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ASIA STOCKS: China Equities Rally Following Trump Comments

ASIA STOCKS
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Chinese equities are rallying, supported by a softer tone from President Donald Trump on tariffs. The Hang Seng China Enterprises Index climbed over 2%, while the yuan strengthened to its highest level in six weeks in both onshore and offshore trading. This follows Trump’s remarks indicating a preference to avoid significant tariffs on China, easing market fears of aggressive trade actions.

  • Investors remain cautious, however, as Chinese assets are under pressure from concerns about economic slowdown and limited stimulus measures from Beijing. Despite recent gains, volatility is expected to persist due to the unpredictable nature of U.S.-China trade relations and broader economic uncertainties.
  • China's recent measures could inject at least 1t yuan ($138b) into its struggling stock market in 2025, with JPMorgan's most bullish estimate predicting up to 13t yuan over three years. The initiatives require state-owned insurers to allocate 30% of new premiums to onshore stocks annually starting in 2025, and mutual funds to increase holdings by at least 10% annually.
  • Analysts estimate flows from these policies to range widely: Citi projects over 1t yuan in 2025, UBS predicts 1.7t yuan, and Huajin forecasts 860b to 1.35t yuan. These injections aim to counteract pressure on Chinese equities, which have suffered from fears of economic slowdown and external risks. Investors remain skeptical about the efficacy of recent stimulus measures introduced by Beijing.
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Chinese equities are rallying, supported by a softer tone from President Donald Trump on tariffs. The Hang Seng China Enterprises Index climbed over 2%, while the yuan strengthened to its highest level in six weeks in both onshore and offshore trading. This follows Trump’s remarks indicating a preference to avoid significant tariffs on China, easing market fears of aggressive trade actions.

  • Investors remain cautious, however, as Chinese assets are under pressure from concerns about economic slowdown and limited stimulus measures from Beijing. Despite recent gains, volatility is expected to persist due to the unpredictable nature of U.S.-China trade relations and broader economic uncertainties.
  • China's recent measures could inject at least 1t yuan ($138b) into its struggling stock market in 2025, with JPMorgan's most bullish estimate predicting up to 13t yuan over three years. The initiatives require state-owned insurers to allocate 30% of new premiums to onshore stocks annually starting in 2025, and mutual funds to increase holdings by at least 10% annually.
  • Analysts estimate flows from these policies to range widely: Citi projects over 1t yuan in 2025, UBS predicts 1.7t yuan, and Huajin forecasts 860b to 1.35t yuan. These injections aim to counteract pressure on Chinese equities, which have suffered from fears of economic slowdown and external risks. Investors remain skeptical about the efficacy of recent stimulus measures introduced by Beijing.