I. Performance of Global Equity Indices (in US Dollar)
Source: Bloomberg, Tiger Brokers
Key Highlights
◼ U.S. equities saw widening volatility and continued declines last week, as active funds cooled and market sentiment turned cautious. Ahead of the December FOMC meeting, both macro data and Fed communication will enter a relative quiet period, likely keeping indices in a phase of high-volatility consolidation. Even so, buybacks and allocation flows are providing notable downside support. Within the Fed, views on a possible December rate cut are clearly divided. We believe the probability of no cut in December is higher, but the Fed may compensate with a more dovish forward path for next year. In AI, NVIDIA delivered strong earnings but was suppressed by macro headwinds. Meanwhile, Google has become the new focal point following the release of Gemini 3 and NANO Banana Pro, with markets increasingly recognizing its full-stack advantage.
◼Across Greater China, the recent pullback does not appear to be a trend reversal, but rather a mid-cycle correction within a steady upward trend. Dense volume areas are offering support on the downside, and a moderate pullback is a healthy digestion of prior gains. Macro conditions remain in a “weak domestic demand, low inflation” recovery phase, while policy stays focused on stabilizing growth. Valuation multiples are reverting toward reasonable levels, making corporate earnings the key driver in the next stage. Additionally, if the U.S. confirms relaxation of the H200 chip export restrictions to China, major internet platforms stand to benefit directly, with current valuations appearing more attractive.
◼ Key events to watch this week include the delayed release of September CPI and retail sales, U.S. Treasury auction results, and earnings from Alibaba, Meituan, and other China ADRs.
II. Key Market Themes
U.S. Equities: Divergent Rate-Cut Expectations, New Signals Emerging in AI
Last week, U.S. equities saw further volatility expansion and a continued pullback, with market sentiment shifting from cautiously optimistic to defensive. On the flows side, ETF passive inflows remained steady, but active long-only funds and hedge funds notably trimmed positions from recent highs—showing that capital is scaling back risk exposure amid rising macro uncertainty. With the December FOMC approaching, both macro data and Fed communication will enter a relative quiet period, leaving the market without fresh catalysts. Indexes will likely oscillate around key moving averages in a high-volatility consolidation phase. Meanwhile, corporate buybacks and medium- to long-term allocation flows should provide strong downside support, suggesting the market may enter a “time instead of space” basing process. Within this environment, AI leaders with strong fundamentals and high earnings quality remain the preferred destination for capital.
From a macro perspective, Rate-cut expectations have become the biggest source of disagreement. Last week, several Federal Reserve officials delivered a series of remarks expressing divergent views. Among the voting members for the December FOMC meeting, roughly four favor continuing with rate cuts, five believe the Fed should pause, and another three, including Chair Powell, maintain a neutral stance—reiterating that incoming data remains the core determinant of policy. We believe the likelihood of the Fed holding rates steady in December is higher, but it may simultaneously provide a more dovish forward-guidance path, laying the groundwork for next year’s easing cycle. However, with overall valuations still elevated and sentiment relatively fragile, the market has become increasingly dependent on earnings. If rate cuts are slower than expected or if earnings see unexpected downgrades, market volatility could rise significantly.
Source: CME Group
On the AI front, NVIDIA’s Q3 earnings were essentially flawless, with financial results beating expectations across the board and effectively addressing prior concerns around chip depreciation. The report briefly lifted market sentiment, though the stock ultimately opened high and closed lower due to broader macro headwinds. In contrast, Google broke through the noise and became the market’s main focus. The newly released Gemini 3 achieved leading scores across multiple benchmark tests, showing substantial improvements in reasoning efficiency and clarity of expression. Although real-world hallucination control remains weaker than GPT-5.1, Gemini 3 demonstrates clear advantages in multimodal understanding, particularly in screen and video comprehension, where its capabilities significantly surpass peer models. At the same event, Google also launched the next-generation image-generation model NANO Banana Pro, which delivers a step-change improvement in usability, conversational consistency, and visual fidelity—marking a level of quality that is already commercially deployable. We expect that as AI-generated visual content rapidly proliferates across the internet, the penetration of the Gemini ecosystem will further accelerate, positioning Google as a potential core outperformer within the AI sector amid a volatile market backdrop.
Greater China: Volatility Without Trend Reversal, Earnings to Drive Structural Opportunities
Last week, the Greater China markets experienced a period of pullback and consolidation. From both sentiment and technical perspectives, this movement resembles a mid-cycle correction within a steady upward trend, rather than a reversal. Although the indices showed signs of technical breakdown, the dense trading zone below provides meaningful support. Meanwhile, Southbound flows and long-term capital continued to register net inflows, and year-end rebalancing demand from mutual funds and ETFs is likely to add incremental liquidity. As such, we view the current adjustment as a healthy digestion after earlier gains, not a structural risk event. Looking ahead to the next 1–3 months, the market is more likely to remain in a volatile consolidation regime, where the recommended strategy is to gradually increase exposure during drawdowns—focusing on sectors with low valuations and solid fundamentals, positioning for structural rather than broad-based opportunities.
From a macro standpoint, the region remains in a phase of soft recovery characterized by weak domestic demand and low inflation. According to Morgan Stanley, current policy remains centered on front-loaded fiscal spending, targeted stabilization measures, and small-step monetary easing, with the goal of keeping real GDP growth around the 5% level rather than re-accelerating nominal growth. Under this framework, we maintain a cautiously optimistic outlook for the next year. Fiscal and monetary tools retain room for maneuver, helping buffer systemic risks and supporting a gradual bull-market rhythm. At the same time, the valuation range for MSCI China has normalized to 12–14x forward earnings, implying that future upside will rely more on modest improvements in corporate earnings, rather than further valuation expansion. The medium-term trend remains intact under this macro-valuation mix.
Source: Bloomberg, Tiger Brokers
From an earnings perspective, Greater China corporates have largely completed a full recovery cycle heading into 2025. Earnings growth for the first three quarters has broadly returned to the 5–8% YoY range, and most institutions maintain similar expectations for 2026, suggesting that the market is not overly optimistic about next year’s growth. At the sector level, financials and parts of the upstream cyclical complex continue to see improving earnings expectations, while property and traditional consumer sectors remain relatively soft. In contrast, technology hardware, semiconductors, and advanced manufacturing exhibit the strongest earnings quality and visibility. Notably, there were market rumors last week that the United States may consider relaxing export restrictions on NVIDIA’s H200 chips to China. If this ultimately materializes, the most direct beneficiaries would be internet platform companies with cloud businesses, large-model training capabilities, and ecosystem advantages. This group previously experienced significant valuation compression due to the rising U.S. dollar and tightening overseas liquidity, making current valuations more attractive. We continue to view this as a key medium-term allocation theme.
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