The Chinese administration have announced their intention to rollout an additional RMB 6 trillion package to support the debt burden of local governments and China’s finance minister also gave forward guidance that they would be introducing new measures to further stabilise the property market. While the headline number of RMB 6 trillion seems substantial, ultimately it was not impressive as the debt swap is intended to occur gradually over the next 3 years. Furthermore, there is uncertainty over how the local governments will spur their respective economies once their debt position improves. A positive note is that there has been some initial rebound in property sales. However, we believe near-term equity valuations in China are likely to remain rangebound until further stimulus measures are announced given the modest earnings results so far.

In the US, the presidential election results was a red sweep, where the Republican party took control of the House and Senate. This shift is expected to lead to more decisive policy action going forward which would be beneficial for domestic US companies. Nevertheless, President Donald Trump’s erratic nature may cause bouts of market volatility despite the anticipated policy clarity.

Going forward into 2025, we remain constructive on technology companies. With overall valuation levels in this space remaining high and economic growth still normalising, we shall selectively initiate new positions. We note that equity markets have been exhibiting high amounts of volatility on surprising economic data or slight earnings misses. We believe this is due to the high valuations observed in the broad equity market. Though disappointing earnings results may signal the start of a deterioration in business performance, we tend to see that most of these reactions are overblown over a long-term horizon. This presenting attractive buying opportunities.