Chinese stocks completely erase last Monday’s massive stimulus-induced gains

China’s pledge to “implement more proactive fiscal policies and moderately loose monetary policies” in 2025 spurred a furious rally that propelled the iShares MSCI China ETF up 7.8% to open last week.

With this morning’s retreat, that surge has been completely unwound. Exchange-traded funds that offer leveraged exposure to the Chinese market, like the Direxion Daily FTSE China Bull 3X Shares ETF or the Direxion Daily CSI 300 China A Share Bull 2X Shares ETF, are now negative over this period.

(As an aside, the tens of millions in paper gains from big long-term options bets made on those funds don’t appear to have been realized, and so have turned into paper breakevens.)

Unsurprisingly, the hop into and out of the Chinese equity pool has coincided with another round of outperformance for megacap US technology stocks. Every member of the Magnificent 7 except Nvidia is higher over this stretch — with Tesla and Google positing big gains —  in contrast to the awful breadth and modest decline for the S&P 500. The automaker is poised to be a beneficiary of a more permissive regulatory environment for autonomous driving under the incoming Trump administration, while the search giant has attracted fresh demand thanks to its quantum-computing breakthrough.

China’s bond market, for what it’s worth, didn’t put any stock in the possibility of a more pro-growth backdrop. Ten-year yields dipped on December 9 and are plumbing fresh record lows to approach 1.7% on Monday.