As stocks and the renminbi fall, Chinese regulators rush to reassure investors

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Chinese regulators tried to calm markets on Monday as the equity and renminbi extended losses at the start of the year following weak economic data and geopolitical uncertainty ahead of Donald Trump’s inauguration.

Mainland China’s benchmark CSI 300 index fell 0.2 percent on Monday and fell 4.1 percent in the first three trading days of the year, the worst start to 2025 among major Asian indexes.

Small-cap stocks on the CSI 2000 are down 6.6 percent since the start of the year. Hong Kong’s Hang Seng index fell 0.4 percent on Monday, down 1.2 percent this year.

The decline came as China’s stock exchanges held meetings with global investors and the central bank reaffirmed its commitment to keeping the currency stable, undermining Trump’s threats. Tariffs on Chinese exports have risen sharply. It’s looming.

Jason Lui, head of Asia-Pacific equity and derivatives strategy at BNP Paribas, said: “Right now everyone is wondering what Trump 2.0 will bring. “It makes sense for investors to try and take some profit.”

China’s currency fell to a 15-month low of Rmb7.33 to the dollar on Monday, even as the People’s Bank of China held its daily trading band for the onshore renminbi. Selling pressure on China’s currency is associated with bearish pressure. Chinese stockssay analysts.

Poor production data, a Two-year high for the dollar index And Trump’s arrival has all contributed to pressure on Chinese stocks, said Kevin Liu, strategist at CICC.

The Shanghai and Shenzhen exchanges sought to reassure investors that China’s economy is underpinned by “strong fundamentals and resilience,” at a meeting with foreign institutions over the weekend to “solicit comments and feedback” on recent moves in Chinese stocks, they said on Sunday.

The central bank on Monday set the daily adjustment rate – the midpoint at which the renminbi is allowed to trade 2 percent against the dollar in either direction – at Rmb7.19, despite selling pressure on the currency.

According to the newspaper Financial News, the central bank will “resolutely guard against the risk of excessive exchange rate manipulation and maintain the fundamental stability of the renminbi.”

He added that the central bank’s past “experience of multiple rounds of appreciation and devaluation” showed it had “adequate” tools to keep the currency “fundamentally stable”.

In another sign of weak sentiment, investors continued to buy long-dated sovereign debt, as fears of weak domestic consumption prompted the PBoC to further ease monetary policy.

The yield on China’s 10-year government bond fell 0.015 percentage point to 1.61 percent, hitting a low of less than 1.6 percent last Thursday. Bond products, on the contrary, move to prices.

The weak start to the year comes despite claims from Beijing that it wants to boost domestic consumption following a protracted asset crisis.

China’s rubber-stamp parliament is set to unveil its economic policy agenda in March, which is expected to be tough.

“Given the key things that will be needed in 2025. . . , we think investors need to look more at consumption, government support for the private sector and youth employment,” said Winnie Wu, executive director of China equity strategist at Bank of America.

In the year Despite a rough start to 2025, analysts said Chinese stocks were strong in 2024 after a long period of decline, with the CSI ending the year at 300, up 14.7 percent.

“We think the worst is over,” Wu said.