• Investing
  • Stock
  • Editor’s Pick
  • Economy
The Significant Deals
Stock

China scrambles to shore up sliding yuan and stock markets

by January 6, 2025
written by January 6, 2025

By Samuel Shen and Ankur Banerjee

SHANGHAI/SINGAPORE (Reuters) – China’s stock exchanges and central bank scurried to defend a tumbling yuan and falling stock markets on Monday, trying to soothe investors concerned about Donald Trump’s return to the White House and Beijing’s ability to revive the economy.

With two weeks before Trump begins a second U.S. presidency, his threats of big tariffs on Chinese imports have rattled the yuan, driven mainland bond yields down and got stocks off to a rough start to 2025.

On Monday, China’s tightly controlled yuan weakened to its lowest in 16 months while the blue-chip stock index touched its weakest level since the end of September, down as much as 0.8% on the day. The index fell 5% last week to clock its biggest weekly loss in more than two years.

The Shanghai and Shenzhen stock exchanges recently held meetings with foreign institutions, both bourses said on Sunday, assuring investors they would continue to open up China’s capital markets.

The People’s Bank of China could issue more yuan bills in Hong Kong in January, state-owned news outlet Yicai reported on Monday, in a sign authorities want to absorb currency to dampen speculation. Financial News, a central bank publication, said the PBOC has the tools and the experience to react to yuan depreciation.

“The decision to allow the yuan to weaken last week has heightened concerns about capital outflows, further dampening investor sentiment,” said Charu Chanana, chief investment strategist at Saxo.

“Preventing a sharp decline of the yuan will be crucial for China’s recovery. Any tactical recovery this year will need more than just stimulus measures, particularly whether China can negotiate a deal with President-elect Trump.”

The world’s second-biggest economy has struggled over the past few years as a property downturn and slowing income sapped consumer demand and hurt businesses. Exports were one of the few bright spots, but could face hefty U.S. tariffs under a second Trump administration.

The S&P 500 has risen 4% while China’s CSI300 index has dropped 4.3% since the U.S. election, highlighting the worries around tariffs. European stocks are flat in the same period.

YUAN PRESSURE

Chinese authorities have introduced various support measures since September, including swap and relending schemes totalling 800 billion yuan ($109 billion), to shore up investor confidence and put a floor under stocks.

The yuan has routinely hit multi-month lows since Trump won the U.S. election in early November as the threat of tariffs along with worries about China’s sluggish economic recovery triggered capital outflows.

The spot yuan hit 7.3237 per U.S. dollar on Monday, its weakest level since September 2023, after breaching the key threshold of 7.3 per dollar for the first time since 2023 on Friday.

The yuan declined 2.8% against the dollar in 2024, its third straight annual decline, reflecting most currencies’ struggle against a strong dollar.

Despite China’s efforts to stall the yuan’s decline via the daily benchmarks it sets, falling domestic yields and broad dollar strength have undercut their efforts.

The central bank on Friday warned fund managers against pushing bond yields even lower, amid worries that a bubble in bonds might stymie Beijing’s efforts to revive growth and manage the yuan.

In a sign of bearishness on the economy and deeply entrenched deflationary pressures, bond yields up to the 3-year tenor are trading below the short-term policy rate, the 7-day repo rate at 1.75%. Long term yields are at record lows.

“While Chinese officials have promised further stimulus, signalling greater monetary and fiscal easing, investors are waiting for concrete signs that demand is responding,” HSBC’s chief Asia economist Fred Neumann said.

“After many fits and starts over the past year, greater evidence is needed that China’s economy is responding to stabilisation measures,” Neumann said.

A key test for consumer confidence will be the impending Lunar New Year celebrations, which start on Jan. 29, he said.

($1 = 7.3281 Chinese yuan renminbi)

 

 

This post appeared first on investing.com
0 comment
0
FacebookTwitterPinterestEmail

previous post
French finance minister says eyes 2025 budget deficit in 5-5.5% range
next post
Morning Bid: Canadian dollar calm as Trudeau heads for the exits

You may also like

BASF results down on impairments, restructuring

January 27, 2025

European chipmakers slump as traders gauge DeepSeek AI...

January 27, 2025

Nasdaq futures tumble as China’s AI push rattles...

January 27, 2025

China Vanke’s CEO, chairman resign amid growing liquidity...

January 27, 2025

Fuji Media, rocked by sexual misconduct allegations, says...

January 27, 2025

Italy’s MPS shares fall ahead of Mediobanca board...

January 27, 2025

British Land stock drops following stake sale

January 27, 2025

UMG shares rally after new multi-year pact with...

January 27, 2025

BASF shares indicated 3% lower as impairments drag...

January 27, 2025

Ryanair cuts 2026 traffic forecast amid ongoing Boeing...

January 27, 2025
Fill Out & Get More Relevant News








    Stay ahead of the market and unlock exclusive trading insights & timely news. We value your privacy - your information is secure, and you can unsubscribe anytime. Gain an edge with hand-picked trading opportunities, stay informed with market-moving updates, and learn from expert tips & strategies.

    Recent Posts

    • Procter & Gamble to cut 7,000 jobs as part of broader restructuring

      June 6, 2025
    • Shein and Temu see U.S. demand plunge as loophole for cheap goods closes

      June 6, 2025
    • Shein and Temu see U.S. demand plunge as loophole for cheap goods closes

      June 5, 2025
    • This California startup is cleaning water and removing CO₂ from the atmosphere — all at a reduced cost

      June 5, 2025

    Categories

    • Economy (245)
    • Editor's Pick (3,646)
    • Investing (504)
    • Stock (6,426)

    Latest News

    • Procter & Gamble to cut 7,000 jobs as part of broader restructuring
    • Shein and Temu see U.S. demand plunge as loophole for cheap goods closes

    Popular News

    • China’s cabinet approves measures to boost trade growth
    • Futures lower, bank earnings ahead, Tesla’s robotaxi event – what’s moving markets

    About The Significant deals

    • Privacy Policy
    • Terms & Conditions

    Copyright © 2025 thesignificantdeals.com | All Rights Reserved

    The Significant Deals
    • Investing
    • Stock
    • Editor’s Pick
    • Economy