【True Zoom Finance】China's Ministry of Finance calls for boosting domestic demand; Central Bank emphasizes preventing RMB overshooting
China's Ministry of Finance has called for an expansion of fiscal spending next year to vigorously boost domestic demand. The central bank's financial stability report emphasized preventing "overshooting" in the RMB exchange rate.
Overnight Highlights
– U.S. stocks were nearly flat on Friday in thin post-Christmas trading, lacking clear catalysts to drive market direction. U.S. Treasury yields declined. The yen weakened against the dollar as investors remained watchful for potential intervention to support the currency; the dollar edged higher against the euro amid sparse trading volumes. Oil prices closed down over 2% as investors weighed concerns about global oversupply while monitoring potential Ukraine peace talks. Gold rose while silver surged 9% to record highs, supported by market shortages and increased industrial demand among other factors.
International News
– U.S. President Trump said Sunday's talks with Zelensky made "significant progress" and praised his call with Putin as productive. Zelensky stated that 90% of the peace framework had reached consensus, with full agreement on Ukraine's security guarantees.
– Russian forces launched large-scale airstrikes on Kyiv Saturday. Kremlin foreign policy advisor Ushakov said both Russian and U.S. leaders believe Ukraine and Europe's proposed temporary ceasefire plan based on referendums would only prolong the conflict.
– Bank of America CEO Brian Moynihan expects the Trump administration may push to de-escalate trade tensions next year, with average tariffs projected around 15%.
– Japan plans to raise defense spending to a record ~¥9 trillion next fiscal year as the Sanae Takaichi administration seeks to address heightened geopolitical tensions, U.S. demands for greater cost-sharing, and yen weakness.
Greater China News
– China's November industrial profits fell 13.1% YoY, declining for a second straight month, further indicating weak domestic demand and persistent deflation are pressuring corporate earnings.
– China's Ministry of Finance held a national fiscal work conference over the weekend, calling for expanded fiscal spending in 2026 to vigorously boost domestic demand and increase investment in key areas like new quality productive forces.
– The PBOC issued a financial stability report emphasizing preventing RMB exchange rate "overshooting," sending a clear signal of slowing the pace of yuan appreciation.
– Hong Kong Financial Secretary Paul Chan expects the city's 2025 economic growth to accelerate to 3.2%, slightly above earlier projections.
– Bondholders agreed to extend the grace period for China Vanke's (02202.HK) $China Vanke (02202.HK)$RMB3.7 billion notes maturing Dec 28 by 30 trading days, buying more time for debt restructuring plans.
– The PBOC and SAFE jointly issued rules clarifying that funds raised from overseas listings and proceeds from share reductions/transfers should in principle be repatriated.
– China's cyberspace regulator released draft rules for AI human-like interaction services requiring providers to implement anti-addiction measures, including pop-up warnings after 2+ hours of continuous use.
– The MIIT announced establishing a humanoid robotics and embodied intelligence standardization committee. Separately, the National Data Administration issued guidelines to strengthen data technology innovation.
– As gold, silver and copper futures repeatedly hit records, the SHFE warned of trading risks in nonferrous and precious metals. After multiple risk alerts failed, SDIC Silver Fund will suspend Class C share subscriptions starting Monday.
– China's November solar power 新增装机规模 rose to a six-month high, extending year-end recovery. Regulators also tightened oversight of 光伏 industry price competition, banning collusion and commercial bribery.
Commodities & FX
– Oil fell in thin post-Christmas trading as investors assessed Ukraine peace talk progress; a potential deal could pave the way for more Russian crude into global markets.
– Gold, silver and platinum prices all hit record highs amid escalating geopolitical tensions, a weaker dollar and thin liquidity.
Key Earnings & Data
– U.S. EIA Crude Inventories (week to Dec 19) (prior: -1274K, forecast: -2432K)
Source: Golden Horse Capital Management (HK) Ltd.
Author: Terry Chow
Proofreader: Penny Yang
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