Lift off – Week 6

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

December 8th, reports from China with exports topping 1 Trillion on the year, the highest ever, despite huge trade tariffs from the US, China has proven that they are able to export elsewhere. Consumer inflation readings was also the highest since two years at 0.7%

HSI however, has been underwhelming, -0.42% WTD^[1], but this was mainly due to southbound traders selling off stocks, which I have mentioned in previous articles are erratic.

NEV’s ready to be exported, Chongqing China, photo taken by Xinhua

• Home appliances and electronics. Haier Smarthome 6690HK WTD -2%, TCL Electronics 1070HK WTD +2.5%, continuing their strong outperformance as stock price is nearing year high. Looking ahead in 2026, the phasing out of domestic subsidies (if they do not extend it) may put huge downward pressure on domestic sales. If that is the case exports may overtake domestic sales, this is where TCL may really outperform the domestic names as they are established brands overseas. Overall, sector sentiment is strong, just need to look forward to subsidies early 2026.
• E-commerce. Lucky, to say the least. Popmart 9992HK WTD -11.37%, so good switch last week. PDD US did not fare well either ~ -4.7%. I think mainly dragged down by the sector, since E-comm names have huge market caps in comparison to other names within the HK/CN market, and as I have mentioned before, a large selling flow of southbound investors. For Popmart, it seems like a win for the short sellers, with huge inflows of short sellers throughout the week. As for PDD, once again testing some resistance levels, although not much happened, not much that I could find out about anyways.
• Xiaomi 1810HK. Ask and you shall receive. +0.42% for the week despite the underperformance of the HK/CN markets. Despite the amount of southbound sellers, Xiaomi saw a larger number of southbound buyers. Reports that Xiaomi’s EV arm are working on targeting different family, luxury and performance segments with the YU9, YU7 GT, and SU7 L, with the YU7 GT is likely to become Xiaomi’s first model launched in Europe.

US market

No surprise, 25 bps^[2] rate cut, seems like we are getting to a point where it is not beneficial to either raise or cut rates further. Although current Fed Chair Jerome Powell did not completely rule out another cut come January but stated that it would require evidence of further deterioration of the labour market to have any case. Seems like the main concern is jobs instead of inflation, which has been sitting above the target 2% for quite some time now. It is also worth mentioning that the vote by the Fed was rather fractured, combining the votes of all Fed officials, 7 voted against a 25 bps cut. I would imagine that it would be rather difficult to convince another cut in January.

Federal Reserve Chair Jerome Powell takes questions during a press conference in Washington on Wednesday. Photo: Chip Somodevilla/Getty Images

• US financials, flat since last week, some headwind^[3] due to the rate cut, what will be interesting next year is any potential hawkish cut if inflation picks up again.
• US tech. Oracle is the biggest name this week, Q2 FY2026^[4] earnings reported on Wednesday showed a beat on EPS but missed Revenue by less than a percentage point, and more concerningly, free cash flow has turned deeply negative, almost -10 Billion, a -273% change YoY^[5], after CapEx ate up two thirds of the sales. As of 11th December pre market, Oracle is trading down as much as 13%. A reminder that OpenAi agreed to a 300 Billion deal with Oracle, purchasing computing power over five years. With the latest ChatGPT models lagging behind its competitors, such as the newest Gemini model from Google, companies with significant exposure with OpenAi and ChatGPT have seen sell offs. This has led to degrossing within the tech sector with funds rotating into the broader markets.
• GLP-1^[6] and Pharma. Two weeks since coverage and judgement so far, so good. But even if Novo extends this rebound, it doesn’t seem surprising to me at all. The underperformance this year is so drastic that they are trading as if Wegovy was never approved in the first place. Since the 1st December, Novo is +2.8%, steady but still a long way to go, a reminder that it has lost 50% of their market cap in 2025 alone. I have to also say that I may have underestimated Lilly’s potential strength within the market. With all the spotlight and attention on Lilly, I still prefer Novo to recover strong and potentially outperform Lilly, if not GLP-1, maybe in the market.
• Quantum computing. Volatility has calmed down a little, that’s not to say that I feel at all comfortable to dabble in any trade. Elsewhere, SandboxAQ (not publicly traded), a spin off from Alphabet, lands a pentagon backed deal with the US Department of War, signed for 5 years to help prepare future cyber threats, showing the potential in military application of quantum computing.
• Aerospace, as the title suggests, success so far. Sentiment was so poor that it saw a significant rebound. +20.5% since last week^[7], still far away from the all time highs reached not so long ago. What would really help is if they are able to show that they can win more contracts, and more regularly. Most recently the 44 million DARPA contract to advance very low earth orbit mission, which may have marked the bottom of this large fall. FY2026^[8] forecasts will also be important, they have been estimated to make a profit all throughout 2025 but has been super underwhelming that they had to cut forecasts for 2025, which has contributed hugely to this fall.

^[1] Week to date

^[2] Basis points

^[3] Challenge or obstacles that could negatively impact a company’s performance or broader market growth

^[4] Second quarter fiscal year 2026

^[5] Year over year

^[6] Glucagon-like-peptide-1

^[7] Price taken market close 11th December 2025

^[8] Fiscal year 2026