I. Performance of Global Equity Indices (in US Dollar)
Source: Bloomberg, Tiger Brokers
Key Highlights
◼ Last week, the U.S. equity market entered a quiet period, with volatility in the three major indices slightly declining. On the macro front, the overall narrative of cooling inflation and slowing economic activity continued. The market has now almost fully priced in an imminent rate cut this week, but expectations for next year's easing pace remain divided. The upcoming FOMC meetings and economic data over the next two weeks will determine the market's direction. From a flow perspective, retail participation remains active while institutional positioning is relatively light. Meanwhile, rising market-maker gamma is suppressing volatility, providing near-term support to equities. At the sector level, the Al-driven memory-chip super-cycle continues to advance, with strong demand across HBM, DRAM, and NAND.
◼In Greater China, the top-level central meeting will take place this month. We expect the overall policy tone to remain consistent with this year-focused on moderate stabilization covering areas such as new infrastructure, real estate, consumption, and livelihood support. On the funding side, last week's policy decision to lower the risk factor for insurance institutions could unlock roughly RMB 200 billion of incremental capital, strengthening long-term inflows into the market. At the same time, domestic large models such as DeepSeek, Kling, and LingGuang are advancing rapidly. Despite external constraints, China's Al industry has not fallen behind in technological generation, and leading internet and technology companies are expected to enter a new phase of earnings realization as fundamentals improve.
◼ Key events to watch this week include U.S. November PMis, the September PCE inflation report, and the University of Michigan consumer sentiment survey.
II. Key Market Themes
U.S. Equities: Awaiting Macro Clarity, Positioning for the Super-Cycle
Over the past week, volatility across the three major U.S. equity indices declined, while the macro narrative continued to center on cooling inflation and a slowing economy. Core PCE for September rose 0.2% MoM and 2.8% YoY, slightly below market expectations, extending the trend of gradual disinflation. However, real personal consumption was flat on the month, suggesting early signs of softening demand. At the same time, the November ADP private payrolls report unexpectedly turned negative, with employment falling by 32,000 - sharply below consensus and the weakest reading since March 2023. Survey data from the University of Michigan echoed a similar message: consumer sentiment rebounded far more than expected while inflation expectations continued to decline. Against this backdrop, the market has now almost fully priced in a 25 bps rate cut at this week's FOMC meeting. Yet the key debate lies not in whether the Fed will cut, but in the pace and depth of rate cuts next year. We believe the macro path for U.S. equities will become increasingly clear following this week's FOMC guidance and next week's releases of the latest nonfarm payrolls and inflation data.
Source:University of Michigan, Tiger Fund Management
From a flows and positioning standpoint, U.S. equities have largely recovered from November's technical pressures. Market dynamics have shifted toward buyer dominance, and any new index highs could trigger momentum-driven "FOMO" behavior. Retail investors - the primary marginal price-setters this year — remain active, while light institutional positioning leaves room for incremental inflows. Meanwhile, market-maker gamma exposure rose sharply last week, helping to suppress volatility. As a result, even with a dense macro calendar ahead — including the Fed and Bol policy meetings, as well as November payrolls and inflation — the market still appears to have adequate buying capacity to absorb potential negative surprises in the macro narrative.
At the sector level, Bank of America Securities' latest global memory technology report indicates that the memory-chip super-cycle remains intact. SK Hynix has begun mass production of HBM4 in Q4, and by the second half of 2026, its share of total memory output could exceed 50%. Contract prices for traditional DRAM still have roughly 50% upside over the next 6-9 months. NAND is gradually recovering, supported by strong eSSD demand, while capacity expansion across the industry remains disciplined. Overall, the supply chain continues to be driven by Al, with downstream demand — including Google's TPU orders and NVIDIA-related procurement — remaining robust. Industry fundamentals stay firmly in the optimistic zone.
Greater China: Policy Backstop, Long-Term Capital Inflows, and an Earnings Recovery Ahead
In Greater China, short-term macro data has yet to show a meaningful improvement, making this month's Central Economic Work Conference a key focal point. We expect that, as 2025 marks the first year of the 15th Five-Year Plan, the GDP growth target will likely remain around 5%, with the overall policy stance continuing to emphasize moderate stabilization. In terms of policy cadence, the first half of the year is likely to focus on building a modern industrial system, with policy strength concentrated on new infrastructure closely linked to that objective. Support for the property sector may also come through targeted interest subsidies and other stabilizing measures. In the second half of the year, policy priorities may gradually shift toward stronger stimulus in consumption and livelihood-related areas to facilitate a steady recovery in domestic demand. In an environment of elevated external uncertainty and still-weak endogenous momentum, maintaining growth stability is likely to remain the core theme of next year's policy framework.
On the capital front, although the past two weeks of data show continued foreign outflows from Greater China equities, the market staged a notable rebound last Friday. The key catalyst was the reduction in insurance capital risk factors. Based on current calculations, the lowered risk factors for CSI 300 and STAR Board equities could unlock an estimated RMB 200 billion of medium- to long-term incremental inflows into A-shares, strengthening long-term allocations toward core Greater China assets and technology innovation sectors. This development is not only a near-term liquidity positive but also a structural policy signal aimed at channeling long-term capital into technological innovation and supporting the stable development of China's capital markets.
In the technology sector, Chinese large language models have entered a new phase of rapid iteration. DeepSeek V3.2 Speciale demonstrated exceptional capabilities in mathematical reasoning, while Kuaishou's Kling 01 video model shows strong alignment with real business applications earning comparisons to "Nano Banana2" in the Al video space. Meanwhile, a wave of native applications built around frontier models is accelerating, with new hardware and software products such as Doubao phones, Quark smart glasses, and LingGuang apps beginning to roll out. In our view, despite external constraints in areas such as chips and hardware, China retains clear advantages in infrastructure, data resources, and talent. As a result, the domestic Al ecosystem has not fallen behind in generational technological capabilities. We remain constructive on leading Greater China tech and internet names. As their core businesses begin to recover alongside improving consumption, prior investments in large-model development are poised to translate into sustainable long-term earnings growth.
Source: artificialanalysis.ai
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