The trading year of 2025 has concluded. Looking back at the performance of global capital markets, stock markets in many countries extended the upward trend from 2024. Against the backdrop of a wave of interest rate cuts initiated by global central banks, which released ample liquidity, most markets achieved gains. However, in April, impacted by Trump's tariff policies, global stock markets experienced a significant correction, with several markets, including US stocks, even falling into a technical bear market.
Despite this, global markets ultimately demonstrated considerable resilience. Driven by the AI revolution, stock indices in many countries rebounded sharply, with US, Japanese, European, and South Korean stocks all reaching record highs. This propelled the MSCI World Index to achieve another double-digit gain in 2025, rising approximately 20%, marking the third consecutive year of growth exceeding 15%. This undoubtedly benefited from the continued momentum of the AI boom.
The performance of A-shares and Hong Kong stocks was also impressive: the Shanghai Composite Index rose nearly 20%, reclaiming the 4,000-point level. Although it saw some volatility towards the year-end, it ultimately closed with "11 consecutive positive sessions," suggesting the bull market trend might continue into 2026. The ChiNext Index surged by 50%, highlighting the characteristics of a strong tech-driven bull market.
In terms of Asia-Pacific stock markets, Japanese and South Korean markets embarked on a magnificent rally. Favorable macro environments and valuation advantages also enhanced the appeal of European stock markets to overseas investors. Against the backdrop of the Federal Reserve cutting interest rates three times, capital outflows triggered by Trump's related policies not only fueled a significant bull run in metals like gold but also boosted stock markets in Latin American emerging economies such as Mexico, Brazil, and Colombia.
The MSCI Asia Pacific Index surged about 28% in 2025, marking the first time since 2020 that Asian stock markets have outperformed major US and European indices in a single year. Asia accounts for 75% of global semiconductor manufacturing capacity and is expected to maintain its dominant position over the next five years. Benefiting from cost advantages, complete industrial chains, and specialized expertise, the Asia-Pacific region leads in various semiconductor sectors, including memory chips. The Nikkei 225 Index broke through the 50,000-point milestone, rising approximately 30% for the year with strong momentum. Despite the Bank of Japan raising interest rates to combat high inflation, Japanese stocks remained resilient.
The current global capital market bull run stems from two main factors: ample global liquidity resulting from consecutive Fed rate cuts on one hand, and the powerful trend driven by the AI revolution on the other.
Looking ahead to 2026, the fundamental logic supporting the rise in global stock markets remains unchanged. The Federal Reserve is expected to continue cutting interest rates, with at least two 25-basis-point cuts anticipated, and potentially even three. In May of this year, current Fed Chair Powell's term ends, and candidates like Hassett may be nominated by Trump for the chairmanship. If confirmed, such nominees would likely support Trump's advocacy for low-interest-rate policies, potentially leading to more aggressive rate cuts. Coupled with US non-farm payroll data falling below expectations, these factors could prompt the Fed to accelerate its rate-cutting cycle. 2026 may see another wave of rate cuts from global central banks, providing positive support for global stock markets.
The AI revolution is still in its early stages, and current debates about a bubble in US AI tech stocks are intense. Previously, during a discussion with Wall Street investor Jim Rogers, he explicitly stated he had sold all his US stock holdings and shifted to A-shares and Hong Kong stocks; Warren Buffett has also significantly reduced his US stock holdings over the past two years, reflecting his consistent cautious stance. Of course, some investors remain actively bullish on US tech stocks. In 2026, US stocks, particularly tech stocks, may peak and then correct, facing downward pressure on valuations primarily due to overvaluation rather than poor performance of AI tech stocks. This expected correction is unlikely to replicate the aftermath of the 2001 dot-com bubble burst; the decline is expected to be relatively limited, serving more as an adjustment to overly rapid gains and high valuations rather than signaling the start of a major bear market.
Relatively speaking, A-shares and Hong Kong stocks still trade below their historical average valuations, and the bull market in tech stocks, in particular, is expected to continue. Benefiting from policy support, foreign capital inflows, and the shift of household savings into the capital markets, A-shares and Hong Kong stocks are poised to achieve gains of around 10% to 20% in 2026. Tech stocks will remain a key investment theme, while sectors like new energy, consumer blue-chips, defense, and non-ferrous metals are also expected to see rotational strength. The market's wealth effect and investors' sense of gain are projected to improve significantly.
The market structure in 2025 presented a "barbell" shape: one end featured strong gains in low-valuation, high-dividend bank stocks, driving the index upward; the other end saw robust performance from growth-oriented tech stocks. Technology sectors represented by humanoid robots, chips/semiconductors, advanced algorithms, and solid-state batteries still have room for further gains in 2026, especially as technological innovation remains a key theme in the inaugural year of the 15th Five-Year Plan. However, in 2025, the middle part of the "barbell" among traditional sectors saw little to no growth, with many sectors even declining. Entering 2026, with increased market liquidity and an accelerated shift of household savings into capital markets, the A-share market has the potential to transition from a structural bull market to a comprehensive bull market, offering rising opportunities for more sectors.
Therefore, 2026 is a year full of hope and numerous investment opportunities. Regarding risks, investors should remain vigilant about international geopolitical instability, potential measures like tariffs from Trump, and disagreements surrounding a potential bubble in US tech stocks. Overall, however, 2026 remains a year where significant achievements are possible.
Wishing all investors good health and successful investments in 2026, leading to favorable investment returns.
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