📈 World Bank: Optimistic About China's Economy

Good Morning!

In these final days of 2024, Asian markets are taking a breather with Hong Kong, Australia, and New Zealand out for the holidays. Despite today's pause, global markets are wrapping up another strong year with an impressive 17% gain, powered by Wall Street's remarkable run. The dollar's holding strong, while Treasury yields tick upward – the 10-year's now at 4.613%. After Powell's recent hawkish stance, we're looking at just 35 basis points of potential easing for 2025, considerably tempering earlier market expectations.

In today’s email:

• China: World Bank upgrades forecasts

• Bitcoin: Up slightly to $97K area

• NVDA: Retail investors have crowned a new king  

• Gold: Essential portfolio allocation for 2025

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THE BIG IDEA

China's economic narrative for 2024-2025 shows promise with World Bank's upgraded forecasts, though property sector concerns and consumer confidence remain key challenges

Fresh data paints an intriguing picture of China's economic trajectory. After revising its 2023 GDP up to a whopping $17.73 trillion, the World Bank's now boosted China's growth forecast to 4.9% for 2024 - a notch above their June prediction of 4.8%. They're also more optimistic about 2025, lifting projections to 4.5% from 4.1%, though that's still showing a cooling trend.

But it's not all smooth sailing in the world's second-largest economy. The property sector's still giving economists heartburn, with the workforce in real estate development shrinking by 27% compared to 2018 levels. The World Bank's Mara Warwick emphasizes we won't likely see a property market turnaround until late 2025, while warning that subdued household and business confidence will continue to weigh on growth.

To counter these headwinds, Beijing's pulling out the big guns with a planned record-breaking 3 trillion yuan ($411 billion) in special treasury bonds for 2024

This comes as China grapples with tepid domestic demand and consumer confidence issues, despite its middle class now representing 32% of the population.

The latest National Economic Census reveals some bright spots, showing increased business entities and employment in secondary and tertiary industries compared to 2018. However, the challenge remains significant - about 55% of Chinese citizens remain "economically insecure," highlighting the delicate balance needed between short-term growth support and crucial structural reforms.

As we head into 2025, all eyes will be on China's next moves at March's National People's Congress, where these economic strategies could still see some fine-tuning.

MARKETS AT A GLANCE

TOP NEWS

Nvidia's meteoric rise in 2024 has attracted unprecedented retail investor attention, making it the most bought stock among individual traders with nearly $30B in net inflows

Retail investors have crowned a new king in 2024 - Nvidia's dethroned Tesla as the retail favorite, pulling in almost $30B in net inflows. The AI giant's 180% surge this year has retail portfolios now holding over 10% in NVDA, double from January. While December's been rocky, small investors remain bullish: "All roads lead to Nvidia."

Russia's sanctioned Pioneer LNG vessel docks at home after failing to find international buyers during a four-month global search

After a futile four-month odyssey seeking buyers willing to dodge US sanctions, the Pioneer LNG tanker has finally docked at Russia's Kamchatka storage facility. This setback highlights how US restrictions are derailing Moscow's ambitious plan to triple LNG exports by 2030, with Arctic LNG 2's first shipments finding no foreign ports willing to risk US retaliation.

China launches polysilicon futures trading amid industry volatility, offering a new hedging tool for the struggling solar materials market

China's Guangzhou Futures Exchange kicked off polysilicon futures trading today, introducing seven contracts through June 2025. With prices plummeting 90% over two years due to massive oversupply, major producers like Tongwei and Xinjiang Daqo are cutting output. The move follows China's successful lithium futures launch, expanding its green tech trading portfolio.

CRYPTO

Binance Bitcoin Reserves Hit January Levels, Raising Bullish Speculation

Bitcoin reserves on Binance have fallen below 570,000 BTC, their lowest since January 2024, coinciding with a 90% BTC price rally months later. At $98,680, similar momentum could see Bitcoin reach $187,500 in the coming months. The decline suggests investors are moving BTC to cold storage, signaling long-term confidence, while market analysts predict post-holiday liquidity could drive prices beyond $105,000.

2025 Set to Be the Year AI Agents Revolutionize Crypto Ecosystem

AI agents, autonomous programs capable of optimizing tasks like trading, community-building, and yield farming, made waves in 2024, including driving a memecoin to a $1 billion market cap. In 2025, agent-led interactions are expected to dominate on-chain activity, from decentralized finance to gaming, as blockchains offer seamless financial infrastructure and open-source innovation. The rise of AI agents signals a transformative era for blockchain and artificial intelligence.

Crypto OTC Desks Report Surge in Trading Volumes Post-Election and Price Rally

Over-the-counter (OTC) crypto trading desks are experiencing significant growth, with volumes up 220% year-over-year at Kraken and similar spikes seen across the industry. The post-election rally in Bitcoin and Ethereum prices has fueled increased activity, with institutions expanding into altcoins like Solana and Aave. Industry players anticipate continued demand in 2025, particularly as derivatives markets and ETF offerings mature, driving broader institutional adoption.

Bitcoin Accumulator Addresses Acquire 225k BTC in December Despite Sell Pressure

Bitcoin accumulator addresses saw significant demand in December, adding 225,280 BTC—a monthly increase of 82.6%. This comes amid a drop in sell-side liquidity, with exchange and ETF inventories shrinking by 590,000 BTC. While new short-term holders and reduced OTC supply point to strong absorption of sell pressure, analysts caution potential short-term downside due to declining USDT liquidity on exchanges.

GOLD

Gold Allocation in 2025: A Strategic Hedge for Investors

Gold is expected to rise by about 10% in 2025, potentially reaching near $3,000 per ounce, despite challenges from higher real yields and resilient U.S. economic growth, according to Tom Bruce, Macro Investment Strategist at Tanglewood Total Wealth Management. Bruce advises a 9.5% gold allocation in diversified portfolios, emphasizing its role as a hedge against broader market risks, bolstered by sustained central bank buying as they diversify reserves away from the U.S. dollar.

DAILY ECONOMIC CALENDAR (ET)

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