Group 1 - UBS Wealth Management's Director of Investment Office for Greater China, Li Zhiying, projects the MSCI China Index to rise from approximately 80 points to 100 points next year, anticipating a double-digit increase in Hong Kong stocks due to the significant proportion of Chinese stocks [1] - The estimated growth in Chinese corporate earnings for this year is only 2%, but a 13% year-on-year increase is expected next year, driven by the absence of price wars in the food delivery sector [1] - Technology companies are projected to see a 37% year-on-year increase in earnings, with domestic CPU supply expected to rise from 27% currently to 50% by 2027, benefiting the growth of technology firms [1] Group 2 - Investment in the stock market by insurance companies is highlighted as a significant factor for market performance [1] - Despite a positive outlook for the stock market, UBS Wealth Management anticipates 2026 to be a volatile year, with risks including potential AI bubbles, inflation resurgence, economic slowdown, global debt crises, and escalating US-China tensions [1] - Li Zhiying advises investors to diversify their portfolios, recommending at least 5% in gold, 20-25% in private equity and bonds, and a stock-bond allocation of 60% and 40% within the remaining 70-75% [1]

Core Viewpoint - The rare earth sector has shown significant price increases this year, driven by supply-side export controls and strong demand from downstream industries like renewable energy [1][2]. Supply Side - Export controls have been a major factor affecting the supply of rare earths, with stricter regulations implemented in October [2]. - Myanmar's domestic issues have also contributed to changes in the supply landscape for rare earths [2]. - China holds approximately 44 billion tons of rare earth oxide reserves, accounting for nearly half of the global total of around 90 billion tons [1]. Demand Side - Demand for rare earths remains robust, particularly from sectors such as new energy vehicles and wind power, which are experiencing peak production seasons in the fourth quarter [2]. - The export licensing system is functioning normally, and there is potential for overseas stockpiling of rare earths due to supply constraints [2]. Market Outlook - The rare earth sector is expected to perform well in the medium term, supported by favorable supply and demand dynamics [2]. - The overall non-ferrous mining sector is experiencing a tight balance between supply and demand, benefiting from anticipated interest rate cuts by the Federal Reserve and strong downstream demand [3]. - The mining ETF tracking the non-ferrous mining index shows a high concentration of leading companies, with industrial metals, gold, and rare earths making up over 50% of the index [3].

Group 1 - Stephen Roach, a prominent economist and former chairman of Morgan Stanley Asia, has revised his earlier pessimistic view on Hong Kong's economic prospects amid US-China tensions, stating that Hong Kong is benefiting from its unique position as a bridge between mainland China and international financial markets [1][3] - Roach previously claimed in February 2024 that "Hong Kong is finished," but now believes that the city is thriving due to its "Chinese characteristics" and its critical role in connecting with international finance [3] - He noted that Hong Kong's financial success is increasingly dependent on its ties with the mainland and the impact of US pressures leading to a near-complete financial decoupling between the US and China, suggesting that Hong Kong stands to gain from this situation [3] Group 2 - Roach mentioned that recent US policies, such as the cancellation of Chinese student visas and criticism of elite institutions like Harvard, could encourage talent to flow into Hong Kong [3] - The importance of Hong Kong as a "super connector" and "super value creator" has been rising, especially as mainland companies seek to raise funds in the city amid escalating US-China tech competition [3] - The chaotic governance of the Trump administration has also contributed to international capital fleeing from US assets, further enhancing Hong Kong's appeal as a financial hub [3]