Five Things to Watch in China’s EV Market Next Year

Stocks

Economic

Summary:

It's been another frenetic year in China's electric vehicle market. Xiaomi continued its stunning rise from smartphone maker to EV darling, while market leader BYD's runaway growth stalled out.

Regulatory scrutiny increased, with policymakers focusing their attention on everything from the long-running price war, zero-mileage used cars and flush door handles.

Technology advances continued apace, with BYD and CATL going head-to-head to develop ultra-fast charging batteries and carmakers increasingly making advanced driver-assistance systems more widely available.

So what does 2026 have in store? Here are five key things to watch:

Can BYD Bounce Back?

BYD started this year with a target to sell 5.5 million vehicles, building on last year's record 4.25 million. But after a strong start, sales have tailed off — particularly after steep price cuts invoked the wrath of government regulators — forcing the company to lower its objective for this year. BYD's earnings have declined the past two quarters, and the stock has slumped around 36% from its May peak.

The question is whether this ends up being just a blip for China's biggest EV maker, or the start of a tougher phase as it faces increased competition from the likes of Geely and Xiaomi, as well as heightened regulatory scrutiny. Analysts are still bullish, with 34 rating the stock a buy, compared to just three sells, according to data compiled by Bloomberg.

Deutsche Bank analysts see BYD's ultra-fast charging batteries, God's-Eye driver-assist features and new models helping drive sales to 5.6 million units in 2026. Chairman Wang Chuanfu blamed BYD's slowdown in domestic sales on a lack of compelling technological upgrades and said during a shareholder meeting last week that breakthroughs are ahead in the years to come.

Competition Curbs

While China's auto industry has long been the beneficiary of government support, the tables turned somewhat this year as part of the country's anti-involution drive pushing back against aggressive price wars and industry overcapacity.

In June, the chiefs of major carmakers were summoned to Beijing and given a dressing down for their "rat race competition." The government also took aim at the practice of offloading unsold cars into the secondhand market while boosting sales figures.

A continued hard line from Beijing could act as a damper on the EV market in 2026. The government has yet to renew its trade-in subsidy that encourages drivers to swap older cars for EVs or more fuel-efficient models. Tax rebates are also set to be wound back next year ahead of their total abolition in 2027, as policymakers look to wean the sector off state support.

The uncertain fate of the subsidies has had the effect of pulling car purchases into the final months of this year and could mean a rocky start to 2026.

Xiaomi's Next Act

Tech giant Xiaomi has enjoyed a stellar year with its EVs, consistently beating internal sales targets — it now expects to deliver 400,000 vehicles this year — and reaching profitability in less than half the time it took Tesla.

But there are constraints to the company's growth. It currently has just two models — the SU7 sedan and YU7 midsize sport utility vehicle — and with just one factory in Beijing, there's a lengthy wait time for its EVs. That should ease with a new production line, speeding delivery for some trims.

For the smartphone and home-device maker's next act, it's reportedly working on a full-size sport utility vehicle to compete with the likes of Nio and Li Auto in the highly competitive premium EV segment. The new model is key to bringing fresh impetus to Xiaomi's small lineup that also may need a refresh to stay competitive.

Global Domination

Given the feverish competition at home, Chinese automakers are accelerating their push into global markets. BYD has been at the forefront, opening factories in Brazil and Thailand, with Hungary and Turkey to follow.

The diversification is paying off, with the stock jumping last week after the company reported that exports climbed even as overall shipments fell in November.

BYD is aiming for export sales of 1.6 million vehicles in 2026, up from around 1 million this year, according to Citi analysts. Geely is targeting 600,000 international sales next year, which would be up to 80% higher than 2025.

Even with the key North American market effectively closed off due to tariffs, Europe, South America, Southeast Asia, Australia and even the Middle East are proving to be fertile ground for Chinese automakers.

Battery giant CATL is also pushing ahead with its overseas expansion efforts in a bid to localize production and be closer to customers, with a key factory in Hungary to come on line next year.

Make-or-Break for Nio

Nio faces a critical year, with founder William Li's goal to reach profitability this quarter looking like a stretch. The company was once the rising star of Chinese EV startups, taking on Tesla in the premium end of the market and building a cult-like following with its clubby Nio Houses and showy investor days.

It has failed to live up to the early promises, racking up $20 billion in losses and counting. The stock is down more than 90% from the heady peak of 2021, when the automaker was valued at almost $100 billion. Sales are hovering around 40,000 a month, a fraction of market leaders.

Nio heads into 2026 with limited visibility of its sales performance, according to Citi analyst Jeff Chung. As more rivals start to leapfrog Nio in deliveries, it adds pressure to its finances and finite cash reserves.

Renault supports France's call for EVs sold in Europe to contain locally sourced parts, but is warning against making the content requirements too onerous. Electric-car batteries are still mostly made outside Europe and are the most expensive part of an EV, Chief Strategy Officer Josep Maria Recasens said in an interview. Rather than single out EVs, the EU should impose a 60% local-content rule across all passenger vehicle types, including combustion models, he said.

Source: Bloomberg Europe

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Adam

Economic

MARKET WRAPS Stocks:

European shares were struggling for direction as the trading week kicked off, with investors turning their attention to the upcoming Federal Reserve policy meeting.

After recent weak U.S. jobs data, the Fed could deliver its third and final 25 basis-point rate cut for 2025 on Wednesday, although the decision is unlikely to be unanimous, Deutsche Bank said.

"We expect Powell to emphasize that the hurdle for further cuts in early 2026 is high, signalling a near-term pause ," it said.

An interest-rate cut by the Fed is fully priced in, while consensus is growing that it will be framed as hawkish, BNY said. That means that further monetary policy easing would depend on weaker data or lower inflation in March and June 2026.

The coming Fed Chair transition also presents a risk , as markets evaluate any new leadership, BNY added.

In Europe, the eurozone's data calendar for the coming week will be light. Italian industrial production data for October are due Wednesday. Final CPI data for November are due Friday from Germany, France and Spain.

Elsewhere, Chinese government data earlier on Monday showed that its trade surplus topped $1 trillion this year, comfortably beating forecasts.

U.S. Markets:

Stock futures inched higher early Monday, led by Nasdaq-100 contracts.

Dovish comments from some Fed officials and the latest U.S. labor market data are supporting the case of a rate cut this week.

However, traders are cautiously waiting for Powell's speech for more cues on the path ahead. "What happens next is the part no one agrees on, " said Swissquote.

Forex:

The euro rose after European Central Bank policymaker Isabel Schnabel indicated that the ECB's next move in interest rates could be a rise rather than a cut , ING said.

Commerzbank said the currency could come under pressure if the EU uses frozen Russian sovereign assets to provide much-needed financial aid to Ukraine.

Such a move could " undermine the attractiveness of the eurozone as an investment destination and, in turn, cause long-term damage to the euro itself," it added.

The dollar fell as investors awaited the Fed rate decision.

Sterling fell slightly as last week's rally lost steam. "We caution that the pound's recent strength could prove fragile if global conditions deteriorate or if attention swings back to the U.K.'s challenges," Monex Europe said.

Bonds:

Global rates could be set to test higher levels , said ING. While the Fed was expected to cut interest rates, it could be cautious about prospects for further reductions and this could put some pressure on yields, it added.

Eurozone government bond yields rose, with the 10-year Bund yield rising to their highest level since March , according to LSEG.

Treasury yields edged higher in early trading hours.

Energy:

Oil prices were steady as investors monitored geopolitical risks and awaited the Fed's decision.

A peace deal to end the war in Ukraine looks distant at the moment, while continued attacks on Russian energy infrastructure raise the risk premium , according to market watchers.

Metals:

Gold inched lower, but continued to be supported by expectations of a Fed interest-rate cut this week and a softer dollar.

Gold's outlook for 2026 is likely defined by ongoing geoeconomic uncertainty , the World Gold Council said.

Copper

Copper prices extended last week's gains, surging to fresh record highs on fears of global supply shortages.

"Supply shortages continue to spark panic buying ," ANZ said.

Iron

Iron ore prices were lower in early trade. On the supply side, cumulative global iron ore shipments in 2025 continue to rise on year, while port inventories are also building, Nanhua Futures said.

EMEA HEADLINES

German Industrial Output Accelerates Again

Industrial production in Europe's largest economy continued to accelerate in October, surpassing expectations as the sector awaits large-scale government investment.

Output jumped 1.8% on month, Germany's statistics agency Destatis said Monday, compared with a 1.1% increase in September. Economists polled by The Wall Street Journal expected a rise of 0.3%.

L'Oreal Doubles Stake in Swiss Skincare Company Galderma

L'Oreal is buying a stake in Galderma from an investor group, doubling its holding in the Swiss company to 20% in a deal that expands its footprint in dermatology.

Financial terms weren't disclosed. The package of about 24 million Galderma shares would be valued at 3.9 billion francs ($4.85 billion) based on Friday's closing price of 162.80 francs. The seller is an investment group led by Sweden's EQT and includes Sunshine SwissCo, Abu Dhabi Investment Authority and Auba Investment, L'Oreal said.

Repsol, HitecVision to Merge JV With TotalEnergies UK's Upstream Business

Repsol and HitecVision said they would merge their joint venture Neo Next Energy with TotalEnergies' U.K. offshore oil and gas production business.

The Spanish energy company said Monday that under the terms of the transaction, TotalEnergies UK would acquire a 47.5% stake in Neo Next Energy.

Kloeckner & Co Shares Rise on Takeover Talks With Worthington Steel

Shares in Kloeckner & Co surged Monday on takeover talks with U.S. metals processor Worthington Steel.

Shares were 21% higher in early European trade and have now risen 64% in the year to date.

GLOBAL NEWS

China's Exports Bounce Back, Trade Surplus Powers Past $1 Trillion

China's trade surplus has topped $1 trillion this year, with fresh data showing that exports bounced back last month despite a sharper drop in shipments to the U.S.

Outbound shipments rose 5.9% on the year in November, reversing from October's 1.1% drop, government data showed Monday.

Japan Is Out Spending. Bond Markets Seem Nervous About Picking Up the Tab.

TOKYO-Japanese Prime Minister Sanae Takaichi says her $135 billion stimulus package will prop up the world's fourth-largest economy.

Some see a danger in swelling a debt pile that is already one of the largest globally. But many economists say fears of a fiscal unraveling are overblown.

German Industrial Output Accelerates Again

Industrial production in Europe's largest economy continued to accelerate in October, surpassing expectations as the sector awaits large-scale government investment.

Output jumped 1.8% on month, Germany's statistics agency Destatis said Monday, compared with a 1.1% increase in September. Economists polled by The Wall Street Journal expected a rise of 0.3%.

Israel Closes In on Hamas Fighters Trapped in Tunnels, Testing Cease-Fire

For most of the year, a couple hundred Hamas militants have manned fighting positions in the tunnels under southern Gaza. But the walls are closing in.

The U.S.-brokered cease-fire in October left them on the wrong side of the line dividing the parts of the enclave controlled by Hamas and Israel. Food and especially water are running low, Arab intelligence and Israeli military officials briefed on the fighters' situation said. And with the hostages and the bodies of all but one of the dead captives now returned by Hamas, Israel has a freer hand to tear up tunnels looking for its enemy.

Trump's Firing Spree Gives Supreme Court the Chance to Remake Government

WASHINGTON-President Trump's firing spree at federal agencies has snowballed into a Supreme Court showdown over how modern American government should work.

Dangling by a thread is the tradition that certain sensitive policy details-from regulating nuclear reactors to setting safety standards for consumer products-should be managed by bipartisan panels of technocrats, whose jobs are insulated from political pressure.

Putin Wanted AI Supremacy. Now Russia Is Struggling to Stay in the Race.

President Vladimir Putin has often proclaimed that Russia must lead the world in artificial intelligence. In reality, the country is stuck on the sidelines as others pull ahead.

As the U.S. and China race to dominate AI models and applications and countries in Europe and the Middle East pour resources into building computing infrastructure, the Ukraine war has derailed Russia's once lofty ambitions.

Trump-Brokered Cease-Fire Crumbles on Thai-Cambodian Border

Thailand's military on Monday launched airstrikes on targets across its disputed border with Cambodia, shattering a volatile cease-fire agreement between the two Southeast Asian countries brokered by President Trump.

Thai officials said they acted after soldiers stationed near the border came under fire from Cambodian troops on Sunday and Monday morning. Cambodian officials, meanwhile, blamed the Thai military for restarting the fighting.

Source: morningstar

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Gerik

Political

Russia-Ukraine Conflict

Peace Talks Deadlocked Over Donbas and Security Assurances

Efforts to broker a peace agreement between Ukraine and Russia, mediated by the United States, have hit a major roadblock as Ukrainian President Volodymyr Zelenskiy revealed that no consensus has been reached regarding control of eastern Ukraine’s Donetsk and Luhansk provinces. Speaking in an interview with Bloomberg, Zelenskiy stated that the various visions of the U.S., Russia, and Ukraine remain fundamentally misaligned, especially regarding sovereignty over the Donbas region, one of the most contested areas since Russia’s 2022 full-scale invasion.

The core of the deadlock lies in the contrasting territorial expectations. While Ukraine demands full restoration of its territorial integrity, including Donbas, other stakeholders appear to entertain compromise scenarios. This divergence has created a causal impediment to advancing negotiations, with Zelenskiy emphasizing that Ukraine cannot proceed without ironclad security guarantees, particularly from the United States.

Tensions Rise After Trump Criticizes Kyiv’s Stance

Zelenskiy’s comments came shortly after U.S. President Donald Trump voiced disappointment with Ukraine’s approach to the proposed settlement, stating that Zelenskiy had not “yet read the proposal.” This public rebuke represents a shift in tone from Trump, who had previously focused on Russia’s response. The criticism places additional pressure on Kyiv to respond to Washington’s framework while simultaneously managing its domestic expectations and long-standing war aims.

Zelenskiy pushed back, pointing out the existential stakes for his country. “There is one question I and all Ukrainians want to get an answer to: if Russia again starts the war, what will our partners do?” he asked, underlining Ukraine’s insistence on binding guarantees that would activate Western support in the event of renewed aggression. This concern underscores a deeper strategic mistrust, where Ukraine fears becoming a buffer zone without firm commitments.

European Engagement Grows as Leaders Prepare to Convene

As the diplomatic situation intensifies, Zelenskiy is en route to London for high-level talks with key European leaders, including UK Prime Minister Keir Starmer, German Chancellor Friedrich Merz, and French President Emmanuel Macron. The scheduled meetings are expected to focus heavily on the U.S. peace proposal, especially its provisions related to territorial control and international security assurances.

The inclusion of major European leaders at this stage indicates that the transatlantic alliance is seeking to present a more unified position. However, internal divisions within NATO and differing national priorities could complicate any consolidated front. European powers have previously expressed a more cautious approach to long-term military guarantees, preferring phased security arrangements over blanket commitments.

Ukraine’s refusal to concede control over Donbas without robust security guarantees continues to stall progress in U.S.-led peace talks. As Kyiv balances geopolitical pressures from Washington and Moscow with domestic imperatives of sovereignty and security, President Zelenskiy’s upcoming meetings with European leaders could prove pivotal. Still, without a breakthrough on territorial consensus and Western security commitments, a lasting settlement remains elusive. The coming weeks may determine whether diplomacy advances or freezes further in the shadows of an unresolved war.

Source: Bloomberg

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Gerik

Economic

Commodity

Oil Markets Stabilize After Rally, With Eyes on Russian Flow and Demand Uncertainty

After a brief upward momentum, oil prices retreated modestly on Monday, with Brent crude futures slipping in rangebound trading that has persisted since early November. The market remains constrained within a $4-per-barrel bandwidth, signaling a state of indecision shaped by geopolitical tensions, uncertain demand recovery, and growing concerns about supply imbalances.

A key driver of oil price sentiment is the ongoing realignment of Russia’s crude exports, especially its increasing flow to India. President Vladimir Putin’s recent promise of “uninterrupted shipments” to India has reassured markets about short-term supply stability, though it also signals Russia’s long-term pivot toward Asian buyers in response to Western sanctions. This strategy could alter global trade flows and undercut the impact of sanctions, reinforcing supply levels and contributing to future price softness.

The correlation between Russia’s redirection of exports and Brent’s resilience within its narrow band illustrates how geopolitical maneuvering is now a key variable in crude pricing. With U.S. negotiators arriving in India for trade talks, the strategic energy partnership between Moscow and New Delhi is likely to influence broader diplomatic and energy dynamics.

Geopolitical Tensions Persist but Are Priced In

While diplomatic developments around a possible peace deal between Russia and Ukraine remain in play, they have so far produced limited price disruption. U.S. President Donald Trump’s recent expression of disappointment with President Zelenskiy’s handling of a peace proposal underlines continued uncertainty. Nevertheless, markets appear to have priced in the war’s protracted nature, with only material changes such as a ceasefire or expanded conflict likely to trigger sharp volatility.

Beyond geopolitics, structural supply dynamics are increasingly exerting downward pressure on oil prices. Output is rising not just from OPEC+ countries, but also from major non-OPEC producers including the United States, Brazil, and Guyana. This expanded production base threatens to outpace what remains a tepid demand recovery, setting the stage for potential oversupply in early 2026.

According to Vivek Dhar, an analyst at Commonwealth Bank of Australia, Russian oil exports are gradually bypassing sanctions and flowing into alternative markets, making the threat of oversupply more tangible. He anticipates that these conditions will push Brent crude down toward $60 per barrel through 2026, especially if demand growth fails to reaccelerate. This prediction reflects a direct causal link: as new supply increasingly reaches markets unrestricted, downward price pressure becomes a structural inevitability rather than a temporary fluctuation.

Market Outlook Reports Could Reframe Sentiment

The near-term trajectory of oil may be shaped by upcoming market reports from the U.S. Energy Information Administration (EIA), the International Energy Agency (IEA), and OPEC. These reports are expected to clarify global inventory trends, production adjustments, and revised demand forecasts. If data supports the oversupply narrative or downgrades demand, oil could decisively break below its current range.

Oil markets are navigating a delicate balance of geopolitical maneuvering and supply-side buildup. While political developments around Ukraine and India-Russia energy cooperation have kept Brent trading steady within a narrow range, the underlying risks of a global supply glut remain unresolved. Unless demand accelerates or significant supply cuts emerge, the structural indicators point toward sustained pressure on prices heading into 2026. For now, the market’s calm may prove temporary as economic data and policy reports provide the next directional cues.

Source: Bloomberg

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Warren Takunda

Economic

The euro to dollar exchange rate (EUR/USD) technical setup has improved markedly, and this week's Federal Reserve interest rate cut will underscore the fundamental case for ongoing resilience.

The pair rallied to a high of 1.1681 last week, a level last seen in mid-October, and in doing so broke above the 21- and 55-day exponential moving averages (EMA).

The move above these two momentum indicators provides a clean technical signal that the outlook has flipped from the downside to upside in the short-term.

Euro-to-Dollar Week Ahead Forecast: Staying Constructive_1

In sympathy with this, we would anticipate further gains in the coming week.

That being said, a pullback ahead of Wednesday's Federal Reserve decision cannot be ruled out, as this could be a high-stakes event for currency markets.

Weakness should be limited to the 1.1610 area where the 21- and 55-day EMAs are converging, confirming this to be the line-in-the-sand for the coming week.

Of course, should the Fed strike a hawkish tone, euro-dollar can come under significant pressure and a break back into the 1.15s will transpire, putting the exchange rate back under pressure into year-end.

However, our base case is that the Fed won't have the data to 'shake the boat' to the degree required to trip up the euro's rally.

This is why we would anticipate setbacks to the euro's advance to be shallow, and ultimately why 1.17 is in scope in the coming days.

There is some EUR-based interest due Wednesday when European Central Bank (ECB) Governor Christine Lagarde addresses the FT Global Boardroom event in London, where she is expected to touch on Eurozone monetary policy.

Expect her to maintain the view that interest rates are in a good place, which will broadly underpin the view the ECB won't be cutting anytime soon, which confers support to the euro.

Recent industrial production improvements and firming inflation data should underpin the case for Lagarde to maintain a steady stance.

The divergent path between U.S. and European interest rates will become all the more stark this week when the ECB's steady hand comes up against that of an active Federal Reserve.

The week's highlight for EUR/USD is the Federal Reserve policy decision, due Wednesday, and markets have almost fully priced in a 25 basis point interest rate cut, which would take the Fed funds target range to 3.50–3.75%.

The decision to cut will rest on a series of economic surveys that confirm the labour market is softening.

Last week saw EUR/USD jump to 1.1681 after the U.S. November ADP employment report read -32k, disappointing consensus expectations for a 10k gain in employment, in the process sealing this Wednesday's rate cut.

The rate cut itself won't be remarkable enough to drive any sizeable FX market reaction.

Instead, it's the outlook for interest rates in 2026 that will be of greater interest. Here, there's uncertainty owing to divisions within the Fed's FOMC.

"Some members remain concerned about inflation staying above target, while others place greater emphasis on signs of labour market weakness," says Hann-Ju Ho, Senior Economist at Lloyds Market Insights.

The Fed’s statement and Chair Powell’s press conference, along with updated economic projections, will also provide insight into policy intentions for 2026. This meeting includes updated forecasts, including interest rate projections (the dot plot).

Euro-to-Dollar Week Ahead Forecast: Staying Constructive_2

Above: What markets expect from the Fed. Image courtesy of Lloyds Bank.

"The September projections showed a consensus of 3.625% for end-2025, consistent with a 25bp cut on Wednesday, but only 25bp of additional easing in 2026, less than markets currently expect. It will be interesting to see whether the dot plot projection shifts, given the current divisions within the Committee," says Hann-Ju Ho.

Source: Poundsterlinglive

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Glendon

Cryptocurrency

Ethereum has managed to maintain its position above the $3,100 level, showing steady performance in recent days. As of the latest update, ETH is priced at $3,160, reflecting a 3.87% increase over the past 24 hours. This strong price action suggests a potential for further upward movement, with traders keeping an eye on key resistance levels that could trigger gains toward the $3,700 zone.

Whale Activity Supports ETH Price Stability

A significant factor behind Ethereum's current price stability is the involvement of large investors, often referred to as "whales." Analyst Ted pointed out that some whales have recently opened long positions in Ethereum. This activity has helped keep ETH's price above critical levels, as large trades can have a substantial impact on the market.

Despite the strong buying from major investors, Ethereum's price faces resistance between $3,300 and $3,400. If the cryptocurrency fails to break through this zone, there could be a retracement, bringing the price back to the $3,000 range. Investors are monitoring whether Ethereum can surpass this resistance to drive the price higher.

Looking forward, Ethereum faces crucial price levels that could determine its next move. If the price moves above the key resistance zone, it could pave the way for a move toward $3,700 or even $3,800.

Ethereum ETF Outflows Create Market Tension

Meanwhile, Ethereum exchange-traded funds (ETFs) have seen substantial outflows, which could signal a shift in investor sentiment. According to a recent report from Ted indicated that $65.4 million was withdrawn from Ethereum ETFs, with BlackRock alone selling $55.8 million worth of ETH.

These outflows suggest some investors may be pulling back or rebalancing their portfolios, potentially impacting Ethereum's price in the short term. Despite these ETF withdrawals, Ethereum has maintained a solid price above $3,100.

The market remains cautious but optimistic due to the cryptocurrency's underlying momentum and long-term appeal. Analysts have emphasized that if Ethereum continues to show positive momentum despite these ETF movements, it may highlight the resilience of ETH in the current market. With whales continuing to buy into ETH, there is potential for further upward momentum.

Source: CryptoSlate

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Justin

Political

Economic

Bassem Naim, an official in Hamas' political wing, speaks in Istanbul, Turkey, Dec. 5, 2024. AP-Yonhap

Hamas is ready to discuss "freezing or storing" its arsenal of weapons as part of its ceasefire with Israel, a senior official said Sunday, offering a possible formula to resolve one of the thorniest issues in the U.S.-brokered agreement.

Bassem Naim, a member of Hamas' decision-making political bureau, spoke as the sides prepare to move into the second and more complicated phase of the agreement.

"We are open to have a comprehensive approach in order to avoid further escalations or in order to avoid any further clashes or explosions," Naim told The Associated Press in Qatar's capital, Doha, where much of the group's leadership is located.

The deal halted a two-year Israeli offensive in Gaza, launched in response to Hamas' Oct. 7, 2023, attack. Asked whether the attack was a mistake, Naim defended it as an "act of defense."

Since the truce took effect in October, Hamas and Israel have carried out a series of exchanges of Israeli hostages for Palestinian prisoners. With only the remains of one hostage still held in Gaza — an Israeli policeman killed in the Oct. 7 attack — the sides are preparing to enter the second phase.

The new phase aims to lay out a future for war-battered Gaza and promises to be even more difficult — addressing such issues as the deployment of an international security force, formation of a technocratic Palestinian committee in Gaza, the withdrawal of Israeli troops from the territory and the disarmament of Hamas. An international board, led by President Donald Trump, is to oversee implementation of the deal and reconstruction of Gaza.

The Israeli demand for Hamas to lay down its weapons promises to be especially tricky — with Israeli officials saying this is a key demand that could hold up progress in other areas. Hamas' ideology is deeply rooted in what it calls armed resistance against Israel, and its leaders have rejected calls to surrender despite over two years of war that left large parts of Gaza destroyed and killed tens of thousands of Palestinians.

Naim said Hamas retains its "right to resist," but said the group is ready to lay down its arms as part of a process aimed at leading to the establishment of a Palestinian state. He gave few details on how this might work but suggested a long-term truce of five or 10 years for discussions to take place.

"This time has to be used seriously and in a comprehensive way," he said, adding that Hamas is "very open minded" about what to do with its weapons.

"We can talk about freezing or storing or laying down, with the Palestinian guarantees, not to use it at all during this ceasefire time or truce," he said.

It is not clear whether the offer would meet Israel's demands for full disarmament.

The ceasefire is based on a 20-point plan presented by Trump, with international "guarantor" nations, in October.

The plan, adopted by the U.N. Security Council, offered a general way forward. But it was vague on details or timelines and will require painstaking negotiations involving the U.S. and the guarantors, which include Qatar, Egypt and Turkey.

"The plan is in need of a lot of clarifications," Naim said.

One of the most immediate concerns is deployment of the international stabilization force.

Several countries, including Indonesia, have expressed a willingness to contribute troops to the force, but its exact makeup, command structure and responsibilities have not been defined. U.S. officials say they expect "boots on the ground" early next year.

One key question is whether the force will take on the issue of disarmament.

Naim said this would be unacceptable to Hamas, and the group expects the force to monitor the agreement.

"We are welcoming a U.N. force to be near the borders, supervising the ceasefire agreement, reporting about violations, preventing any kind of escalations," he said. "But we don't accept that these forces have any kind of mandates authorizing them to do or to be implemented inside the Palestinian territories."

Displaced Palestinians walk through a muddy pathway between tents set up amid destroyed buildings in Jabalia, in the northern Gaza Strip, Dec. 7. AP-Yonhap

In one sign of progress, Naim said Hamas and the rival Palestinian Authority have made progress on the formation of the new technocratic committee set to run Gaza's daily affairs. He said they have agreed upon a Palestinian Cabinet minister who lives in the West Bank, but is originally from Gaza, to head the committee. He did not give the name, but Hamas officials, speaking on condition of anonymity to discuss the negotiations, have identified him as Health Minister Majed Abu Ramadan.

Both Israel and Hamas have accused each other of repeated violations of the deal during the first phase.

Israel has accused Hamas of dragging out the hostage returns, while Palestinian health officials say over 370 Palestinians have been killed in continued Israeli strikes since the ceasefire took effect.

Israel says its strikes have been in response to Palestinian violations, including the movement of Palestinians into the Israeli-held half of Gaza. Three soldiers have been killed in clashes with about 200 Hamas militants that Israeli and Egyptian officials say remain holed up underground in Israeli-held territory.

Naim said Hamas was "not aware" of these gunmen when the ceasefire was signed, and that communications with them were "totally cut."

"Therefore, they are not aware about what's going on now on the ground," he said.

He claimed that Israel has rejected Hamas offers to resolve the standoff and added numerous "conditions" to their surrender. Israel has not acknowledged the negotiations and says it has killed several dozens of them.

Naim said Hamas is committed to "fulfilling its obligations" and claimed that Israel has fallen short of key pledges, including not flooding Gaza with humanitarian supplies and failing to reopen the Rafah border crossing with Egypt.

Most of the supplies entering Gaza, he said, are goods for private merchants to sell to the few people in Gaza with money, leaving masses of poor people struggling without food or shelter.

Last week, Israel said it was ready to reopen Rafah — Gaza's main gateway to the outside world — but only for people to leave the strip. Egypt and the Palestinians fear this is a plot to expel Gaza's Palestinians and say Israel is obligated to open the crossing in both directions.

The Oct. 7 attack killed over 1,200 people and took over 250 others hostage. It is the deadliest attack in Israel's history and remains a source of great national trauma.

Israel's retaliatory offensive has killed over 70,000 Palestinians, according to local health officials, displaced nearly all of Gaza's 2 million people and caused widespread damage that will take years to rebuild. It remains unclear who will pay for the reconstruction or when it will begin.

The Palestinian Health Ministry, part of Gaza's Hamas government, does not distinguish between civilians and militants, but says that roughly half of the dead were women and children.

Naim acknowledged the Palestinians have paid a heavy price for Oct. 7 but when asked if the group regrets carrying out the attack, he insisted it came in response to years of Israeli policies going back to the war surrounding Israel's establishment in 1948.

"History didn't start on Oct. 7," he said. "Oct. 7 for us, it was an act of defense. We have done our duty to raise … the voice of our people."