I. Performance of Global Equity Indices(in US Dollar)
Source: Bloomberg, Tiger Brokers
Key Highlights
◼ Last week, U.S. equities extended their strength under the dual boost of macro data and the AI narrative. While inflation showed resilience, it was broadly in line with expectations; employment data came in weak but not recessionary. This reinforced market confidence in a modest 25bp rate cut at this week’s FOMC meeting. A surprise 50bp cut, however, would imply a sharper-than-expected deterioration in employment, potentially triggering recession fears. At the sector level, Oracle’s earnings report reignited enthusiasm for the AI space. We believe general-purpose AI is now moving from its early stage to a critical growth phase, with hardware and infrastructure demand continuing to far exceed supply—well before the industry enters a zero-sum game.
◼ Meanwhile, Hong Kong tech stocks delivered an impressive performance last week, with Alibaba soaring nearly 15%. The company not only unveiled proprietary chips and large models but also doubled down on businesses such as cloud computing and mapping services, showcasing its diversified competitiveness. At the same time, foreign interest in Chinese assets has risen significantly, even though actual inflows remain limited. In our view, the short term warrants caution around holiday effects and “buy the rumor, sell the news” risks, while in the medium to long term we continue to favor Greater China tech and cyclical sectors for allocation value.
◼ Key focus this week: the Fed’s FOMC meeting.
II. Key Market Themes
US Equities: Inflation Supports Rate Cuts, Oracle Ignites the AI Narrative
Last week, all three major U.S. indices edged higher, with the S&P 500 and Nasdaq once again hitting record highs despite liquidity headwinds. On the macro side, inflation data showed resilience but remained within expectations, while labor data weakened modestly without triggering recession fears—keeping the rate-cut trade in focus. Specifically, August PPI came in at -0.1% MoM and +2.6% YoY, well below both the prior reading and consensus, driven largely by a sharp pullback in trade services. Core CPI rose +0.3% MoM and +3.1% YoY, its highest in six months but still in line with expectations, avoiding stagflation concerns.
Meanwhile, labor market softness continued. Initial jobless claims rose to 263k, the highest since October 2021. Adjusting for one-off factors such as weather, employment remains in a “no expansion, no layoffs” state, not yet recessionary. Taken together, last week’s macro data did not alter the Fed’s baseline case, leaving rate-cut expectations intact. The upcoming FOMC is widely expected to deliver a 25bp cut. We believe the probability of a 50bps cut is low, but if it were to happen, it would not be a positive sign. It would indicate that the Fed has acted too late and that employment is in much worse shape than expected, likely sparking short-term fears of a recession.
Source: CME Group
At the sector level, $甲骨文(ORCL)$ Oracle (ORCL) issued striking forward guidance. Remaining performance obligations surged 359% YoY to $455bn, while management now projects cloud revenue to reach $144bn by 2030—eight times its 2026 outlook. This reignited broad enthusiasm across the AI sector. We remain convinced that general-purpose AI represents an industrial-revolution-scale super-cycle, and the massive capex by tech giants is justified. Oracle’s update serves two key signals: (1) it raises the total addressable market (TAM), providing a new long-term benchmark, and (2) it marks the transition of AI from its initial stage to a new growth phase, with emerging cloud leaders rapidly scaling. With inference-driven compute demand set to surge, AI hardware and infrastructure will remain in structural undersupply—far from a zero-sum game at this stage.
Greater China: Tech Rallies, Cyclicals Remain Strong
In Greater China, technology stocks—previously range-bound—finally took the baton, with the Hang Seng Tech Index rising over 5% last week. Alibaba stood out in particular, surging nearly 15% over the past five sessions and drawing significant attention from global investors. On the corporate side, reports suggest Alibaba has begun training AI models with internally designed chips while also launching the more efficient Qwen3-Next model. While performance still lags behind Nvidia, the focus is on high cost-effectiveness. In China, Alibaba remains the undisputed leader in cloud computing with roughly 35% market share. Moreover, in the long-standing food delivery battle, Alibaba is seen as steadily taking share from Meituan. Last week, it also launched a new “street ranking” feature on Amap, directly challenging Dianping’s core business—unlocking further market imagination. In short, whether through AI innovation or ecosystem integration, Alibaba is pressing ahead on multiple fronts, reinforcing our positive stance on high-quality Greater China tech leaders.
Source: Bloomberg, Tiger Brokers
On the macro side, however, data remains subdued. August CPI came in at -0.4% YoY, below expectations and at a six-month low. The good news is that August PPI showed signs of stabilization, ending an eight-month streak of sequential declines with narrower YoY contraction. Coupled with recent “anti-involution” policy initiatives, we believe the direction is right, though implementation will take time and face challenges. If successful, PPI may improve first, followed by marginal upward pressure on CPI. Demand-side support remains critical, with government subsidies and consumer credit easing already in motion. Meanwhile, foreign investor interest in China is clearly rising—around 90% of U.S. buy-side respondents plan to buy or increase exposure, though actual inflows remain modest. Seasonally, A-share performance tends to soften in the two weeks before the National Day holiday, and markets appear to be consolidating. In the short term, investors should be cautious of “sell-the-news” risk post-rate cut; longer term, we remain constructive on both Greater China tech and cyclical sectors.
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