China in the Spotlight: Equities With the Worst Start to Any Year Since 2016

The Yuan Slipping Below Support Levels; And Bond Yields Sliding to All-Time Lows

Highlights

• Deteriorating macro backdrop puts Chinese markets on the defensive

• Equities continue to come under pressure after a lackluster December

• Ongoing dollar strength represents a financial condition shock

• 2024 stock market described in one word: Momentum

Key Takeaways

India and Energy Shine Amid a Sloppy Start

• In a sloppy start to the year for the world market, what has stood out positively has been India on a regional basis and Energy on a sector basis.

Worst Performance in Nine Years for Chinese Equities

• China is in the spotlight with its equity market entering 2025 with its worst performance in nine years. Beijing allowed the onshore yuan to slip below the Rmb7.3 per dollar line, and the 10-year bond yield dipped below 1.6% for the first time on record. Shades of what we saw exiting 2015 and entering 2016.