Dellin Weekly Observation (January 5, 2026)

The minutes from the Federal Reserve’s December interest rate meeting showed that most officials believe further interest rate cuts are appropriate as long as inflation recedes over time. However, some officials opposed further loosening of policies in the short term, reflecting internal divisions and solidifying expectations that the January meeting will stay on hold. Policymakers have significant disagreements over whether inflation or unemployment poses a greater risk to the U.S. economy.

The U.S. Department of Labor announced that initial claims for unemployment benefits for the week ending December 27 fell by 16,000 to 199,000, lower than the expected 218,000. For the week ending December 20, continuing claims for unemployment benefits dropped by 47,000 to 1,866,000, fewer than the expected 1,902,000.

Data from Freddie Mac, the U.S. mortgage agency, shows that the interest rate for 30-year home mortgages in the U.S. this week was 6.15%, marking the third consecutive weekly decline and hitting its lowest level since 2025. This could inject momentum into the housing market, which has been sluggish for most of last year. Sales of existing homes in the U.S. are set to reach a 30-year low in 2023, 2024, and 2025.

The average price of newly built residential properties in 100 cities across the country in December 2025 was 17,084 yuan per square meter (RMB), up 0.28% month-on-month and 2.58% year-on-year. Meanwhile, the average price of second-hand residential properties in the same 100 cities was 13,016 yuan per square meter, down 0.97% month-on-month and plunging 8.36% year-on-year.

The Ministry of Finance issued a new policy on value-added tax (VAT) for individual housing sales. The VAT rate for individuals selling homes purchased less than two years ago has been reduced from 5% to 3%, while homes owned for more than two years remain exempt from VAT. Several regions have also optimized real estate control policies. For instance, Beijing has relaxed restrictions on non-resident and multi-child families purchasing homes, reducing the required length of social security contributions or individual income tax payments for non-local households; Shenzhen's first urban village renovation resettlement housing voucher has been implemented.

Mainland China’s official and unofficial manufacturing Purchasing Managers' Index (PMI) unexpectedly rebounded in December, surpassing expectations. According to the National Bureau of Statistics, the manufacturing PMI rose by 0.9 percentage points to 50.1, higher than the market expectation of 49.2, returning to expansionary levels after ending eight consecutive months in contraction territory, thus escaping the longest manufacturing downturn on record. The non-manufacturing PMI also rebounded to 50.2. Due to improvements in both manufacturing and non-manufacturing activities, the composite PMI output index for December increased to 50.7, the highest in six months.

The latest 2026 car trade-in subsidy plan was recently released, changing from a fixed subsidy amount in 2025 to a calculation based on a percentage of the vehicle price, while maintaining the maximum subsidy amount. Market estimates suggest subsidies for lower-priced models might be affected, potentially disadvantaging popular-market car brands.

Kenty Wong, Deputy CEO of Dalin Securities, observed that last Friday marked the first trading day of 2026, with Hong Kong stocks showing a strong start. The Hang Seng Index closed near its daily high at 26,338 points, rising 707 points on the day. Market turnover shrank to HKD 140 billion, mainly due to the absence of 'northbound' capital during mainland holidays.

Looking ahead to this week, with the official return of 'northbound' funds, market turnover is expected to recover to the HKD 200 billion level. Over the weekend, there were sudden sharp changes in Venezuela’s political situation, which will likely bring unavoidable volatility to global stock markets this week. The next moves and stances of the world’s two largest economies (China and the U.S.) will add uncertainty to the short-term direction of stock markets. Investors are advised to make timely adjustments, reallocating assets such as increasing holdings in safe-haven assets like gold and Bitcoin. As for the Hang Seng Index, it is expected to fluctuate between 25,000 and 26,800 points this week.

The start of 2026 has been promising for new stocks, with over 470,000 people subscribing to Biren Technology (6082.HK), one of the 'GPU Four Little Dragons' from mainland China. After its official listing last Friday, the stock price performed significantly well, closing at a level 75% higher than the offer price, providing a good omen for this year's Hong Kong IPO market.

Looking ahead to the Hong Kong stock market in 2026, it is predicted that the outlook can remain more positive compared to last year. The Hang Seng Index target could break through the 30,000-point mark, which implies an increase of over 15% from current levels. Key catalysts include some room for overall policy easing in mainland China and long-term support for emerging industries such as AI, high-end equipment, robotics, smart driving, and hydrogen energy. Additionally, compared to major overseas stock markets, Hong Kong stocks still offer very attractive valuations. Therefore, we are more optimistic about the performance of Hong Kong stocks and index trends this year.

Last week, the A-share market experienced volatility, with major indices showing mixed results. Supported by heavyweight stocks, the Shanghai Composite Index rose slightly by 0.13%, successfully achieving an 'eleven-day winning streak' to close strongly; however, the Shenzhen Component Index and the ChiNext Index fell by 0.58% and 1.23%, respectively, indicating divergence.

Structural features were prominent on the trading board. Industries such as petroleum petrochemicals, defense military, and media led the gains. Meanwhile, commercial aerospace and AI applications became active themes on the last trading day of the year, serving as highlights in the market. Trading remained robust, with the average daily turnover maintaining a high level of RMB 2.13 trillion.

Entering 2026, the market moves into a critical period for data validation, which may increase volatility. However, the strengthening of Hong Kong stocks during the holiday period and the appreciation of the renminbi help boost confidence, and the spring rally might kick off earlier than expected. In terms of investment directions, besides technology themes with clear industry trends, resource commodities like non-ferrous metals with strategic scarcity, as well as certain domestic demand recovery sectors, are also worth paying attention to.

Last week, the total market value of on-chain RWAs steadily increased to $19.21 billion, with the number of holders approaching 600,000, but the growth rate was moderate, suggesting that traditional asset on-chain activities might be facing demand bottlenecks. The total market value of stablecoins slightly decreased to $297.08 billion, while monthly transaction volumes surged by 13.77%. The 'scissors gap' between market value and transaction volume highlights that the market is entering a 'stock efficiency-driven' phase, with improving capital turnover efficiency becoming the new focus. More notably, the TVL of RWA protocols has surpassed DEX to become the fifth-largest DeFi category.

On the regulatory front, the US Financial Accounting Standards Board (FASB) plans to study in 2026 whether certain crypto assets can be classified as cash equivalents and how to handle accounting issues related to the transfer of crypto assets. This decision comes amid the Trump administration’s push for crypto investments. FASB recently added these two crypto-related items to its agenda, primarily focusing on the accounting treatment of fiat-pegged stablecoins and 'wrapped tokens.' Previously, in 2023, FASB required companies to adopt fair value accounting for crypto assets like Bitcoin but did not cover NFTs and some stablecoins.

Regarding local developments, Bank of China completed the first cross-border QR code consumption payment business in digital currency between China and Laos. Under the joint guidance of relevant departments of the People's Bank of China and the Lao central bank, Bank of China was among the first participants in the cross-border pilot projects of digital payments and central bank digital currency cooperation between the two countries. Meanwhile, Bank of China’s Vientiane branch was among the first to connect to the People's Bank of China’s cross-border digital payment platform for the digital renminbi. By providing real-time exchange rate quotes and efficient clearing services, Bank of China successfully completed production verification for merchant QR code payments within Laos. This service will significantly lower the threshold for cross-border settlements between China and Laos, enabling a seamless end-to-end experience for 'payment-exchange-clearing.'

The Hong Kong capital market made a full recovery in 2025, with total annual IPO proceeds surpassing HKD 285.8 billion, regaining the top position among global exchanges. This marks a significant resurgence of Hong Kong's attractiveness as an international financial hub. Six companies—Insilico Medicine, An Lying Robots, Lin Qingxuan, Meilin Shares, Xunce, and Wuyi Vision—listed on the Hong Kong stock market on the same day, setting a record for the first time in five years that six companies went public simultaneously. Market participants jokingly remarked, 'The gong at the Hong Kong Stock Exchange might not be enough again,' as the exchange’s trading hall was packed with crowds during the listing ceremony, barely accommodating all participants.

A total of 119 companies listed in Hong Kong throughout the year, marking a 63% increase compared to 2024. December became the busiest month for the Hong Kong IPO market since November 2019, with at least 25 companies going public during the month. The main drivers behind this wave of IPOs included the concentrated listings of Chinese tech firms, A-share companies seeking listings in Hong Kong, and a significant improvement in market liquidity. This substantial improvement in liquidity laid a solid foundation for the IPO boom. Data from the Hong Kong Stock Exchange shows that the average daily turnover for the first 11 months of 2025 was HKD 255.8 billion, up approximately 95% year-on-year. This liquidity boost attracted international capital back to Hong Kong, significantly increasing companies' interest in listing there. According to the latest data from the Hong Kong Stock Exchange, the ranking of foreign institutions participating in Hong Kong IPOs for the whole year of 2025 has been finalized. Morgan Stanley Asia ranked first among sponsors, having sponsored 13 Hong Kong IPOs throughout the year. On the underwriting side, Livermore Securities ranked first, having underwritten 32 Hong Kong IPOs throughout the year.

Meta acquired AI startup Manus for billions of dollars, marking the third-largest acquisition in the social media giant’s history, following WhatsApp and Scale AI. This deal represents a new phase in Meta’s aggressive investment strategy in AI and sets a new benchmark for Chinese entrepreneurs in the global AI race.

According to Bloomberg, Manus generated annual recurring revenue of $125 million earlier this year by selling AI agents to businesses through subscription services. This acquisition will provide Meta with more direct revenue returns on its massive investments in AI. Meta CEO Zuckerberg has identified AI as the company's top priority and pledged to invest $600 billion over the next three years in U.S. infrastructure projects, most of which are AI-related. This move comes amid investor skepticism towards Meta. Despite heavy investments in AI R&D—including hiring high-paid research teams this summer to develop a new generation of AI models set to launch next spring—there are concerns about whether these expenditures will yield meaningful short-term revenue.

Butterfly Effect was founded in 2022 by Xiao Hong, who graduated from Huazhong University of Science and Technology, with the startup journey beginning in Wuhan. The company’s first product was Monica, a browser AI plugin offering large model-driven chat, search, reading, writing, and translation functions. Despite being labeled a 'shell' product at the time, Monica became one of the few profitable products in China’s AI industry. Ji Yichao, a serial entrepreneur born in the 1990s, and product manager Zhang Tao joined the team to co-develop Manus. This AI agent product, capable of orchestrating different tools to solve complex problems, launched in March 2025. Manus can perform tasks such as screening resumes, creating travel itineraries, and analyzing stocks. By the end of 2025, Manus announced that its annual recurring revenue had surpassed $100 million.

In his final year as CEO of Berkshire Hathaway (Bajue), 94-year-old Warren Buffett adhered to the investment principles he upheld for six decades: exercising patience at market highs. In 2025, he continued to sell stocks, pushing cash reserves to an all-time high. Buffett officially stepped down on January 1, handing over the company to his successor, Greg Abel. Amid record-breaking highs in the U.S. stock market and a surge in AI concept stocks in 2025, Buffett chose to 'sell stocks, hoard cash.' Berkshire net sold $10 billion worth of stocks in the first nine months of the year, marking the third consecutive year as a net seller, with cash reserves soaring to a historic high of $358 billion. Since Buffett took the helm, an initial investment of $100 has grown to about $5.5 million (based on Berkshire Hathaway Class A share prices), while the S&P 500 index delivered returns of about $39,000 during the same period. His portfolio outperformed the market benchmark roughly 67% of the time.

Looking back at 2025, amidst widespread market euphoria, Warren Buffett demonstrated consistent, almost stringent investment discipline. Berkshire Hathaway reduced its core holdings in Apple during the second and third quarters of 2025, with the reduction intensifying notably in Q3. Additionally, Berkshire completed its landmark final large-scale acquisition: purchasing OxyChem, a chemical producer under Occidental Petroleum, for $10 billion. This deal provided much-needed cash for debt-reducing Occidental Petroleum, while Berkshire likely secured an attractive price. Morningstar analyst Gregory Warren noted that acquisitions of attractively priced companies like these have consistently driven Berkshire’s profit growth over the decades.

In his Thanksgiving letter to shareholders, Warren Buffett, with his usual restraint and humor, told investors that he would 'remain quiet' — he then added 'to some extent' — and reaffirmed his strong confidence in his successor, Greg Abel. As the vice chairman of Berkshire's non-insurance businesses, Abel’s capabilities have earned extremely high praise from Buffett.