SHANGHAI (Reuters) – China is widely expected to leave its benchmark lending rates unchanged on Wednesday, a Reuters poll showed, as rate cuts a month earlier squeeze banks’ profitability and the yuan comes under fresh pressure as Donald Trump returns to the White House.

Beijing has announced a series of stimulus steps since late September, ranging from monetary easing, to fiscal measures and property market support, in an attempt to pull the economy out of a deflationary funk and back towards the government’s growth target.

In October, Chinese lenders slashed lending benchmarks by bigger-than-expected margins to revive economic activity.

But with Trump’s re-election, some analysts say policymakers in Beijing may now prefer to keep their powder dry, refraining from further strong moves until he takes office in January and reveals more clues on his policy intentions.

The loan prime rate (LPR), normally charged to banks’ best clients, is calculated each month after 20 designated commercial banks submit propose rates to the People’s Bank of China (PBOC).

In a Reuters survey of 28 market watchers conducted this week, all respondents expected both the one-year and five-year LPRs to remain steady.

“LPRs were lowered so sharply in October, so it is unlikely to have another cut this month,” said a trader at a Chinese bank.

“We may first wait and see the impact of the policy in the short term.”

As part of his pitch to boost American manufacturing during the recent election campaign, Trump said he will impose tariffs of 60% or more on goods from China. The proposed tariffs, as well as other policies such as tax cuts, are seen as inflationary and likely to keep U.S. interest rates relatively high in a blow to currencies of trading partners.

China’s yuan has already lost about 1.8% against the dollar since the Nov. 5 U.S. election. [CNY/]

“Aside from the tariff threat, the recent upward repricing of U.S. rates is surely causing some headaches in Beijing, as it limits space for monetary easing in China at a time when the economy is trying to get back on its feet,” said Roman Ziruk, senior market analyst at Ebury, said in a note.

“Changes to the medium-term lending facility (MLF) or LPR rates are probably not on the cards in the coming days.”

By Siddarth S

(Reuters) – Goldman Sachs has forecast the S&P 500 index would reach 6,500 by the end of 2025, joining peer Morgan Stanley (NYSE:MS), on the back of continued growth in the U.S. economy and corporate earnings.

The Wall Street brokerage’s target implied an upside of 10.3% from the index’s last close of 5,893.62.

On Monday, Morgan Stanley also forecast the benchmark index would hit 6,500 by the end of next year. It estimated the recent broadening in U.S. earnings growth would continue in 2025 as the Federal Reserve cuts interest rates into next year and as business cycle indicators improve further.

Goldman said the so-called ‘Magnificent 7’ stocks – Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), and Tesla (NASDAQ:TSLA) collectively will outperform the rest of the 493 companies in the benchmark index next year.

However, the ‘Magnificent 7’ stocks will outperform by about 7 percentage points only, the slimmest margin in seven years, Goldman said in a note dated Monday.

“Although the ‘micro’ earnings story supports continued outperformance of the Magnificent 7 stocks, the balance of risk from more “macro” factors such as growth and trade policy lean in favor of the S&P 493 (companies),” the brokerage said.

Goldman estimated corporate earnings to grow 11% and a real U.S. gross domestic product growth of 2.5% in 2025.

The brokerage also warned that risks remain high for the broader U.S. equity market heading into 2025, due to a potential threat from tariffs and higher bond yields.

“At the other end of the distribution, a friendlier mix of fiscal policy or a more dovish Fed present upside risks,” Goldman added.

Trump’s victory in the U.S. Presidential election earlier this month has brought into sharp focus his campaign pledge to lower taxes and impose higher tariffs, moves that are expected to spur inflation and reduce the Fed’s scope to ease interest rates.

The brokerage also projected earnings-per-share of S&P 500 companies at $268 in 2025.

By Tom Westbrook

SINGAPORE (Reuters) – Investors are betting a slide in the yen will force a hawkish shift at the Bank of Japan and are shorting bonds, buying bank shares and bracing for rates to rise as soon as next month.

Markets are paying attention because Japan’s last rate hike 3-1/2 months ago – against the tide of global cuts – was part of the trigger for a chaotic surge in the yen that whipped around the world as positions funded in yen were quickly unwound.

With the yen at 154 to the dollar and near levels that drew intervention, followed by a rate hike, investors are taking fewer chances this time. They have accumulated positions, notably in bank stocks, which stand to benefit from higher rates.

“There seems to be a lot more attention and sensitivity being paid around the BOJ,” said Shinji Ogawa, co-head of Japan cash equities sales at J.P. Morgan in Tokyo.

“That’s being expressed through various asset classes, whether it be direct overnight index swaps…(or) financials, which is an area where there’s obviously pretty aggressive share price movement.”

Dealers say some hedge funds have also taken out bets on bond yields rising. Since late October, pricing for a 25 basis point hike in Japan in December has gone from negligible to about a 54% probability.

“Fast money is again focusing on short end of the curve,” said Keita Matsumoto, head of financial institution sales and solutions at Citigroup (NYSE:C) Global Markets Japan, with hedge funds accumulating small short positions over recent weeks.

In the two weeks since the U.S. election, Tokyo bank shares have surged about 13% against a mostly flat broader market where exporters, especially in cyclical sectors like industrials and machinery, have been the other outperformers.

“Our focus has been on Japan mid-caps and Japan banks,” said George Efstathopoulos, manager of a $102 million global multi-asset fund at Fidelity International, as they stand to benefit from wage inflation and higher interest rates respectively.

“More recently, we are also turning more constructive on broader Japan large caps, as yen weakness should translate into a better earnings picture at a time when global growth is re-accelerating,” he said.

YEN STORY

The price of the yen is a major factor in Japan’s economy and equity market performance and can influence monetary policy through the cost of imports, which drive inflation.

BOJ Governor Kazuo Ueda made only passing mention of the currency, which has lost more than 30% against the dollar since the start of 2021, in a closely watched policy speech on Monday.

However, markets think the falling yen will pressure the central bank to move sooner rather than later, particularly as foreign exchange traders bet on a deeper slide.

“In light of the recent performance of the Japanese yen, the BOJ might need to re-evaluate whether they need to be more hawkish in the coming meetings,” said Nathan Swami, Asia-Pacific head of currency trading at Citi in Singapore.

Speculators in foreign exchange have been adding to bets against the yen, according to CFTC data.

To be sure, bets in the rates market are modest and a more than 375 basis point gap between two-year U.S. rates and two-year Japanese rates is a powerful fundamental driver of the yen’s weakness that has many investors comfortable.

“Given the yield differentials and the carry trade, many clients have been structurally eager to be long the dollar,” said Shafali Sachdev, head of investment services in Asia at BNP Paribas (OTC:BNPQY) Wealth Management in Singapore.

Still, the scars of August, when the yen’s lurch higher drove the Nikkei‘s largest one-day drop since 1987, has the currency strategy at the front of investors’ minds.

“I think Japan will be a yen story as much as a Japanese fundamentals story,” said BNY strategist Geoff Yu. And, said Citi’s Matsumoto, that may even be a boon for foreign investors in Japan if the currency stops eating in to dollar returns.

“Because global investors have to worry about where this yen depreciation may stop,” he said. “So they are looking for the bottom on JPY.”

By Liangping Gao and Joe Cash

BEIJING (Reuters) – Beijing and Shanghai have announced tax breaks to spur home purchases as distress in the property sector continues to drag on growth in the world’s second-largest economy.

Other major Chinese cities are widely expected to follow suit and the measures come on the heels of some tax breaks on home and land transactions unveiled by China’s finance ministry last week.

Beijing and Shanghai residents looking to sell an existing property will be exempt from paying the value-added tax so long as they have held onto it for more than two years, statements from local authorities said on Monday.

The two megacities also raised the standard for levying deed tax to properties larger than 140 square metres (1,500 square feet), up from 90.

Chinese policymakers urgently need to arrest a slump in the property market, once a key growth driver that at its peak accounted for around a quarter of economic activity. But a broader consumer and investor confidence crisis has glued prospective buyers’ wallets shut.

The steps by Beijing and Shanghai have done little to boost property stocks. China’s real estate share index has lost about 1% so far this week while an index for Hong Kong-listed mainland property developers is roughly flat.

The new measures this month come on top of a raft of rule changes for the property sector at the end of September, including a cut in the minimum down payment ratio to 15% for all housing categories and a relaxation in home purchase restrictions.

“The policy pivot since September has been effective in reviving demand and supporting housing and stock prices,” said Xu Tianchen, senior economist at the Economist Intelligence Unit. “However, China’s economy is not yet on a firm footing, and policy support has to be bold and sustained to revive confidence.”

Zhang Dawei, an analyst at property agency Centaline, said confidence in near-term prospects for the country’s real estate markets had improved.

“The property market in some cities, especially tier-one and tier-two cities, can be judged to have bottomed out, and the property market stabilisation will be the trend,” Zhang added.

Analysts also said, however, that officials will need to roll out further policy support to tackle the wider stresses dragging on consumer confidence.

“To reignite the growth engine of the property sector, policymakers must address residents’ expectations regarding economic and income growth, and offer a more stable outlook on housing prices,” said Bruce Pang, chief economist at JLL, a property consultancy company.

Other tax breaks announced by both Beijing and Shanghai include eliminating the distinction between so-called “ordinary” and “non-ordinary” housing when value-added taxes are levied on property sales. Shanghai will also eliminate the distinction when it levies personal income taxes on property sales.

“Non-ordinary” housing consists of properties of 144 square metres or larger which had previously been subject to higher taxes.

($1 = 7.2366 Chinese yuan)

A look at the day ahead in European and global markets from Kevin Buckland

Signs are positive for European stocks’ open, with futures pointing up, and equity indices across most of Asia also in the green.

Like Monday, there’s little news to guide market direction, with a reversal of some of the big moves from last week when world stocks suffered their worst week since the start of September again being the main driver of moves.

The U.S. dollar is trading on the back foot again today, extending its retreat from a one-year peak versus major peers from last week. Treasury yields sagged to new lows in Tokyo, pulling away from Friday’s high above 4.5%, a level last seen 5-1/2-months ago.

The outlook for Federal Reserve easing seems to have returned as the market’s main preoccupation, in the absence of highly anticipated announcements of Donald Trump’s picks for the Treasury and trade portfolios.

A run of robust U.S. data combined with expectations of faster inflation under Trump’s higher-tariff, tighter-immigration policies have seen bets for a December rate cut pared to around 58% on CME FedWatch, from greater than 65% odds a week ago.

Despite the relative news vacuum, AI darling Nvidia (NASDAQ:NVDA)’s earnings on Wednesday loom large as the event likely to set the tone for equity markets at least for the final half of the week, and possibly into year-end.

There’s little on the data docket in Europe today, which is headlined by final consumer inflation readings for October for the euro zone as a whole. Similarly, the U.S. only has housing figures on tap.

There are plenty of central bank speakers though, including Kansas City Fed President Jeffrey Schmid late in the day.

Ahead of that, Bank of England Governor Andrew Bailey and his peers appear in parliament, where they are likely to be peppered with questions about the implications of the government’s big-spending budget and Trump’s potential trade policies.

ECB policy maker Frank Elderson also gives remarks at a green finance forum in Frankfurt. And in Sweden, Riksbank’s First Deputy Governor Anna Breman takes the podium.

Key developments that could influence markets on Tuesday:

-BoE officials speak in parliament

-Euro zone final HICP (Oct)

-ECB’s Elderson speaks

-Riksbank’s Breman speaks

-Kansas City Fed’s Schmid speaks

By Jessie Pang and James Pomfret

HONG KONG (Reuters) -Hong Kong’s High Court on Tuesday sentenced 45 leading democrats to jail terms of up to 10 years in what critics say is a major blow to the financial hub’s rule of law.

The following are comments on this landmark ruling:

REPUBLICAN CHRIS SMITH, CHAIRMAN OF THE U.S. CONGRESSIONAL-EXECUTIVE COMMISSION ON CHINA (CECC)

“The Hong Kong government is seeking U.S. investments in the very same week that it brutally silences free speech and jails pro-democracy advocates. The Chinese Communist Party is asking U.S. financial institutions to subsidize their repression in Hong Kong.

“Instead of investment, the Biden Administration must sanction the judges, police, and prosecutors engaged in the political prosecutions of the HK 47 (democrats) and Jimmy Lai.”

PENNY WONG, FOREIGN MINISTER OF AUSTRALIA

“The Australian Government is gravely concerned by the sentence handed down in Hong Kong for Australian citizen Mr Gordon Ng and other members of the NSL47.

“Australia has expressed our strong objections to the Chinese and Hong Kong authorities on the continuing broad application of national security legislation, including in application to Australian citizens.

“We call for China to cease suppression of freedoms of expression, assembly, media and civil society, consistent with the Human Rights Committee and Special Procedure recommendations, including the repeal of the National Security Law in Hong Kong.”

THE INTER-PARLIAMENTARY ALLIANCE ON CHINA (IPAC), A GROUP OF INTERNATIONAL LAWMAKERS ENGAGED IN ISSUES ON CHINA.

“(IPAC) denounce their convictions as a travesty of justice. These 45 men and women are suffering political persecution for organising a democratic primary election. This is clear evidence, if any more were needed, of the precipitous decline in the rule of law in Hong Kong. No credible system would countenance such ludicrously harsh sentences for people who merely wanted to vote.”

LEE YUE SHUN, 31, ONE OF THE TWO ACQUITTED DEMOCRATS:

“We should actively care to express our feelings, put forward our views, raise some questions or give some suggestions based on … the conclusion of this case. I think this is what everyone needs to do. Because as a member of society, these cases are not only about legal interests. In fact, everyone has a chance to be affected.”

ROXIE HOUGE, THE U.S. CONSULATE IN HONG KONG’S HEAD OF POLITICAL AND ECONOMIC AFFAIRS

“The U.S. government condemns the continuous prosecution of individuals here in Hong Kong who are expressing their political views … exercising their freedom of speech.”

MAYA WANG, ASSOCIATE CHINA DIRECTOR AT HUMAN RIGHTS WATCH

“Running in an election and trying to win it is now a crime that can lead to a decade in prison in Hong Kong. Today’s harsh sentences against dozens of prominent democracy activists reflect just how fast Hong Kong’s civil liberties and judicial independence have nosedived in the past four years since the Chinese government imposed the draconian National Security Law.”

SARAH BROOKS, CHINA DIRECTOR FOR AMNESTY INTERNATIONAL:

“We have moved into an era where healthy civic debate, the space for public discourse, and the normal interactions and sometimes frictions between civil societies and governments, is no longer seen as acceptable (in Hong Kong).”

STEVE TSANG, DIRECTOR OF THE CHINA INSTITUTE AT THE SCHOOL OF ORIENTAL AND AFRICAN STUDIES (SOAS) IN LONDON:

“Hong Kong’s democratic movement essentially has been put to a stop. It doesn’t mean that people in Hong Kong are not still aspiring for democracy. It doesn’t mean that there are no people in Hong Kong who would still fight for democracy. But as an organised movement, it has effectively been put to a stop. The range of people who are being caught up in this network of 47 shows that even people who are known to be very, very moderate indeed can be caught in the net.”

URANIA CHIU, A DOCTORAL LEGAL RESEARCHER AT OXFORD UNIVERSITY:

“Ultimately I think the damage to Hongkongers’ faith in the courts and the rule of law has already been done in how the case has been handled so far, in terms of the mass arrests, stringent bail requirements, and over 3.5 years of detention for some of the defendants.”

By Sneha Kumar

(Reuters) – Singapore shares jumped to a 17-year high on Tuesday, powered by a rally in index heavyweight financials, as the city-state ramps up efforts to revive its stock market.

The Straits Times Index, comprising 30 biggest companies in the city-state, rose as much as 0.9% to touch a level unseen since November 2007. It has gained 16% so far this year, outperforming most of its rivals in the region.

In August, the Monetary Authority of Singapore (MAS) said it had formed a review group to recommend steps to strengthen the development of the equities market in the island country, which hosts more than $4 trillion of assets under management.

“The combination of seemingly stronger political will and low market expectations drives our conviction that soon-to-be announced initiatives will likely have a meaningfully positive market impact, even if their exact details are still to be fleshed out,” Morgan Stanley (NYSE:MS) analysts said in a note.

DBS Group (OTC:DBSDY), Oversea-Chinese Banking Corp and United Overseas Bank (OTC:UOVEY) rose between 0.4% and 0.6%.

The Singapore dollar traded largely flat.

Among other stock markets in Southeast Asia, Thailand and Taiwan rose 0.9% and 1.4%, respectively.

On Monday, Thailand reported better-than-expected economic growth for the July-September period, although rising government spending and slowing private consumption remain a concern.

The latest economic data is expected to maintain pressure on the central bank to lower interest rates further, helping Thai stocks rise to their highest since Nov. 8.

“Considering uncertainty surrounding the growth outlook, the still elevated real policy rate, and weak credit growth, it is too early to rule out further monetary policy easing in 2025,” ANZ analysts said in a note.

Among currencies in the region, the Taiwan dollar and the Malaysian ringgit gained 0.2% and 0.3%, respectively, against an easing U.S. dollar.

The ringgit is the only Asian currency that has gained so far this year, as the Malaysian economy stays on track to meet official forecasts, reflecting a jump in investments and boost in domestic spending.

HIGHLIGHTS:

** Bank Indonesia to keep rates steady on Nov. 20 to stabilise battered rupiah

** Philippine central bank signals more rate cuts ahead

** Thai Q3 GDP growth beats forecast, but risks seen ahead

Asian

currenc

ies and

stocks

as of

0357

GMT

COUNTRY FX RIC FX FX INDE STOCK STOCK

DAILY YTD % X S S YTD

% DAILY %

%

Japan +0.31 -8.50 0.73 15.66

China +0.00 -1.85 -0.39 11.30

India -0.02 -1.41 0.32 8.27

Indones +0.22 -2.62 0.99 -0.93

ia

Malaysi +0.34 +2.85 0.20 10.49

a

Philipp +0.07 -5.56 0.40 5.25

ines

S.Korea +0.24 -7.34 0.30 -6.74

Singapo +0.04 -1.41 0.82 16.13

re

Taiwan +0.24 -5.30 1.36 27.45

Thailan -0.10 -1.22 0.90 3.53

d

CEBU, Philippines (Reuters) – The International Monetary Fund (IMF) warned on Tuesday that “tit-for-tat” tariffs could undermine Asia’s economic prospects, raise costs and disrupt supply chains even as it expects the region to remain a key engine of growth for the global economy.

“The tit-for-tat retaliatory tariffs threaten to disrupt growth prospects across the region, leading to longer and less efficient supply chains,” IMF Asia-Pacific Director Krishna Srinivasan said at a forum in Cebu on systemic risk.

Srinivasan’s remarks come amid concerns over U.S. President-elect Donald Trump’s plan to impose a 60% tariff on Chinese goods and at least a 10% levy on all other imports.

Tariffs could impede global trade, hamper growth in exporting nations, and potentially raise inflation in the United States, forcing the U.S. Federal Reserve to tighten monetary policy, despite a lacklustre outlook for global growth.

In October, the European Union also decided to increase tariffs on Chinese-built electric vehicles to as much as 45.3%, prompting retaliation from Beijing.

The IMF’s latest World Economic Outlook forecasts global economic growth at 3.2% for both 2024 and 2025, weaker than its more optimistic projections for Asia, which stand at 4.6% for this year and 4.4% for next year.

Asia is “witnessing a period of important transition”, creating greater uncertainty, including the “acute risk” of escalating trade tensions across major trading partners, Srinivasan said.

He added that uncertainty surrounding monetary policy in advanced economies and related market expectations could affect monetary decisions in Asia, influencing global capital flows, exchange rates, and other financial markets.

By Selena Li and Kane Wu

HONG KONG (Reuters) -Beijing will support more high-quality enterprises from China to list and issue bonds in Hong Kong, China’s Vice Premier He Lifeng said on Tuesday, offering backing to the city at a time its future as a financial centre is facing scrutiny.

Speaking at the Global Financial Leaders’ Investment Summit hosted by the Hong Kong Monetary Authority (HKMA), He said China’s recent stimulus measures were gradually taking effect and benefitting Hong Kong’s markets.

He said Beijing would help support Chinese financial institutions to expand their businesses in Hong Kong.

“We will improve the mechanism for the regular issuance of treasury bonds, steadily increase issuance in Hong Kong, and support Hong Kong in consolidating its position as a global financial business hub,” He said, without providing specifics.

Hong Kong’s standing as a regional capital markets hub has diminished in the past few years, with the value of initial public offerings and secondary listings sliding.

There have been $9.1 billion worth of listings in Hong Kong in 2024, according to Dealogic data, compared with $5.88 billion in 2023. Despite the pick up, issuance volumes remain well off the 2020 peak of $51.6 billion.

The deals slowdown has prompted Western and Chinese financial firms to slash hundreds of investment banking jobs in the past two years. Some international law firms have scaled back or exited their businesses in the greater China region.

The HKMA event is being attended by some of China’s top policymakers and global bankers who have gathered in the Asian financial hub.

It marks the first appearance of He, China’s top economic official, and all three of its main financial regulatory chiefs at the annual event that has been running since 2022.

TRUMP EFFECT

The event also comes as China is grappling with an economic slowdown, fuelled by a property sector debt crisis and the lingering effects of the pandemic lockdowns. Geopolitical uncertainties remain heightened in light of Donald Trump’s election as the next U.S. president.

Trump has proposed tariffs on Chinese made goods of at least 60%, in a move likely to further strain diplomatic and business ties between the two countries.

“Asia itself has very good core growth, 4.6%, even if you look at the tariff effect on China which will significantly affect Chinese growth, we think China can do quite a lot in terms of remediating that,” UBS chairman Colm Kelleher told the summit.

Citigroup (NYSE:C) chief executive Jane Fraser and Goldman Sachs chairman David Solomon told the forum the return of Trump to the White House next year should spur more corporate buyout activity on the prospect of reduced regulation.

“When we think about deregulation tapering there (U.S), we saw an almost immediate unlock happening with the election result,” Fraser said.

“… We saw a huge growth in our pipelines, almost overnight in M&A, IPOs, our sponsor clients are definitely back and I would call it the big unlock that we’ve been waiting for a long time.”

Beijing unveiled earlier this month a 10 trillion yuan ($1.38 trillion) debt package to ease local government financing strains and stabilise the country’s flagging growth.

($1 = 7.2364 Chinese yuan)

SYDNEY, Nov 19 (Reuters) – Australia’s central bank said on Tuesday that there was no immediate need to change interest rates, having left them steady for a year now, but it was important to be ready to act as the economic outlook evolves.

Minutes of its November 4-5 board meeting released on Tuesday showed the Reserve Bank of Australia (RBA) again discussed scenarios under which the cash rate of 4.35% may need to be cut, raised or held steady for a prolonged period.

In one such scenario, the RBA said a drastic slowdown in inflation could warrant a rate cut, but the board will need to observe more than one good quarterly inflation outcome to be confident that such a decline is sustainable.

Markets have not fully priced a cut in rates until May next year, with a move in February after the fourth-quarter inflation report just at a 38% probability.

A majority of economists, however, still look for a rate cut in February.

The central bank considered a range of scenarios that might require a timely response from policy.

“It is important to remain forward looking, avoiding an excessive reliance on backward-looking information that may lead the board to react too late to a change in economic conditions,” said the RBA.

Policy might need to be tightened if the board judged that the current stance is not restrictive enough, said the RBA, adding that it will closely watch data such as credit growth, banks’ willingness to lend and growth in asset prices.

The central bank has kept rates steady for a year now, judging that the cash rate of 4.35% – up from a record-low 0.1% during the pandemic – is restrictive enough to bring inflation to its target band of 2-3% while preserving employment gains.

The RBA does not expect inflation to return to its target band until 2026. Headline inflation slowed to 2.8% in the third quarter, mainly due to government rebates on electricity, while underlying inflation ran at a still elevated 3.5%.

Other scenarios for a change in the cash rate include developments around consumption and the labour market. Card data from banks showed consumer spending has been weaker than expected even with the government’s tax cuts, while the labour market has stayed surprisingly strong, with the jobless rate staying at 4.1% for six months or so.

If the supply capacity of the economy was much more limited than assumed as productivity growth fails to pick up, it could necessitate a tighter policy stance, noted the RBA.

The central bank was also watching for major changes in U.S. economic policy and the size of the stimulus package from China.