Goldman upgrades expectations for China stocks after Beijing’s stimulus pledge

Good morning. In today’s newsletter:

• India bails out the Maldives

• The year that changed Israel

• HTSI interviews Kim Kardashian

But first we turn to China, where investors are preparing for the resumption of a scorching rally in Chinese stocks when markets reopen today after a week-long holiday.

Goldman Sachs has upgraded its expectations for Chinese equities, telling investors that shares could go a further 15 to 20 per cent higher after a historic rally triggered by Beijing’s pledge to do more to stimulate the economy.

Strategists at the US investment bank said the measures announced so far by Chinese authorities “constitute a more substantial policy stimulus that contrasts with the sporadic and modest easing measures over the past few years”.

But they cautioned that “the market requires confirmation” of the sizeable fiscal stimulus that many expect Beijing to unleash.

Investors will be watching closely today when Chinese authorities are expected to outline a series of fiscal measures to complement the monetary policy stimulus blitz they launched at the end of September. Here’s what market participants are expecting.

And here’s what else I’m keeping tabs on today:

• Economic data: Taiwan publishes September inflation data and Japan reports provisional trade statistics for the month.

• State visit: South Korean President Yoon Suk Yeol begins a state visit to Singapore.

• Results: Samsung Electronics and LG Energy Solution post quarterly earnings.

Five more top stories

1. India unveiled a $760mn bailout for the Maldives after the cash-strapped Indian Ocean archipelago turned to New Delhi to stave off a sovereign default. The bailout cements New Delhi’s central role in supporting the Maldives’ economy despite attempts by its president — who was elected last year on an “India Out” platform — to deepen ties with China.

2. Oil prices surged above $80 yesterday as fears grow of an escalating conflict in the Middle East and possible supply disruptions in the US Gulf of Mexico from a major hurricane. There are signs that hedge funds, many of which had been betting on oil extending this year’s falls, are beginning to adjust their positioning.

• Middle East news: Militants fired on Israel from multiple fronts as the country marked the first anniversary of Hamas’s deadly October 7 attack.

• Storm fears: Hurricane Milton strengthened to a category five storm as it moved across the Gulf of Mexico yesterday, threatening to bring heavy rainfall and life-threatening storm surges to the west coast of Florida.

3. Exclusive: Seven & i Holdings is hunting for ways to boost its share price and bolster its defences ahead of what the 7-Eleven owner believes is a looming second takeover bid from Alimentation Couche-Tard. Alongside other plans, the Japanese group is considering accelerating the sale of its stake in its financial services arm, Seven Bank, as well as selling its supermarket business.

4. Thai investor Central Group has struck a deal with Saudi Arabia’s Public Investment Fund to own jointly the company behind upmarket London department store Selfridges. The deal follows the collapse last year of Central’s previous partner Signa after it ran into financial difficulties.  

5. Donald Trump’s transition team co-chair has warned that people appointed to the former president’s next administration must prove their “loyalty”. Howard Lutnick, who is also head of investment firm Cantor Fitzgerald, told the FT that Trump would execute his agenda at a “speed no one’s ever done before” if he was elected again in November.

The Big Read

Yesterday marked the first anniversary of Hamas’s deadly October 7 attack on Israel. Over that year, Israelis have seen an initial outpouring of compassion gradually curdle into censure and condemnation, especially as the death toll and suffering of Palestinian civilians in Gaza became apparent. The international criticism has led many Israelis to retreat inwards, feeling abandoned by a world “gone crazy” that seems to care little for the hostages still in Gaza.

We’re also reading . . . 

• Will Google be broken up?: The potential remedies in the US antitrust case could transform the search giant. But equally it could prove too little, too late.

• The false promise of regime change in Iran: Military intervention is not the way to bring about the fall of the Islamic republic, writes Gideon Rachman.

• Jane Street: Here’s how a quirky and opaque New York firm generated net trading revenues of more than $10bn for four consecutive years.

Chart of the day

A strong rally in the renminbi is testing Beijing’s currency management policies, after China’s stimulus plans and the US Federal Reserve’s embrace of lower interest rates sent Asian currencies surging against the US dollar.

Take a break from the news

“She understands her position within culture in a way that so many other people in the public eye just don’t,” says British singer Charli XCX of Kim Kardashian. HTSI speaks to the reality queen-turned-retail mogul, whose $4bn apparel empire is moulding a new generation of shoppers.

Additional contributions from Gordon Smith and Tee Zhuo