Institutional Perspectives on China

A historic AI capital expenditure cycle and expanding enterprise adoption of Agentic AI.

Easing of geopolitical tensions (specifically progress in U.S. and Iran negotiations), which helped stabilize oil and energy markets.

Cooling of enthusiasm around global AI investments leading to near-term monetisation concerns and subsequent capital rotation back to markets like India.

Core PCE inflation printing at 3.4% year-on-year, the highest since late 2023, coupled with downward revisions to final sales to private domestic purchasers to 1.7%.

Refilling and expansion of Strategic Petroleum Reserves (SPRs) globally driven by energy security mandates.

A sudden and severe reversal in index momentum if massive capital investments in AI fail to produce adequate financial returns, triggering a pivot back to cash-generative, fundamentally cheap businesses.

A powerful AI-driven earnings cycle that led investors to look through inflation and geopolitical concerns to boost global equity markets.

US hyperscalers continued to raise capex guidance for 2026 to a collective $700 billion, reinforcing investor confidence in the AI infrastructure buildout.

Hyperscalers raised capex guidance for 2026 to a collective $700 billion, reinforcing confidence in the AI infrastructure buildout.

A planned $500bn memory production capex investment in South Korea acts as a significant supply-side expansion catalyst that could accelerate the end of the semiconductor boom cycle.

Moderation of inflation levels post the Iran war.

Continued investment in infrastructure, defense, and industrial capacity in Europe is creating attractive opportunities beneath the modest macro growth surface.

The rapid acceleration of agentic AI globally is driving exponential token consumption, requiring hyperscalers to continue massive capex in data centers.

Successful US-Iran peace talks reducing inflation expectations and unlocking private investments.

The memorandum of understanding between the US and Iran allowing the partial reopening of the Strait of Hormuz.

Massive electricity demand driven by AI infrastructure and data centers, creating a structural tailwind for traditional and nuclear energy producers.

A reduction in macroeconomic overhangs, highlighted by a stable transition of the Federal Reserve Chair and a fragile holding of Middle East peace, which allows markets to focus back on corporate earnings.

Signs of property price stabilization and easing deflationary pressure in China.

Prospects of stabilizing inflation in emerging markets and anticipated interest rate cuts in the U.S.

De-escalation in the US-Iran geopolitical conflict.

Aggressive financial sector deregulation under the Trump administration, driving increased credit flows, M&A, and IPO activity.

China's April 2024 nine-point corporate governance guidelines explicitly endorsed shareholder returns through share buybacks for the first time with formal CCP blessing.

A potential shift in US trade policy negotiations to reduce ultimate tariff burdens, which would bring significant equity market relief.

The potential announcement of retaliatory tariffs by the European Union on major US export sectors like software services.

A strong U.S. labor market combined with healthy household and financial institution balance sheets, providing a cushion against a severe economic downturn.

Long-term economic growth and corporate earnings expansion across developed and emerging Asian economies.

A potential shift in Canadian federal leadership to the Conservative Party, which is expected to ease environmental regulations and support energy sector growth.

The structural technological revolution driven by AI, which continues to drive corporate efficiency, capital efficiency, and market gains.

A potential shift in market focus back to valuations, closing the record valuation spread between disciplined value strategies and expensive benchmarks.

U.S. policy shifts including potential corporate tax cuts, deregulation, and protectionist tariff implementation under the incoming administration.

Implementation of pro-growth economic policies and deregulation by the incoming U.S. administration.

Global central bank easing biases and accommodative fiscal policies injecting ample liquidity into financial markets.

Federal Reserve's ongoing rate-cutting cycle lowering funding costs and steepening the yield curve for banks.

Upcoming corporate quarterly earnings reports following the holiday season.

Broadening AI implementation allowing companies to utilize AI to create real-world efficiencies.

Strong economic growth and financial sector improvement in India.

Global central bank interest rate cuts providing monetary tailwinds for emerging market currencies and growth assets

Widespread integration of hardware-level AI features driving replacement cycles in smartphones and PCs.

Potential stabilization of the Chinese property market through increased government policy support and social housing acquisition initiatives.

A strong cyclical rebound in global capital markets and M&A activity from their 10-year lows.

Ebbing inflation paired with resilient consumer spending and robust employment.

Prospect of falling central bank interest rates driven by a slowdown in economic growth and falling inflation.

The $280bn CHIPS Act is driving a historic wave of technology, battery, and semiconductor factory onshoring in the U.S., creating huge turnkey electrical infrastructure demand.

President Biden's signature legislation driving significant US fiscal spending into clean energy, infrastructure, and domestic semiconductor manufacturing.

Consolidation trends and M&A activity within the copper mining industry due to supply constraints.

Peak inflation in the US, leading to falling interest rates and a falling dollar, which will boost overseas multiples.

A definitive peak in US inflation that triggers falling domestic interest rates, leading to a weaker US dollar and expanding multiples across international markets.

China's reopening announcement post-lockdowns is expected to drive demand recovery.