China set to unveil 10tn yuan stimulus

June Chen and Bloomberg

The National People's Congress has reviewed spending and debt-financing plans, and stimulus of as much as 10 trillion yuan (HK$10.9 trillion) is expected to be revealed this Friday.

Shares and the yuan edged up.

The lawmakers have been gathering in the shadow of the US presidential election to sign off on the fiscal package that's set to run into the trillions of yuan yet is unlikely to put the market fully at ease, analysts said.

Economists at Goldman Sachs, Macquarie, and Nomura predict lawmakers this week will back at least 1 trillion yuan in quota of special sovereign bond issuance to replenish bank capital.

They also expect approval for an increase in local government bond sales either this week or in the coming months to swap so-called hidden debt over several years, with forecasts ranging from about 6 trillion yuan to 10 trillion yuan.

In Hong Kong, the Hang Seng Index rose by 61 points to 20,567 points with investors adopting a wait-and-see attitude as the US presidential election gets under way today.

Some auto stocks led the growth with Geely Auto (0175) rising by nearly 5 percent to HK$14.48 apiece and BYD (1211) by as much as 5.6 percent before closing 3.5 percent higher at HK$287.40.

The momentum came with China urging France to push the European Commission towards a solution acceptable to both the European and Chinese electric vehicle makers, while France said the bloc would not yield on key matters as it pushes to overturn a Chinese tariff on brandy imports.

Nio's (9866) shares ended slightly higher at HK$40.60 amid news that the Chinese EV firm plans to launch its first hybrid model in 2026 and will only sell it in overseas markets, including the Middle East, North Africa and Europe.

Meanwhile, crypto speculators are bracing for potentially pronounced market volatility in the aftermath of the US election day, with bitcoin's dropping from US$73,000 (HK$569,400) to US$68,467 in the past seven days, and more than 10 other crypto currencies seeing their value ease by more than 10 percent in the period.

In the emerging market of India, the rupee touched its weakest level on record yesterday, as persistent outflows from local stocks blunted the impact of a weaker US dollar that helped lift the currency's regional peers ahead of the US election. The rupee closed at 84.11 against the greenback after touching its all-time low of 84.12 earlier in the session.

Benchmark Indian equity indexes, the BSE Sensex and Nifty 50, fell more than 1 percent each on the day, their worst single-day performance in a month.

The benchmarks are down 8 percent from their respective record highs hit in late September, hurt by an exodus of foreign funds to the tune of US$10 billion amid a tepid earnings season.

In commodity markets, oil prices advanced after the Organization of Petroleum Exporting Countries agreed to push back its December production increase by one month and tensions escalated again in the Middle East.