China's leadership indicated a shift towards more aggressive economic support in 2025, marking a change in a 14-year-long policy direction as the country braces for a potential trade war once US President-elect Donald Trump takes office and implements a 60% trade tariff on Chinese exports. President Xi Jinping’s politburo pledged a “moderately loose” monetary policy, moving away from the “prudent” approach previously followed, Bloomberg reports.

This change is expected to include further interest rate cuts and a widening of the 3% fiscal deficit, with an eye to stimulate the economy with more government borrowing. It will also involve measures to “stabilize” the stock and property markets, with analysts expecting a potential stabilization fund for the stock market or more bond issuances. Analysts from Morgan Stanley noted that the politburo’s meeting “sent the most aggressive stimulus tone in a decade,” although there is less certainty with respect to how these policies will be implemented.

The implications of these developments extend beyond China's borders: Increased government spending and monetary easing are likely to influence global financial markets, particularly as investors react to potential shifts in trade dynamics stemming from rising tensions with the US. China’s offshore-traded currency, the CNH, strengthened following the announcements, reflecting market optimism regarding China's economic recovery prospects.

Remember: China's central bank, the People's Bank of China, has already been implementing monetary stimulus measures to jumpstart the country’s faltering growth. Key measures include cutting short-term interest rates, reducing the reserve requirement ratio to its lowest since 2018, lowering mortgage costs to approximately USD 5.3 tn, and easing down-payment requirements for second homes. Additionally, CNY 800 bn (about USD 113 bn) will be injected into the stock market to enhance liquidity, alongside a market stabilization fund.

MARKETS THIS MORNING-

Asian stocks are mostly in the green today on the news of more stimulus in China, with China’s CSI 300 index up 2.1% in trading. Hong Kong’s Hang Seng and Japan’s Nikkei, along with South Korea’s Kospi, are also up. Wall Street futures are little changed following lackluster sessions from the S&P 500 and Nasdaq yesterday, which saw them fall from their record highs last week.

EGX30

31,005

-0.2% (YTD: +24.6%)

USD (CBE)

Buy 50.45

Sell 50.58

USD (CIB)

Buy 50.45

Sell 50.55

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,097

+1.2% (YTD: +1.4%)

ADX

9251

-0.2% (YTD: -3.4%)

DFM

4848

-0.1% (YTD: +19.4%)

S&P 500

6053

-0.6% (YTD: +26.9%)

FTSE 100

8352

+0.5% (YTD: +8.0%)

Euro Stoxx 50

4985

+0.2% (YTD: +10.3%)

Brent crude

USD 72.14

+1.4%

Natural gas (Nymex)

USD 3.18

-0.1%

Gold

USD 2682.60

+0.9%

BTC

USD 96,894.40

-3.1% (YTD: +129.1%)

THE CLOSING BELL-

The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 4.5 bn (0.3% above the 90-day average). Local investors were the sole net buyers. The index is up 24.6% YTD.

In the green: EFG Holding (+3.6%), GB Corp (+1.7%), and Alexandria Container and Cargo Handling (+1.7%).

In the red: E-finance (-3.5%), Juhayna (-2.9%), and Ezz Steel (-2.4%).

CORPORATE ACTIONS-

Raya Customer Experience will buy back up to 7.1% of its shares from investors between 9 December and 9 January, it said in an EGX disclosure (pdf). The company has already purchased some 5.9 mn treasury shares — equal to 2.9% of the company — between March and April of this year.

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