The winner takes it all – A late introduction

Tian Xuan Zhou (Oliver)
Student, New European College – Munich

Perhaps you have read my previous week’s work, perhaps you have not, I’d imagine the latter. I would like to take this week to introduce myself, to you, the reader. My english name is Oliver, currently an IBA student at New European College and I am taking my time alongside my studies to create this blog. Having completed six years of studies in the United Kingdom, I was a lot like the others my age after middle school, not quite knowing what I wanted to do when I graduate.

I always thought I wanted to be professional in sports. All sports, any sports, it all fascinated me, but I didn’t know why. But when I grew up to realise that I was never good enough for the sports world, I was rather lost, had no sense of direction in life and confused. What was I ever going to do when I grow up…

After graduating from high school, I took some time off. My mom thought it would be a good idea to send me to work for my uncle, who was the head of trading at a hedge fund. Although I didn’t know how lucky I was to be in that position at that time. I reluctantly complied, waking up at sunrise, heading into “work” (I thought I was very useless), not leaving until early evening, and my god was it interesting. I took the opportunity and spent a lot of my “working time” learning on my own with the limited access and opportunities I had.

Landmark Chater and Chater House, where I worked, in Hong Kong, Central, photographed by Derry Ainsworth/Sotheby’s

Six months. Six months of very limited contribution (sorry) and meeting some amazing and capable people, before I departed. It was also around this time that my mom thought it was a brilliant idea, to let me, as incompetent and erratic as I was, manage my first account. And surprise surprise, I thought I almost blew the account in the first two weeks.

It was humbling, and mentally, it was a dark time for myself. This was when I realised that in life, I want to win. I yearn for the feeling of winning, of getting something right, of being the one that is correct and if not sports, I can get what I want in financial markets. That’s when I knew where I wanted work in life.

And here I am, mustering up enough courage to write my first few blog posts and posting it somewhere. You may ask – the hell does a 19 year old in college know about financial markets? I would argue that you are right, I only have half a year of work at a hedge fund under my belt, and other than that, I now run a profitable trading account, but why should you believe me anyways.

Perhaps this is why I am writing this blog, to prove myself. I believe that in finance, there is no completely right or wrong answer, therefore I would like to express my view on certain topics and as I have mentioned in a previous post, to confidently say that I was right or have the humility and courage to also say I got it wrong.

From this week forward, the blog posts may look a lot more like this, like a running update, an extended reflection, but I will still be writing about news headlines and stories when it feels appropriate. By no means is my work investment advice, not that I don’t want blame on myself if I get something wrong, but rather I believe that everyone should form their own opinions, and that no one should be swayed by the opinions of others so easily in investing, Therefore do take my posts with a grain of salt, and most importantly happy trading!

HK/CN market

Xiaomi Launch showcase, September 2025, image from Xiaomi’s youtube

So far, so good. HSI briefly touched 27100 before seeing quite a correction ending November, but stable, settling at around the 26000 mark starting December, around flat since the written article 4 weeks ago. HSTech however, has underperformed. This I imagine, was tracking the wobbly performance of US tech, like much of the markets around the world have during the month of November. Sentiment was disappointing – PMI^[1] for November came in at 49.2, indicating an eighth consecutive month of factory production contraction. Seems like the Government has bigger fish to fry, with a flurry of meetings between President Xi and the heads of government of major economies, but be optimistic. The 10 trillion yuan package mentioned in the fourth plenum^[2] starts next year, and furthermore, economic data for year end 2025 releases January of 2026, which could prompt new support measures to stimulate consumption. As for single stock performances that I covered…

• Home appliance and electronics, my picks were and still are Haier Smarthome 6690HK and TCL Electronics 1070HK. Since the 1st November Haier Smarthome +2.02% and TCL Electronics +18.6%^[3]. Pretty good for one month outperforming the broader indexes. As for valuations, Haier Smarthome still feels undervalued to a degree. Midea group 0300 HK, another major player in the home appliance sector is trading at 14.28 P/E^[4] multiplier, whereas Haier, as the market leader within the sector, sitting at 12.35 P/E multiplier, seems like a discount, at least to me the P/E multiplier of Haier should be higher than Midea or at least similar. If we adjust Haier’s P/E multiplier to 14.5 in 2025 target price, similar to Midea, price should be around 32.50 hkd per share, still +19.05% to go. As for TCL Electronics, outperformance was driven by R&D breakthroughs and funding of subsidiaries, such as Raybird, setting the highest record for a single financing deal in China’s AI glasses sector in 2025. The trade in program has driven much of the growth within this sector and I expect this to continue throughout 2026, to which we will see its effectiveness in Jan 2026, where China’s 2025 retail sales data is released. I am expecting both to outperform the index going into 2026.
• E-commerce, for popmart, it seems like they are running out of steam, since 1st November, stock prices have been trading rather flat. Growth is widely expected to slow down in 2026 and I think the current stock price is fairly valued. Therefore I would like to shift the attention away from popmart and focus on another name within the sector – Pinduoduo, traded as PDD US on NASDAQ. E-commerce as a sector, will not surprisingly, remain one of the main drivers of consumption in China throughout 2026.  What they have done this year is charge free deliveries on a lot of the sales on the platform, both domestically and interantionally, on the website better known as Temu. Now Temu is still working to break even, however higher than average industry growth rate may see much improved results and perhaps it is evident. Many may see PDD’s Q3 FY2025^[5] earnings results as disappointing, missing the consensus revenue estimates. However, EBIT rose 3% YoY compared to a 21% decline in the second quarter, therefore I am looking at potential better than forecasted margins and EBIT data in future sets of results. In my opinion, right now is a good position to enter long as stock prices took a hit after Q3 results, almost -27% from year high 139 USD per share, but has since been steadily recovering, currently trading at 117 USD per share.
• Xiaomi, seems like a bottom has been found. A slowdown in smartphone growth somewhat blindsided me as stock prices underperformed more that I imagined, stock prices traded as low as 36 HKD per share. As of the 5th December market close^[6], it has rebounded around 18%. Although smartphone margins will continue to face pressure, gross margin as a whole actually increased. In Q3 2025, Xiaomi’s overall gross margin was reported to be 22.9%, up by around 2.5 percentage points YoY. Now combining this with higher product base prices of new models and products, such as the 17 series phones, I am looking out for future improvements in profit margins, as currently the market is trading a lot on earnings growth. I am expecting stock price to continue the strong recovery momentum and sentiment, outperforming the HSI as a whole.

US market

President Trump, Kevin Hassett and Scott Bessent, photo from Reuters

At this moment, it seems like Kevin Hassett is poised to take up the seat as Fed chair. I would like to mention that he co-authored one of THE WORST stock market forecasts in history on the eve of the dotcom bubble talking about a near quadrupling of the Dow Jones index. Truly baffling, but if he is deemed suitable for the role, who am I to judge his ability, time will be the judge. It also seems like the market is once again pricing in on -25 bps^[7] cut in December. Although I am sceptical, I also think that a -25 bps cut will happen but on a worsening economic outlook is what really puts me off, as we saw what a recession scare can do to the US market last year. Therefore moving forward I think US economic data, even the delayed ones because of the government shutdown, is super important.

• US financials, very solid and stable, the usual. Since the article on the 18th November, ~ +5.8%, not much to say other than
• US tech. Sentiment has recovered strongly. Indexes are once again close to touching new highs. Seems like investors are coming to accept that valuations are not ridiculous, at least not in the sense of a bubble. Time to sell off the high beta basket shorts I would think, that has mostly been trading flat. So far, the strategy last week has worked, depending on which megacap you decided to long^[8]. As I have mentioned before, I would focus on US economic data, as we saw a huge wobble in 2024 due to recession fears. Many are questioning the role of the Fed and its independence, especially with President Trump pushing for more rate cuts when the economy is just not ready for it.
• Quantum Computing, breakthroughs are plenty. Concept stocks have been very very volatile, but have since recovered well from the huge drop caused by the concerns of the tech bubble and overvaluation. The outlook is very optimistic but the challenge now is to pick the winner. It is still very unclear as to who leads the field and the actual usefulness and application. IBM is the big name and perhaps it can rebrand itself just like Nvidia, but a small concept firms, a unicorn^[9], will definitely see the most return. Names that keep floating around include RGTI US, QBTS US, IONQ US and QUBT US. I am monitoring QUBT US for now but a P/S^[10] ratio of almost 3000? Still yet to make my mind up.
• One more sector that I’d like to explore, and the firm is Redwire. They are a manufacturer and supplier of space equipment, and offer solutions in solving space missions and also defense technology. A bit confusing description, but they are tethering on the edge of making profit. As a curious individual that believes that space will be the future, it is hard to stay away from this sector, but its lack of ability to win over contracts have forced their hand to lower their forecasts and missing guidance, leading to a huge fall off from year high. I still believe that the core business and ideas are good, but the management? Beyond poor. However I think the sentiment and valuation has become so poor that a reversal is likely. Interest behind space missions and satellite launches are not going away and if anything, is hugely ramping up. Furthermore drones, another product that they do develop and provide, is proving its worth in both civilian and military application all around the world. I am looking forward to their performance in 2026.

^[1] Purchasing Managers Index

^[2] China has in total seven plenums in each five year terms of the congress, where the party’s central committee come together and discuss key policy and leadership issues

^[3] Prices taken as of market close 04/12/2025

^[4] Price to earnings

^[5] Third quarter fiscal year 2025

^[6] Very sorry for the inconsistent date on referenced prices but this took longer to write than I thought

^[7] Basis points

^[8] As I have mentioned last week that Nvidia is not a good idea and it has proven to be underwhelming so far entering December

^[9] Mostly startups valued around and over 1 Billion USD, and thanks for stating the obvious after genius

^[10] Price to sales