EQUITIES: China & Hong Kong Equities Struggle, Macau Gaming Revenue Drops
- Chinese stocks opened 2025 on a weak note, with the CSI 300 Index struggling to gain momentum despite December's liquidity support from the PBOC. Investor sentiment remains muted as concerns persist over Macau's underwhelming recovery and a lack of enthusiasm for the economic outlook. With the Lunar New Year approaching, a PBOC-driven positive surprise may be needed to reignite market interest.
- Macau casino stocks dropped as December gaming revenue fell 2%, missing estimates amid increased scrutiny during President Xi Jinping’s visit. Annual gaming revenue for 2024 rose 24% to 226.8b patacas but remains below pre-pandemic levels. Shares of Galaxy Entertainment, Sands China, and Melco International fell 1.8%-2.7%
- China's manufacturing activity slowed in December, with the Caixin PMI falling to 50.5 from 51.5, below expectations of 51.7, reflecting a slower expansion amid external challenges. President Xi Jinping highlighted the economy's stability and the 2024 growth target of about 5%, while concerns grow over potential tariffs under Donald Trump's return to office.
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FOREX: JPY & CAD Shorts Cut Per CFTC Positioning Update
CFTC positioning data was released late on Monday in the US (due to the Thanksgiving holiday at the end of last week). The table below updates FX positioning by currency and type of manager for the week ending the 26th of Nov.
- Leveraged players cut back on CAD, JPY and EUR shorts for this period. The also added to GBP longs. AUD longs were cut, but this investor base is close to neutral in terms of outright positioning.
- NZD flipped back to a net short for leveraged investors, but this was just prior to last week's hawkish 50bps cut from the RBNZ.
- The USD index was close to recent highs last Tuesday on the 26th of Nov.
- In the real money space, trends were mixed. Yen shorts were, but EUR longs were cut, and GBP shorts added to. CAD shorts were also cut. Note the 26th of Nov was the day of significant CAD weakness following the trump tariff threat.
- Outright positioning in JPY remained short for both leveraged players and asset managers. This week's update may show further adjustments, given USD/JPY's slide sub 150.00.
Table 1: CFTC Positioning By Currency & Investor Type (Change & Outright Positions)
| Leveraged Contracts | Asset manager Contracts | |||
| Weekly Change | Outright Position | Weekly Change | Outright Position | |
| JPY | 2998 | -23369 | 18244 | -29572 |
| EUR | 9855 | -29956 | -14445 | 168708 |
| GBP | 5231 | 55942 | -24282 | -67462 |
| AUD | -1440 | 1473 | 6219 | -12706 |
| NZD | -3326 | -1181 | -1367 | -26722 |
| CAD | 8477 | -77226 | 21089 | -121729 |
| CHF | -1285 | -12980 | 1320 | -23218 |
| MXN | -7541 | -10292 | -4125 | 3402 |
Source: CFTC/MNI - Market News/Bloomberg
CHINA PRESS: November CPI Seen To Rise Moderately - Analysts
Analysts expect China’s November CPI to grow moderately, ranging from 0.15% to 0.6% y/y, compared to October’s 0.3%, Securities Daily reported. Declining food prices amid better weather and supply, falling prices of crude oil, industrial raw materials, metals and other commodities will weigh down CPI, the newspaper said citing analysts. Sources predicted PPI in November would be between -2.09% to -3.0% y/y, compared to October’s -2.9%, given low ex-factory and raw material purchase prices sub-indices in the recent manufacturing PMI, and affected by weak global oil demand, the daily said, citing analysts. China is set to release the data next Monday.
CHINA PRESS: PBOC To Maintain Supportive Stance - Pan
The People’s Bank of China will keep monetary policy supportive in 2025, while increasing countercyclical regulation, maintaining reasonable liquidity and reducing financing costs for enterprises and residents, Governor Pan Gongsheng said at a recent forum. The central bank will use structural monetary policy tools, strengthen support for scientific and technological innovation, green and consumer finance, and promote the stable development of the real estate and capital market, Pan added. Since late September, authorities have implemented incremental policies aimed at reaching this year's expected economic goals.
