oil eased. Analyst targets: Barclays $200 (Overweight), Jefferies $200 (Buy), JPMorgan $186 (Buy), with a MarketBeat consensus near $167.70 — below the current price, flagging stretched valuation. Key data: third-quarter results are due October 30; the first Venezuelan cargo will be sold to Exxon refineries; Pioneer integration synergies run about $4 billion a year. Risk note: a sharp oil pullback, normalizing refining margins and valuation above most targets are the main risks.

Coca-Cola (KO, beverages). The stock closed October 27 at $91.18, down 1.64%, even after the company raised full-year comparable EPS growth guidance to 9%-10%. Analyst targets: consensus around $95.63-96.27, Piper Sandler $102, Wells Fargo $90 (Overweight). Key data: second-quarter revenue of $13.38 billion, up 6.7% year on year, with adjusted EPS of $0.97 versus a $0.93 consensus; the dividend yields 2.22%, with $0.53 per share payable December 15. Risk note: the shares trade near their 52-week high of $95.37, so valuation is full; soft consumer demand and currency moves could weigh on growth.

What to watch this week: the Fed decision and Alphabet/Microsoft earnings on October 28; the Fifth Plenary Session communique, US Q3 GDP and PCE, the FCC meeting, and Amazon/Apple earnings on October 29; Exxon Mobil results and the Bank of Japan decision on October 30.

For informational purposes only, not investment advice.