SHANGHAI/HONG KONG (Reuters) -China announced plans on Thursday to channel hundreds of billions of yuan annually into shares from state-owned insurers, in the government’s latest effort to support equity markets.

Authorities will in the first half of this year call on insurers to invest at least 100 billion yuan ($13.75 billion) of long-term funds into stocks, China Securities Regulatory Commission head Wu Qing said at a press conference.

The regulators will encourage big state insurers to invest 30% of new annual premiums in A-shares, and encourage mutual funds to increase their A-share holdings’ tradable market value by at least 10% annually over the next three years, Wu said.

“Medium- and long-term funds play a crucial role in the capital market as professional investors. They act as the ‘ballast’ and ‘stabilizer’ to ensure the market runs smoothly and remains healthy,” he said.

These measures will channel “several hundred billion” into onshore stocks every year, and consolidate the positive trend of the capital market, he added.

The plan also involves guiding mutual fund managers to increase investments in their own equity products, cut fund sales fees and promote the development of exchange-traded fund products.

The CSI300 blue-chip index advanced 0.6% while the Shanghai Composite Index jumped 1% by midday break. Hong Kong’s Hang Seng Index added 0.2%.

A gauge tracking insurers jumped 2.6% in morning trade, with China Life Insurance (NSE:LIFI) rallying 4.3%.

Beijing has been intensifying policy support to prop up the stock market, which is weighed down heavily by a long-running property crisis, deflationary pressure and geopolitical tension.

Six Chinese government agencies, including the central bank and the securities regulator, released on Wednesday a slew of measures to guide medium- and long-term funds into the capital market.

Authorities have also introduced swap and re-lending schemes totalling 800 billion yuan for stock purchases in September as well as guidelines on market capitalisation management to encourage companies to improve shareholder returns.

The latest plan announced Thursday mirrors previous calls to promote capital markets, said Ben Bennett, Asia-Pacific investment strategist at Legal And General Investment Management.

“It’s not a big surprise, but nice to see some tangible policies. These things need to go hand in hand with stronger growth and earnings expectations to be fully effective.”

Stock prices have been highly volatile since authorities signalled support. The benchmark stock index CSI 300 surged 35% in the two weeks after that first stimulus announcement but disappointment with the degree and pace of implementation has seen the CSI 300 index halve that gain since.

($1 = 7.2728 Chinese yuan)

A look at the day ahead in European and global markets from Rae Wee

After drowning for days in headlines about Donald Trump’s return to the White House, investors were delivered a bit of a diversion on Thursday with the announcement of new Chinese measures to boost its ailing stock market.

Beijing plans to channel hundreds of billions of yuan per year from state-owned insurers’ funds into the stock market, including at least 100 billion yuan ($13.75 billion) in the first half of this year, according to China Securities Regulatory Commission head Wu Qing.

Chinese authorities are urgently trying to shore up their sagging stock markets, where the main benchmarks have fallen 3% so far this month despite a rise in major share markets elsewhere.

China’s CSI300 blue-chip index and the Shanghai Composite Index jumped more than 1% after the news, as did the Hang Seng Index, although they have since relinquished some of those gains.

The news from China offered little support to MSCI’s broadest index of Asia-Pacific shares outside Japan, which retreated on Thursday after seven straight sessions of gains.

European shares also looked set for a negative open along with their U.S. counterparts, suggesting that enthusiasm over Trump’s mammoth spending plans for artificial intelligence infrastructure may be ebbing after lifting shares on Wednesday.

Trump offered little detail on how the $500 billion private-sector investment would be funded, although The Information reported that OpenAI and Japanese conglomerate SoftBank (TYO:9984) would each commit $19 billion to the project.

The data calendar is light in Europe on Thursday. A rate decision is due from Norges Bank, which is widely expected to keep rates on hold.

The Bank of Japan kicked off its two-day policy meeting on Thursday and markets have about fully priced in a 25-basis-point rate hike after hints last week by BOJ policymakers.

It would likely take both the expected rate hike and an explicit promise of more hikes ahead to stop a renewed fall in the yen, which on Thursday continued to drift away from a one-month high hit early in the week.

Key developments that could influence markets on Thursday:

– Norges Bank rate decision

– U.S. weekly jobless claims

– American Airlines (NASDAQ:AAL), General Electric (NYSE:GE) earnings

(By Rae Wee; Editing by Edmund Klamann)

(Reuters) – Japanese investors raised their holdings in foreign stocks, driven by a benign U.S. core inflation report that fuelled expectations of Federal Reserve cuts and boosted global equities, while a strong yen also lifted domestic buying power.

They invested a net 489.8 billion yen ($3.13 billion) into overseas stocks, for a sixth straight week through Jan. 18, marking their second-largest weekly net purchase since Sept. 7, 2024, according to data from Japan’s Ministry of Finance.

Analysts noted that the investment in foreign stocks was also driven by increased flows into the new Nippon Individual Savings Accounts (NISA) programme, a tax-free investment scheme, and they expect such investments to persist through March.

U.S. core inflation data for December reported a 3.2% increase last week, slightly below the forecast of 3.3%. Strong fourth-quarter earnings from major firms such as JPMorgan, BlackRock (NYSE:BLK) and Goldman Sachs lifted the MSCI World Index by 2.56%, marking its largest weekly gain since Nov. 8, 2024.

Japan’s market participants also acquired foreign debt securities of a net 1.01 trillion yen, the highest for a week since Nov. 9. They poured 819.3 billion yen into long-term bonds and 194.2 billion yen into short-term bills.

At the same time, Japanese stocks witnessed a marginal 66.1 billion yen worth of foreign outflows last week, contrasting 259.1 billion yen in inflows in the previous week.

Japan’s Nikkei share average reached a 1-1/2-month low of 38,055.68 last week, weighed down by a stronger yen and investor caution ahead of U.S. President Donald Trump’s inaugural speech.

The Nikkei, however, has climbed nearly 3.5% so far this week, powered by SoftBank (TYO:9984) Group and other technology stocks, as Trump announced a private sector investment of up to $500 billion to fund AI infrastructure.

Foreign investors bought a net 876.1 billion yen in Japanese long-term bonds, the largest purchase in six weeks, while also adding a net 1.33 trillion yen worth of short-term bills last week.

($1 = 156.4100 yen)

SINGAPORE (Reuters) – Singapore’s key consumer price gauge rose 1.8% in December from a year earlier, higher than economist forecasts and the lowest in more than three years, official data showed on Thursday.

The core inflation rate, which excludes private road transport and accommodation costs, was above the 1.7% forecast by a Reuters poll of economists and the 1.9% seen in November.

Headline inflation was 1.6% in annual terms in December, higher than economists’ forecast of 1.5%.

Inflation has declined from a peak of 5.5% in early 2023 and December’s rise is the smallest since November 2021, when it rose by 1.6%. 

Lower inflation and higher growth have created room for the Monetary Authority of Singapore to ease monetary policy at its scheduled review on Friday, though analysts are split on whether the central bank would wait to assess the impact of U.S. President Donald Trump’s policies.

Singapore’s economy did better than expected in 2024 with 4% growth in advance estimates, after slowing to 1.1% in 2023 from 3.8% in 2022.

The MAS has not changed policy since a tightening in October 2022, which was the fifth in a row, as broader concerns about growth kept authorities sidelined.

It last eased policy in March 2020 as Singapore braced for a recession with COVID-19 spreading worldwide.

The trade ministry is expecting growth of 1.0% to 3.0% in 2025.

By Leika Kihara

(Reuters) -The Bank of Japan concludes its first policy meeting of the year on Friday with the outcome to be announced days after the inauguration of U.S. President Donald Trump.

Here is a guide on what to expect and why the BOJ’s rate review matters:

WHEN DOES THE BOJ MEETING TAKE PLACE?

The BOJ board that sets monetary policy is holding a two-day meeting that concludes on Friday. It will announce its decisions at the end of its deliberations.

The BOJ ended years of negative interest rates in March and raised its short-term policy target to 0.25% in July. It has signalled a readiness to hike again if wages and prices move as projected.

IS THE BOJ GOING TO RAISE INTEREST RATES?

There is growing conviction within the BOJ that conditions for another increase are coming into place. The economy continues to expand moderately and inflation has held above its 2% target for nearly three years.

Companies continue to pass on rising raw material and labour costs to buyers, suggesting the BOJ board is likely to revise up its inflation forecasts in a quarterly outlook report due after the meeting.

More importantly, there have been increasing signs that firms will offer bumper pay hikes for a third straight year in annual wage negotiations with unions kicking off in March.

The BOJ’s regional branch managers said wage hikes are spreading to companies of all sizes and sectors, meeting a key prerequisite for raising interest rates. As such, the central bank is likely to raise rates to 0.5% on Friday.

WHAT HAVE BOJ POLICYMAKERS SAID SO FAR?

The BOJ’s views on wages and the U.S. policy outlook have been closely watched by markets, after Governor Kazuo Ueda cited uncertainty over the domestic wage outlook and Trump’s policies as reasons to hold off raising rates last month.

In a speech on Jan. 14, Deputy Governor Ryozo Himino said wage growth will likely remain strong this year. A day later, Ueda echoed the optimism in a sign of the BOJ’s conviction that Japan was progressing towards durably hitting its inflation target.

Both Himino and Ueda said the BOJ will debate whether to raise rates this month, indicating a strong chance of a hike.

WHAT COULD HOLD POLICYMAKERS BACK?

With increased prospects of sustained wage gains, the only remaining hurdle for raising rates has been the risk of Trump dropping a bombshell and upending financial markets.

Deputy governor Himino said he would look for clues on the “balance and schedule” of the new president’s policy steps, as well as anything that had not been flagged by Trump so far.

A global share rally this week has alleviated policymakers’ fears Trump’s tariff threats could trigger market turmoil, further heightening the chance of a rate hike on Friday.

HOW COULD MARKETS REACT TO A JAPAN RATE INCREASE?

Receding bets of further rate cuts by the U.S. Federal Reserve mean the U.S.-Japan interest rate differential will remain wide, keeping the yen under downward pressure.

A rate hike by the BOJ may briefly nudge up the yen. But the currency’s gains may be short-lived unless Ueda delivers hawkish comments on the outlook in his post-meeting news briefing.

WHAT ELSE SHOULD MARKETS LOOK OUT FOR?

The BOJ will release a quarterly outlook report with revised growth and inflation forecasts, which will show how optimistic the board is on Japan’s prospects for sustainably hitting 2% inflation. That will affect the pace of future rate increases.

Ueda may also give clues on the timing and pace of further hikes at his post-meeting briefing.

The key would be the governor’s view on Japan’s neutral rate. BOJ staff estimates show the inflation-adjusted real neutral rate to be in a range of around -1% to +0.5%. That means if inflation were to hit the BOJ’s 2% target, it could raise its short-term rate at least to around 1% without cooling growth.

Based on forecasts in October, the BOJ expects short-term rates to approach what it considers neutral “in the latter half of the three-year projection period” through March 2027, which suggests some time after October 2025.

While hawkish board member Naoki Tamura projects the neutral rate to be around 1%, Ueda has said it was too hard to come up with credible estimates due to a lack of data.

WHAT’S NEXT?

Many analysts expect the BOJ to keep raising rates at a pace of roughly twice a year. If the BOJ increased rates on Friday, it may stay in a holding pattern until the latter half of this year when there is more clarity on the impact of Trump’s policies.

Domestic politics also complicate the BOJ’s rate-hike timing with an upper house election slated for July, where Prime Minister Shigeru Ishiba’s minority coalition could struggle to garner votes. The BOJ may prefer to avoid shifting policy until the political dust settles.

By Casey Hall

SHANGHAI (Reuters) – More than half of the American businesses in China, the highest level in five years, say they are concerned about a further deterioration in the bilateral relationship between the world’s two largest economies, a survey published on Thursday shows.

The annual survey by the American Chamber of Commerce (AmCham) in China showed 51% of respondents were concerned about a future deterioration in the U.S.-China relationship.

It was released just days after U.S. President Donald Trump took office for a second term with the threat of increasing trade tariffs on Chinese imports.

“A stable and constructive relationship, grounded in economic and trade ties, is critical not only for the prosperity of our two nations but also for global economic stability,” said AmCham China Chair Alvin Liu.

Geopolitical tensions, policy uncertainties, and trade disputes were major concerns of U.S. businesses in China, AmCham China said.

The survey of 368 AmCham China member companies was completed between October and November last year, partly after Trump won the presidential election on Nov. 5.

His previous term as president was marked by a U.S.-China trade war and general decline in diplomatic goodwill between the two countries that did not markedly improve during President Joe Biden’s tenure.

On Tuesday, Trump said his administration was discussing a 10% punitive duty on Chinese imports that could be imposed from Feb. 1 in relation to China’s part in the global supply chain of fentanyl.

Almost half of the respondents still rank China as a top-three global investment priority, around the same level as last year. However, the proportion of companies that no longer list China as a preferred investment destination has more than doubled to 21% compared with pre-pandemic levels and rose three percentage points from last year’s survey.

Also around the same level as last year are the proportion of firms reporting unfair treatment in China compared with local firms – around a third of businesses – particularly in relation to market access and public procurement.

By Kevin Buckland

TOKYO (Reuters) – The dollar steadied against major peers on Thursday, continuing its near paralysis of the past two days before more concrete announcements on tariffs from U.S. President Donald Trump.

A spate of central bank policy decisions are also due over the next week, with the Bank of Japan widely expected to raise interest rates at the end of a two-day meeting on Friday.

Rate decisions from the U.S. Federal Reserve and European Central Bank are scheduled for Wednesday and Thursday of next week, respectively.

The dollar index – which measures the currency versus six top rivals, including the euro and yen – was flat at 108.25, following two days of gains of around 0.1%.

On Monday, it tumbled 1.2%, its steepest one-day slide since November 2023, as Trump’s first day in office brought a barrage of executive orders, but none on tariffs.

So far this week, Trump has mooted levies of around 25% on Canada and Mexico and 10% on China from Feb. 1. He also promised duties on European imports, without giving details.

“President Trump has so far taken a less hostile-than-expected approach to China,” amid overall “softer-than-expected policies and tone on tariffs”, said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY).

At the same time, “we are cautious (that) risk sentiment remains fragile and can quickly turn sour if President Trump strikes a more aggressive tone.”

The Chinese yuan was little changed at 7.2812 per dollar in offshore trading.

Japan’s yen edged up about 0.1% to 156.40 with markets pricing 95% odds of a quarter-point hike on Friday.

The euro was flat at $1.0411. The ECB is widely expected to cut rates by a quarter point next week.

The Canadian dollar held steady at C$1.4386 against the greenback. The Bank of Canada is seen as likely to reduce rates by a quarter point next Wednesday.

The Mexican peso was little changed at 20.47 versus the U.S. currency.

By Makiko Yamazaki

TOKYO (Reuters) – Japan’s exports rose for a third straight month in December, data showed on Thursday, suggesting that companies front-loaded shipments ahead of potentially hefty tariffs promised by new U.S. President Donald Trump.

Trump has signalled plans to deploy tariffs on imports from major trading partners China, Canada and Mexico, raising fears that increasingly protectionist U.S. trade policies could dampen and disrupt global shipments.

Japan’s exports rose 2.8% in December from a year earlier, data showed, more than a median market forecast for a 2.3% increase and following a 3.8% rise in the previous month.

Exports to China, Japan’s biggest trading partner, fell 3% in December from a year earlier, while those to the United States were down 2.1%.

Imports rose 1.8% in December on-year, compared with market forecasts for a 2.6% increase and a decline of 3.8% in November.

As a result, Japan ran a trade a surplus of 130.9 billion yen ($836.80 million) in December, compared with the forecast of a deficit of 53 billion yen.

For the whole of 2024, Japan logged a trade deficit of 5.3 trillion yen, marking four consecutive years of deficits but shrinking from the previous year’s 9.52 trillion yen.

Emerging signs of sustained wage growth and expectations it would boost consumption are seen supporting the case for the Bank of Japan to raise interest rates this week.

But the outlook for external demand is increasingly uncertain, as Trump’s tariff plans could upend international trade and hold back China’s economic recovery.

A recent survey by the Japan External Trade Organization showed that most Japanese companies with operations in the United States are preparing for possible additional tariffs.

Those efforts include strengthening manufacturing and procurement in the U.S. and considering product price hikes, according to the survey.

($1 = 156.4300 yen)

By Lucy Craymer

WELLINGTON (Reuters) -People leaving New Zealand hit record levels in the year to November 2024, in another sign of the weakness in the country’s economy that moved to a technical recession in the third quarter.

Data released by Statistics New Zealand on Thursday showed that 127,800 people left the Pacific nation in the year to November, up 28% on the prior 12 month period. This was provisionally the highest number of people leaving in an annual period ever, according to the statistics bureau.

Of those leaving, more than 50% were New Zealand citizens, according to the data.

New Zealand, which has a population of just 5.3 million, has seen its economy struggle over the last couple of years as the central bank increased the official cash rate to dampen historically high inflation.

Michael Gordon, senior economist at Westpac said that a lot of people come to New Zealand for work opportunities and when these dry up people leave.

“It’s about work opportunities, especially here (New Zealand) versus Australia. Australia’s economy is still running reasonably strongly,” Gordon said. “There are more opportunities over there now so we are seeing quite high outflows of Kiwis.”

However, people leaving does continue to be offset by inward migration.

Statistics New Zealand said net migration – the number of people moving to New Zealand permanently minus those leaving New Zealand – was at 30,600 in the year to November 2024. Net migration peaked in the year ended October 2023 at 135,700.

Gordon added that net migration was now back at historic averages and that over the longer term net migration would support the country’s economy.

“It’s something to keep in mind, that for a big chunk of the world, New Zealand is an attractive place to live, but also for us (New Zealanders) there are also places look more attractive Australia, or going to the U.S. or the UK,” Gordon said.

Investing.com– Economic growth in the Asia-Pacific region is likely to face headwinds in 2025 due to potential U.S. tariff increases, a strong dollar, and weaker export demand, UBS analysts said in a research note.

UBS economists forecast a regional slowdown of 0.5 to 1 percentage point in real gross domestic product (GDP) growth, with much of the impact expected in the second half of the year as trade barriers tighten and U.S.-China tensions escalate, analysts said.

Cyclical exporters such as South Korea and Taiwan are likely to experience a more pronounced slowdown, while domestically oriented economies like India and the Philippines should show greater resilience, according to UBS.

Mainland China, a focal point of U.S. tariff strategies, is expected to employ extensive fiscal and monetary measures to counterbalance the adverse effects of trade barriers and property sector drag. UBS projects China’s 2025 growth to stabilize at mid-4%, supported by fiscal packages ranging from RMB 2 to 4 trillion targeting local debt resolution, property inventory reductions, and bank recapitalization.

While monetary easing is underway, with 50 to 100 basis points of reserve requirement ratio cuts and further policy rate reductions, the challenges posed by higher tariffs could weigh on near-term growth prospects, UBS analysts wrote.

Meanwhile, economies in Southeast Asia are likely to see policy shifts to maintain growth momentum. UBS anticipates rate cuts across India, Indonesia, and the Philippines, while countries like Malaysia and Taiwan could hold steady amid currency and trade concerns.

Despite the economic strain, UBS continues to favor investment in high-quality investment-grade Asian credits, citing stronger fundamentals and lower volatility compared to high-yield options.

“Positioning in short- to medium-duration bonds (average duration of five years) would limit downside volatility from higher long-end rates,” analysts added.