Zürcher Nachrichten - Asian stocks drop as China support plan falls flat, bitcoin hits record

Stocks rallied last week on hopes that a second Trump administration -- supported by a Republican Congress -- would push through a slew of business-friendly policies including deregulation and tax cuts, offsetting concerns about possible trade wars.

However, the mood changed after Beijing said Friday it would lift local government debt by $840 billion to help them clear so-called hidden debt, but fell short of announcing any new growth-boosting measures for the stuttering economy.

Hopes had been building all last week that officials would deploy a "bazooka" stimulus, the need for which was highlighted Sunday by data showing Chinese inflation slowed last month and came in below forecasts.

Authorities in late September began unveiling a raft of policies aimed at reigniting the economy, which has failed to fire since the lifting of tough Covid-fighting rules at the end of 2022.

Among them were interest rate cuts and an easing of home-buying measures as leaders try to address a crisis in the country's vast property sector.

Friday's announcement saw Chinese shares traded in New York plunge more than four percent.

And Hong Kong led losses Monday, shedding more than two percent, while Shanghai was also down, along with Tokyo, Sydney, Seoul, Wellington, Taipei, Manila and Jakarta.

The selling came as investors ignored another record for all three markets on Wall Street, which was also helped by another Federal Reserve interest rate cut.

Observers said there were concerns about the impact of Trump's planned tariffs, which he said would have a particular focus on China, fuelling talk of another trade war between the economic superpowers.

Pepperstone Group's head of research Chris Weston said Beijing may have had an eye on this in its announcement.

"Many feel that China is keeping its tactical powder in play for such time as the Trump-China tariff negotiations build, and they can respond in a more targeted fashion to stem the likely economic fallout," he wrote.

"In the short-term, however, it does suggest downside risk to China/HK equity and the yuan."

Meanwhile, bitcoin continued to push to new highs, hitting a record $81,740 on Monday on optimism that Trump will ease regulations surrounding the cryptocurrency.

"We shouldn't expect this bullish trend to be interrupted for a long time -- about a year. The next level for me is $100,000," Stephane Ifrah, of French crypto asset management company Coinhouse, told AFP.

Meanwhile, researchers at Bank J. Safra Sarasin offered a largely upbeat outlook for the next year.

They wrote in a report that "2024 ends with stronger economic growth, more balanced labour markets and lower inflationary pressures than we expected a year ago. In particular, the US economy was more resilient and is still headed for a soft landing".

"Yet President-elect Donald Trump’s policy proposals could lead to heightened macroeconomic volatility. Deregulation and tax cuts would boost nominal growth, but a trade war would hurt growth and raise prices."

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: DOWN 0.4 percent at 39,347.79 (break)

Hong Kong - Hang Seng Index: DOWN 2.7 percent at 20,177.77

Shanghai - Composite: DOWN 0.6 percent at 3,431.75

Euro/dollar: DOWN at $1.0722 from $1.0724 on Friday

Pound/dollar: DOWN at $1.2918 from $1.2921

Dollar/yen: UP at 153.23 yen from 152.62 yen

Euro/pound: UP at 83.00 pence from 82.95 pence

West Texas Intermediate: DOWN 0.4 percent at $70.08 per barrel

Brent North Sea Crude: DOWN 0.3 percent at $73.64 per barrel

New York - Dow: UP 0.6 percent at 43,988.99 (close)

London - FTSE 100: DOWN 0.8 percent at 8,072.39 (close)

O.Meier--NZN