TMTPOST --  The U.S.-listed shares of Chinese firms jumped on Monday as China’s policymakers signaled they will double down economic stimulus measures for the next year.

Credit：Xinhua News Agency

The Nasdaq Golden Dragon China Index, which tracks 65 China-exposed U.S.-listed companies, surged as much as 10.6% before settling 8.5% higher on Monday. The index, registering its best day since September 26, outperformed the U.S. stock market as the benchmark S&P 500 pulled back from its record close set last Friday with a 0.6% decline. The American depositary receipts (ADRs) of Fangdd Network Group Ltd., operator of a leading online real estate marketplace in China, closed 52.1% higher before soaring as much as 165%. Its domestic peer KE Holdings Inc finished 11.7% higher. ADRs of Temu parent PDD and its e-commerce rivals Alibaba and JD.com added 10.5%, 7.4% and 11%, respectively. Shares of Chinese electric vehicle (EV) makers Xpeng, Nio, Zeekr gained more than 10%, and Zeekr up around 8%.

Exchange-trade funds (ETFs) tracking the investment in Chinese equities accordingly logged losses. The KraneShares CSI China Internet ETF and the Invesco China Technology ETF closed 10% and 8.4% higher, respectively. China exposed stocks traded in Europe, particularly luxury firms, also benefited from the stimulus outlook. The broader luxury index plunged nearly 4%, and Kering and LVMH rose 3.5% reach.

Shares rallied following a meeting of the Politburo, China’s top decision-making body. The Political Bureau of the Communist Party of China (CPC) Central Committee on Monday held a meeting to analyze and study the economic work of 2025 and arrange Party conduct and anti-corruption work, reported the state news agency Xinhua. The main goals and tasks for economic and social development in 2024 will be successfully accomplished, according to the meeting.

The meeting, chaired by Chinese President and general secretary of the CPC Central Committee Xi Jinping, urged implementing a more proactive fiscal policy and a moderately loose monetary policy next year, per Xinhua. It is necessary to enrich and improve the policy toolkit, strengthen unconventional counter-cyclical adjustments, intensify the coordination of various policies, and make the macro regulation more forward-looking, targeted and effective, the meeting noted. The country should vigorously boost consumption, improve the investment efficiency, and expand domestic demand on all fronts, it said. In 2025, authorities must adhere to “the principle of pursuing progress while maintaining stability,” Xinhua reported. It added the housing market and stock market must be stabilized.

Under the “more proactive fiscal policy”, China’s Finance Ministry may have more room to inflate the central government budget deficit,  and “a moderately loose monetary policy” suggests the People’s Bank of China (PBOC) may pay more attention to internal balance when making decision on monetary policy, and  the central bank is likely to cut the reserve requirement ratio (RRR) and interest rates in the future, the state-backed national newspaper China Securities Journal quoted industry insiders.

"It gives high hope for more monetary support to come, including outright interest rate cuts," said Frances Cheung, head of Asia rates and currency strategy at OCBC in Singapore. 

China’s Politburo this time offered unprecedented “supportive guidance for the economy in 2025,” rekindling enthusiasm for China assets, according to Evercore ISI strategist Neo Wang. Announcements of strong fiscal support are now expected in the annual National People's Congress (NPC) meeting in early March, Wang said, noting the new supportive measures could  include “higher deficit ratio, bigger local government special bond quota, and at least 1 trillion yuan of ultra-long special sovereign bonds.”

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