Chart of The Day – CHN.Cash

The People’s Bank of China (PBOC) kept interest rates unchanged—the 1-year LPR remained at 3% and the 5-year at 3.5%—for the seventh consecutive time. The decision to remain unchanged comes at a time when the world’s second-largest economy is struggling with clearly weak economic indicators for November. Retail sales rose by only 1.3% year-on-year, well below the forecast of 2.8%, while industrial production grew by 4.8% – weaker than the expected 5% and the worst reading since August 2024.

The PBOC’s decision reflects the fundamental dilemma facing Chinese policymakers: the economy clearly needs stimulus, but traditional monetary policy alone may not be enough. A significant part of the problem is the weakening of the real estate sector, where investment in fixed assets (including real estate) contracted by 2.6% in January-November compared to the previous year, and new home prices continue to fall – by 1.2% in cities and by as much as 5.8% in the secondary market.

On the Chinese markets, CHN.Cash is down 0.05%, indicating investors’ cautious attitude towards the PBOC’s decision, who may be disappointed by the lack of clear stimulus measures. It is worth noting that at the same time, contracts for European and US indices are performing much better. Persistent deflation and weak demand in the private sector also cast a significant shadow over the outlook – problems that the rate cut alone is unlikely to solve. However, the US suspension of high tariffs on Chinese exports as part of a temporary trade agreement may support economic growth, helping China achieve its “around 5%” growth target for 2025, and the PBOC may have an opportunity to take more decisive stimulus measures in the future.

The CHN.Cash contract remains in a long-term uptrend, which, despite slowing down in recent weeks, still technically maintains important support points set by the 50-week EMA (blue curve in the chart below). As long as CHN.Cash remains above this zone, the overall upward trend can be maintained.

Source: xStation

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