I. Performance and Valuation of Global Equity Indices
Data Source: Bloomberg, Complied by Tiger Brokers
II. Key Market Themes
i. Positive Signals from China's High-Level Meeting: How to Position Greater China Assets?
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On December 9, the Chinese Communist Party's Politburo convened a meeting to analyze and discuss economic work for 2025. Compared to previous sessions, this meeting adopted a more positive tone, introducing the term “extraordinary counter-cyclical adjustments” for the first time. Moreover, in the overall agenda, “expanding domestic demand comprehensively” was prioritized over “building a modern industrial system,” indicating that addressing “how to expand domestic demand and tackle insufficient effective demand” will be the top priority for China’s economy next year.
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Notably, this meeting marked the first mention of “moderately loose” monetary policy in 16 years, since the 2008 financial crisis. While it is just a slight modification, it implies that next year’s monetary easing will be stronger than this year, with expectations of further rate cuts and reserve requirement ratio (RRR) reductions. Additionally, the term “more proactive” was used to describe fiscal policies.
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Furthermore, for the first time, the meeting explicitly mentioned “stabilizing the housing and stock markets.” In mainland China, it is extremely rare for high-level meetings to directly address the stock market, signaling a significant rise in the prioritization of the equity and capital markets. We believe this meeting will significantly boost market sentiment for Greater China assets in the short term. However, whether this uplift can be sustained in the medium to long term depends on the continuity and effectiveness of subsequent policy measures. We maintain a cautious yet optimistic outlook.
Data Source: Macrobond, BOCOM International Holdings
ii. U.S. Inflation Remains Stubborn: Will the Fed Slow or Pause Rate Cuts Next Year?
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Last week, U.S. inflation data for November was released. Both headline CPI and core CPI rose 0.3% month-on-month, meeting market expectations. However, headline PPI surged 0.4%, far exceeding the 0.2% forecast. Fortunately, core PPI showed no significant increase, rising 0.2%, which was in line with expectations.
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In response, Fed insider Nick tweeted that since only part of core PPI is included in PCE calculations, he remains optimistic about this week’s PCE data. He predicts core PCE will rise just 0.13% month-on-month, with an annualized rate of 1.6% for the month, meeting the Fed's target. However, the year-on-year figure may remain stubbornly high at 2.8%, causing discomfort for the Fed.
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With the release of U.S. economic data earlier this month, the Fed has largely set aside concerns about an imminent recession. Currently, inflation has become the central focus for markets. We believe that although Powell has downplayed inflation concerns, the Fed will still give its all to push inflation down from 3% to 2%. If this week’s PCE data aligns with Nick’s prediction, the Fed may have enough justification to slow or pause rate cuts after a December reduction.
Data Source: CME Group
iii. Google Unveils Quantum Computing Chip: Is NVIDIA at Risk of Being Disrupted?
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Recently, Google $谷歌(GOOG)$ launched its latest quantum computing chip, Willow, which completed a benchmark test in under five minutes—a task that would take the most powerful supercomputer today 10^25 years to accomplish. This remarkable result demonstrates the superiority of quantum supremacy, sparking concerns that NVIDIA’s $英伟达(NVDA)$ AI chip empire could be threatened.
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Unlike traditional computers, which build computation and programming systems based on logic gates, quantum computers develop quantum programs based on quantum gates and quantum circuit diagrams. This fundamental difference in architecture makes it impossible to directly replace existing algorithms. The breakthrough here lies in proving that quantum computing is conceptually feasible for the first time, though practical applications remain a distant goal. Moreover, NVIDIA is also an important player in quantum computing, with substantial investments in the field. Therefore, there is no need to overly worry about NVIDIA’s position at this stage.
Data Source: Google
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