China’s regulators sought to calm markets on Monday as stocks and the renminbi experienced a shaky start to 2025, influenced by weak economic data and geopolitical uncertainty ahead of Donald Trump\u2019s return to the U.S. presidency.<\/p>\n
Mainland China’s CSI 300 index dropped by 0.2% on Monday, marking a 4.1% decline in the first three trading days of the year, making it Asia’s worst-performing major index so far in 2025. Small-cap stocks in the CSI 2000 index fell 6.6% since the year’s start. Meanwhile, Hong Kong’s Hang Seng index dipped by 0.4% on Monday, with a year-to-date decline of 1.2%.<\/p>\n
Amid these declines, Chinese stock market regulators convened meetings with international investors, and the central bank reaffirmed its commitment to stabilizing the currency. This occurred alongside concerns about Trump’s plans to increase tariffs on Chinese exports.<\/p>\n
\u201cRight now, everyone is wondering what Trump 2.0 will bring,\u201d said Jason Lui, head of Asia-Pacific equity and derivatives strategy at BNP Paribas. \u201cIt’s reasonable for investors to take some profit,\u201d he added.<\/p>\n
The renminbi fell to a 15-month low of Rmb7.33 against the dollar on Monday, despite the People’s Bank of China keeping the daily trading band for the onshore renminbi unchanged. Analysts linked the currency’s downward pressure to corresponding weaknesses in Chinese stocks. Kevin Liu, a strategist at CICC, attributed the pressure to weak manufacturing data, the dollar index reaching a two-year high, and the anticipated effects of Trump\u2019s presidency.<\/p>\n
In an effort to reassure investors, the Shanghai and Shenzhen stock exchanges emphasized the resilience and solid fundamentals of China\u2019s economy during a weekend meeting with foreign institutions. They welcomed feedback and suggestions to address concerns about Chinese stocks, as outlined in a statement on Sunday.<\/p>\n
On Monday, the central bank maintained its daily midpoint fixing rate for the renminbi at Rmb7.19, allowing it to trade within a 2% range. The state-owned Financial News<\/em> stressed the central bank’s readiness to prevent excessive exchange rate volatility, emphasizing its “sufficient tools” to maintain currency stability.<\/p>\n Investor sentiment remained weak as long-term government bonds continued to attract buyers. Concerns over domestic consumption led to speculation that the central bank might further ease monetary policy. The yield on 10-year Chinese government bonds fell to 1.61% on Monday, nearing an all-time low.<\/p>\n Despite Beijing\u2019s promises to boost domestic consumption following a prolonged property crisis, the year began on a subdued note. The Chinese People’s Congress is set to meet in March to outline its economic policy agenda for what analysts expect will be a challenging year.<\/p>\n Winnie Wu, chief China equity strategist at Bank of America, highlighted the need for policies aimed at stimulating consumption, supporting the private sector, and addressing youth unemployment. \u201cIn terms of the fundamental things to look for in 2025, we think investors need to see more on consumption,\u201d Wu said.<\/p>\n Despite the rough start, analysts noted that Chinese stocks rebounded strongly in 2024, with the CSI 300 gaining 14.7% over the year. \u201cWe think the worst decline is over,\u201d Wu concluded.<\/p>\n","protected":false},"excerpt":{"rendered":" China’s regulators sought to calm markets on Monday as stocks and the renminbi experienced a shaky start to 2025, influenced by weak economic data and geopolitical uncertainty ahead of Donald Trump\u2019s return to the U.S. presidency. Mainland China’s CSI 300 index dropped by 0.2% on Monday, marking a 4.1% decline in the first three trading […]<\/p>\n","protected":false},"author":1,"featured_media":7112,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[4],"tags":[4618,4610,4617,4613,4615,4614,4611,4616,4612,4619],"class_list":["post-7111","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asia","tag-beijing-economic-policy","tag-china-stock-market","tag-chinese-currency-depreciation","tag-chinese-government-bonds","tag-csi-300-index","tag-peoples-bank-of-china","tag-renminbi-exchange-rate","tag-trump-tariffs-on-china","tag-weak-economic-data","tag-youth-unemployment-in-china"],"yoast_head":"\n