To The Moon

I. Performance of Global Equity Indices (in US Dollar)

Source: Bloomberg, Tiger Brokers

Key Highlights

◼ Last week, U.S. equities experienced heightened volatility as market sentiment swung between U.S.–China negotiations, credit events, policy signals, and AI-related earnings. Trump’s softened stance toward China eased expectations of extreme trade friction, yet competition between the two nations in semiconductors and strategic resources is set to persist. A credit fraud scandal at a regional bank triggered brief panic, but solid results from major banks suggested limited systemic risk. Fed Chair Powell’s dovish remarks indicated the balance sheet reduction may be nearing its end, reinforcing rate-cut expectations. The tech sector remained resilient — with stellar earnings from ASML and TSMC — underscoring the continued strength of the AI investment theme, which remains the key mid-term driver for U.S. equities.

◼ In Greater China, markets weakened overall last week, with both Hong Kong and A-share indices seeing notable pullbacks. China’s escalation of export controls on rare earths and batteries aims to reshape trade rules and counter U.S. restrictions on critical industries. If negotiations progress, this could accelerate domestic substitution in semiconductor equipment. Meanwhile, market turnover has contracted and sector rotation has quickened, with capital flowing from AI and tech toward consumption and domestic demand sectors. The upcoming Fourth Plenary Session of the Central Committee is expected to emphasize technological self-reliance and new productive forces, though short-term stimulus is unlikely to be the focus. Overall, the market is navigating a phase of external competition and internal restructuring — with domestic demand recovery and industrial self-sufficiency likely to serve as key supports ahead.

◼ This week, investors should watch for U.S. CPI and other macro data, as well as earnings from Netflix, Tesla, and Intel.

II. Key Market Themes

U.S. Market: U.S.–China Dynamics Remain Unclear, but AI Stays the Core Driver Amid Short-Term Volatility

Last week, U.S. equity volatility surged, with all three major indices experiencing sharp swings across multiple sessions. Four key events dominated market sentiment: U.S.–China negotiations, a credit fraud case, Powell’s remarks, and AI-related earnings reports. Let’s look at each in turn.

First, Trump’s recent comment that the 100% tariff on Chinese imports is “unsustainable” marked a clear softening from his previously hawkish stance, prompting markets to lower the probability of an extreme trade conflict scenario. We expect high-level contact between the U.S. and China ahead of the APEC Summit, though a major breakthrough remains unlikely in the near term. Strategic competition over rare earths, semiconductor equipment, and advanced chips continues to unfold, suggesting that related policy headlines and rhetoric may keep markets volatile in the coming weeks.

Source: Polymarket

In addition, regional banks Zion and Western Alliance were accused of serious credit fraud last week, briefly sparking market panic. However, this appears to be an issue of individual corporate governance rather than systemic credit risk. Major banks such as Goldman Sachs, Citigroup, and Bank of America released robust earnings, indicating limited exposure to subprime consumer lending and maintaining solid overall credit quality. Going forward, investors may monitor SOFR rates and the Fed’s Standing Repo Facility (SRF) usage — if these do not rise sharply, it would signal that risks remain contained rather than contagion-driven.

On the policy front, Fed Chair Jerome Powell delivered dovish remarks, noting that “the balance sheet reduction is nearing its end” and emphasizing that while inflation remains elevated, it is not broadly entrenched. He also hinted that weak employment is now a policy focus. This reinforced expectations for a gradual rate-cut cycle and helped stabilize sentiment across regional banks and credit markets. In the AI sector, both ASML and TSMC reported stellar earnings last week, further anchoring tech as the core pillar of U.S. equities. ASML’s orders and guidance far exceeded expectations, while TSMC expressed strong confidence in AI-driven demand. The company’s 2nm node is progressing smoothly and could mark the start of a new technology cycle following 5nm, fueling another wave of high-performance computing and AI hardware upgrades. The long-term logic of the AI supply chain remains solid, making it the structural backbone of the U.S. market.

Greater China: U.S.–China Talks Remain Unclear, Domestic Demand Still the Key Focus

The Greater China market was broadly weak last week, with Hong Kong’s Hang Seng Index and Hang Seng Tech Index leading the declines, while mainland indices such as the Shanghai Composite and the CSI also saw notable pullbacks — the main driver remains U.S.–China tensions. The essence of this round of negotiations lies in a contest over rules. China’s recent tightening of export controls is not only a direct response to the U.S.’s continued restrictions in semiconductors, but also a strategic move to reshape global industry standards by leveraging its own strengths, in exchange for access to critical upstream technologies. If talks progress smoothly, China may gain partial relaxation on semiconductor equipment exports, which would significantly enhance domestic capacity in advanced manufacturing. According to Morgan Stanley estimates, China maintains a clear advantage in the rare earth sector, though enforcement will likely remain moderate and rational; global substitution could still take three to five years.

From a market perspective, both A-shares and Hong Kong stocks saw a clear contraction in trading volumes last week, with a noticeable rotation in sector leadership. As external demand uncertainties increase, capital has been flowing from high-flying AI and tech sectors toward consumption, travel, infrastructure, and home appliances — areas driven by domestic demand. The market is currently characterized by stock rotation and cautious sentiment, with no clear dominant theme emerging yet. In this phase, a range-trading mindset — accumulating on fear and trimming on euphoria — remains a prudent approach.

Source: Wind, Tiger Brokers

On the policy front, this week’s Fourth Plenary Session is expected to focus on the 15th Five-Year Plan, emphasizing technological self-reliance and “new productive forces,” alongside efforts to build a unified national market and moderately expand domestic demand, while balancing energy security and long-term industrial development. However, given the strategic scope of this meeting, it is unlikely to produce immediate stimulus measures. Specific quantitative targets will probably be revealed during the Central Economic Work Conference in mid-December. We will continue to monitor emerging opportunities in sub-sectors such as senior care and cultural tourism under the dual drivers of domestic and external demand recovery.

Looking ahead, the key focus over the coming weeks remains the U.S.–China negotiations. If the two sides reach partial consensus or show signs of easing tensions in trade and technology, risk appetite could see a marginal rebound — otherwise, volatility may persist. Overall, the Greater China market stands at the intersection of external uncertainty and internal structural upgrading, with domestic demand recovery and industrial self-sufficiency expected to be its core pillars in the coming months.

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