Day: January 24, 2025

CN250124-RMB Surges 300 Points, Major Chinese Stock Indices Rise

1. Global Stock Markets Rally

Global markets are seeing widespread gains. Expectations of potential interest rate cuts by the U.S. Federal Reserve have led to a weakening U.S. dollar, with the dollar index dipping below 108 today. Despite two days of weakness, the three major U.S. stock indices rallied overnight, with large-cap tech stocks driving the S&P 500 to a record high. Chinese stocks listed in the U.S. also stabilized, and the Nasdaq Golden Dragon China Index rose 0.13%. European and Asia-Pacific markets joined the global upswing, marking a positive day for equities worldwide.

2. Chinese Assets Make a Strong Comeback

The renminbi (RMB) surged this morning, rising sharply by 340 points in just over an hour between 9:40 AM and 11:00 AM (Beijing time). Meanwhile, the A50 futures index saw a dramatic turnaround, going from a slight dip (-0.06%) at 9:34 AM to a strong gain of over 1% by midday. Hong Kong’s Hang Seng Index emerged as one of the strongest performers in the Asia-Pacific region, climbing over 1.6% by midday, while the Hang Seng Tech Index surged by more than 3% during trading.

3. A-Share Indices Rise Across the Board

In the A-share market, the Shanghai Composite Index opened slightly lower due to weak sentiment but quickly rebounded. By midday, the Shanghai Composite and Shenzhen Component indices were up 0.73% and 1.13%, respectively. Tech stocks led the rally, with the ChiNext Index and STAR Market Composite Index rising 1.5% and 1.48%. The breadth of the market was impressive, with 3,515 stocks advancing and only 1,636 declining. Out of 56 industry sectors, 49 posted gains, while only 7 saw losses.

4. Timing is Key in Stock Investing

Reflecting on 2024, two significant market rallies stood out. The first began in late January, as I updated my research on January 23 to capture opportunities in specific state-owned enterprise sectors. This rally gained momentum through May. The second rally occurred in September, driven by tech stocks. Following a market bottom on September 18 at 2,700 points, tech stocks led a breakout rally. Both rallies highlight the importance of timing and seizing opportunities.

5. How to View the Current Market?

With only one and a half trading days left before the Lunar New Year, the anticipated “spring rally” is still a compelling opportunity. Key areas to watch include large-cap tech stocks and core assets in the mainboard market. Opportunities like this only came twice last year, and now, another chance is approaching.

Although trading volume this morning was modest, with turnover reaching just ¥737.2 billion, this suggests the rally is not yet driven by significant capital inflows. However, regulatory assurances of pre-holiday fund injections remain in play, and both policy and liquidity factors could support further gains in the coming weeks.

6. A Notable Update from Japan

Just before midday, the Bank of Japan announced a 25-basis-point rate hike, raising interest rates from 0.25% to 0.5%. This move could impact global capital flows, as it affects low-interest-rate arbitrage opportunities in Japan. Some of this capital might find its way into Chinese markets. Let’s wait and see how this unfolds.

Tesla, Xiaomi, and Other Automakers in China Issue Major Vehicle Recalls

On January 24, the China National Administration for Market Regulation’s Defective Product Recall Center website revealed multiple vehicle recalls from major automakers, including Tesla and Xiaomi. Notably, Xiaomi announced its first-ever vehicle recall since entering the automotive market.

Xiaomi Recalls Over 30,000 SU7 Electric Vehicles

Xiaomi is recalling approximately 31,000 SU7 Standard Edition electric vehicles, produced between February 6, 2024, and November 26, 2024. This recall includes three specific vehicle models:

  • BJ7000MBEVR2: 18,410 units
  • XMA7000MBEVR2: 12,117 units
  • XMA7000MBEVR5: 404 units

The issue stems from a software strategy problem that may cause timing synchronization errors. This could impact the smart parking assist system’s ability to detect static obstacles, increasing the risk of minor collisions or scrapes. Xiaomi will address this issue through a free over-the-air (OTA) software update, ensuring safety without requiring customers to visit a service center.

Xiaomi emphasized that user safety is its top priority, and although no physical parts need replacement, the recall follows strict regulatory procedures. This move aims to enhance the reliability of its smart parking assist system.

The recall also affects a batch of pre-launch test vehicles produced in February 2024. Xiaomi explained that these vehicles were part of extensive internal testing to ensure product quality before the SU7’s official release in March 2024.

Responding to questions about the delay in issuing the recall after an incident in November, Xiaomi stated it had immediately identified and resolved the issue with cloud services. However, further extensive testing and regulatory approval delayed the official announcement.

Xiaomi delivered over 135,000 vehicles in 2024 and has set an ambitious goal of 300,000 deliveries for 2025, as revealed by CEO Lei Jun in a New Year’s live stream.

Other Automakers Announce Recalls

On the same day, several other automakers in China also issued recall notices:

  1. Tesla: Over 1.2 million Model S, Model X, Model 3, and Model Y vehicles due to potential software or hardware issues.
  2. Chery Jaguar Land Rover: Nearly 110,000 Range Rover and Jaguar models due to safety concerns.
  3. Hyundai: Over 69,000 Sorento and other models for defects related to manufacturing from 2010 to 2018.
  4. SAIC Volkswagen: More than 330,000 Passat and Tiguan L models produced between 2015 and 2017.
  5. Honda: Over 1.3 million vehicles, including CR-V and Civic models, for safety improvements.

These recalls reflect the industry’s commitment to addressing potential issues proactively, ensuring customer safety and trust.