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UBS Group forecasts that mainland-listed stocks will rise by the end of 2025, driven by a projected 6% growth in corporate earnings and supportive policies from Beijing. The bank anticipates an end to China's deflationary trend, bolstered by stimulus measures and a crackdown on industrial overcapacity, which will enhance companies' pricing power and profit margins. Despite a 5% decline in the CSI 300 Index this year, UBS joins other financial institutions in predicting gains for mainland stocks, citing a shift towards looser fiscal and monetary policies.
Iqbal Khan, Asia Pacific President and Co-Head of Global Wealth Management at UBS, highlights that Asia and the US will be the main growth engines for 2025. He emphasizes the importance of investment diversification in a geopolitically charged world and notes that China's ongoing commitment to macro and fiscal stability will be crucial, alongside any trade policies from President-elect Trump. Khan spoke during the 25th UBS Greater China Conference in Shanghai.
China's December trade data revealed stronger-than-expected exports, driven by US companies stockpiling ahead of potential tax increases from President-elect Trump. Meanwhile, the US consumer remains robust, supported by low unemployment and job creation, despite partisan divides on inflation perceptions.In the UK, real economic data has outperformed expectations, yet increased taxes have fostered a negative narrative among businesses. Additionally, ECB Chief Economist Lane indicated a downward trend for Eurozone interest rates, predicting slower wage growth and inflation by 2025.
Asian stock markets fell as the dollar reached a 14-month high following a strong U.S. payroll report, which raised bond yields and dampened equity valuations. Expectations for Federal Reserve rate cuts have diminished, with a focus on upcoming U.S. consumer price data that could influence future monetary policy. Oil prices surged amid supply concerns, while China's export growth added to trade tensions with the U.S.
Asian stocks fell for a fourth consecutive day as stronger-than-expected US jobs data dampened expectations for Federal Reserve interest-rate cuts, while oil prices surged to a four-month high following new US sanctions on Russia's oil industry. The MSCI Asia Pacific Index dropped 1.1%, with significant declines in Hong Kong, Taiwan, and South Korea, as Chinese shares continued to slide despite record export figures. Meanwhile, the dollar strengthened against major currencies, and bond yields rose in response to the shifting market dynamics.
Stocks in the Asia Pacific region opened the week cautiously amid uncertainties regarding future Federal Reserve rate cuts, with South Korea's Kospi down 0.71%. The US markets closed lower on Friday, with the Dow dropping 696 points, while Indian equities also fell for the second consecutive day, influenced by financials and pharma stocks. The Indian rupee weakened to an all-time low against the US dollar, nearing the 86 mark.
Major stock indexes fell sharply, with the Dow Jones dropping over 500 points, following a stronger-than-expected December jobs report. The 10-year Treasury yield surged to 4.79%, raising concerns about inflation and rate cuts. Delta Air Lines and Constellation Energy saw significant gains after strong earnings and acquisition news, respectively.
Most Asian stocks declined ahead of the crucial U.S. payrolls report, which is expected to influence Treasury yields and the dollar. The 10-year Treasury yield hovers near an eight-month peak, while British bond yields reached their highest since 2008. A strong payrolls report could push yields past 4.739%, impacting stock valuations and the dollar's strength, particularly against the British pound, which has fallen to a year-low.
U.S. Treasury yields fell from an eight-month high as the dollar strengthened, with investors reassessing the Federal Reserve's interest rate policy amid signs of economic resilience. The 10-year yield dropped to 4.689%, while the dollar index rose to 109.15. The upcoming U.S. payrolls report is expected to provide further insights into the Fed's policy direction.
BRICS nations, particularly Iran and Russia, are increasingly moving away from the US dollar in trade, driven by economic sanctions and geopolitical shifts. Over 90% of Russia's trade with China and India is now conducted in national currencies, with a currency agreement between Iran and Russia eliminating dollar use. Despite the dollar's dominance, the momentum for de-dollarization among BRICS and its partners suggests a potential shift in global financial power dynamics.
Chinese Yuan
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