Market analysis should focus on Sino-US relations. Regarding external affairs, a routine press conference held by the Ministry of Commerce expressed firm opposition to the US's additional Section 301 tariffs on Chinese semiconductor products and stated that serious representations have been made to the US side through the China-US economic and trade consultation mechanism. Concerning restrictions on rare earth magnet exports, China actively promotes and facilitates compliant trade. Regarding TikTok signing agreements with investors, the Chinese government hopes enterprises will reach solutions that comply with Chinese laws and regulations and balance interests. In capital markets, the Monetary Policy Committee of the People's Bank of China's Q4 2025 regular meeting proposed utilizing swap facilities and stock repurchase/increase loans, exploring institutionalized arrangements, and maintaining capital market stability. Two tools were established in October 2024, with initial quotas of 500 billion yuan and 300 billion yuan respectively. As of December 25, the swap facility had been utilized twice totaling 105 billion yuan; the total ceiling for stock repurchase/increase loans reached 338.352 billion yuan.
Stock indices continued their upward trend. In the spot market, China's three major A-share indices closed higher with fluctuations; the Shanghai Composite Index rose for a seventh consecutive day, gaining 0.47% to close at 3959.62 points, while the ChiNext Index rose 0.30%. By sector, most industry indices advanced, with Defense & Military Industry, Light Industrial Manufacturing, Machinery & Equipment, and the Automotive sector leading gains; Nonferrous Metals, Commercial & Retail Trade, and Coal Mining declined. The combined turnover for the Shanghai and Shenzhen markets rose to 1.92 trillion yuan that day. Overseas, US stock markets were closed for the Christmas holiday.
IH saw an increase in open interest. In the futures market, regarding basis, the basis for IF, IC, and IM continued to correct. In terms of volume and open interest, stock index futures trading volume decreased, while IH open interest increased.
The targeted tools deployed by the central bank into the capital market provide significant underpinning force, and policy intensity is expected to persist next year. The rapid expansion of the CSI A500 ETF scale injects incremental funds into the market from the fund side. Judging from market trading performance, the price hike logic and the technology sector are expected to reemerge as the main market themes.
Risks include potential downside for stock indices if domestic policy implementation falls short of expectations, overseas monetary policy proves more aggressive than anticipated, or geopolitical risks escalate.