China’s Market Rebound Gains Momentum

FINANCE
China’s Market Rebound Gains Momentum

What a difference a year can make. In early 2024, China was grappling with weak consumption, property market woes, and the aftereffects of regulatory crackdowns. Hong Kong’s stock market, once a key avenue for foreign capital, suffered four consecutive years of losses. Fast forward to today, and sentiment has shifted sharply. The Hang Seng Index is up nearly 20% year-to-date, outperforming the S&P 500 and Japan’s Nikkei. Chinese firms like Alibaba and BYD are rallying, and blockbuster IPOs are returning to Hong Kong, with CATL planning a $5 billion listing—the largest since 2021.

Much of the optimism stems from DeepSeek, a Chinese AI firm whose powerful model launched in January and reignited confidence in China’s tech sector. Major investors and executives now see China as “absolutely investable.” Still, challenges remain, especially around domestic consumption, which makes up only 38% of GDP. While Beijing promises more stimulus, some analysts warn reforms remain more talk than action. Meanwhile, U.S. market uncertainty, driven by tariffs and faltering tech stocks, makes China’s resurgence even more striking.

TECH
Oracle Hit by Pentagon Cuts

Oracle is among several tech firms impacted by sweeping Defense Department budget cuts under the Trump administration. The cuts, totaling $580 million, target various programs, including diversity initiatives, climate and COVID research, and the Defense Civilian Human Resources Management System (DCHRMS), which runs on Oracle software. Defense Secretary Pete Hegseth cited delays and budget overruns—DCHRMS is six years behind schedule and $280 million over budget—as reasons for termination.

Oracle’s contract, awarded in 2019, was intended to modernize HR systems across 500+ government agencies. Bloomberg also identified Leidos and Accenture as affected. Accenture warned investors that federal contract losses have already impacted revenue, with its Federal Services arm contributing 8% of global income. Investor Danny Moses cautioned that widespread contract terminations could ripple through the private sector, impacting hiring and creating an “unvirtuous cycle” as laid-off federal workers face fewer private job options. Neither Oracle nor the Pentagon commented on the terminations.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.