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Takeaways from the Key Notes
- China’s exchange-traded fund and the stocks of Chinese firms listed in U.S. markets jumped on Monday after top Chinese leaders announced their plans to relax monetary policy next year and increase fiscal spending.
- The official Xinhua News Agency reported the announcement as Donald Trump, U.S. president-elect, threatened to increase tariffs on Chinese imported goods.
- Xinhua said Monday that the Communist Party’s Politburo, in its latest monthly meeting, has embraced "implementing a more proactive fiscal policy and a moderately loose monetary policy next year.”
China-focused exchange-traded funds (ETFs) and stocks of Chinese companies listed on U.S. exchanges jumped Monday, after the country’s top leaders announced plans for “more proactive” stimulus spending next year.
The announcement of next year’s priorities, cited by the state-run Xinhua news agency, comes as U.S. President-elect Donald Trump threatens to boost tariffs on Chinese imports and follows a stimulus package by Beijing in September, aimed at bolstering the country’s downbeat economy.
That previous stimulus package, including measures that came later, fell short of investors’ expectations.
Xinhua said Monday that the Communist Party’s Politburo, in its latest monthly meeting, has embraced "implementing a more proactive fiscal policy and a moderately loose monetary policy next year.”
Politburo also seeks Chinese consumption boost
The report went on to say that apart from improving "macro regulation," the meeting concluded that China "should vigorously boost consumption, improve the investment efficiency, and expand domestic demand on all fronts."
The Chinese Communist Party’s highest policymaking body, the Politburo, is composed of 24 members.
According to Bloomberg, Monday's announcement marked Beijing's "boldest" language around a stimulus in years; it noted that the last time China adopted a “moderately loose” When the leaders launched a series of stimulative measures to combat the global financial crises in 2008, this was a monetary-policy moment.
The iShares MSCI China ETF (MCHI) jumped more than 8% Monday morning.
The Nasdaq Golden Dragon China index (HXC)—an index of 64 China-based companies traded in the U.S.—rose more than 9%.
Alibaba Group Holdings’ (BABA), a Chinese conglomerate, saw its shares in U.S. traded markets rise by about 8%. JD.com.com.com.au (JD.com.au) as well as Temu parent PDD Holdings.com.au (PDD.com.au) also rose.
XPeng, Nio and Li Auto are all Chinese manufacturers of electric vehicles (EVs).
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