{"id":82866,"date":"2025-12-24T11:49:00","date_gmt":"2025-12-24T03:49:00","guid":{"rendered":"https:\/\/www.kgieworld.sg\/research\/?p=82866"},"modified":"2025-12-23T17:25:06","modified_gmt":"2025-12-23T09:25:06","slug":"weekly-securities-newsletter-24-december-2025","status":"publish","type":"post","link":"https:\/\/www.kgieworld.sg\/research\/weekly-securities-newsletter-24-december-2025\/","title":{"rendered":"Weekly Securities Newsletter: 24 December 2025"},"content":{"rendered":"\n
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Just Invest in Japan Stocks!<\/strong><\/p>\n\n\n\n

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Chart of the Week:
Japan Hikes Rates Again, Policy Rate Hits a 30-Year High<\/h2>\n\n\n\n

At this month\u2019s meeting, the BOJ raised rates by another 25 bps, following a January hike, lifting the policy rate to 0.75% and decisively breaking the near-30-year \u201c0.5% ceiling.\u201d Since the revised BOJ Act took effect in 1998, policy tightening has occurred in only five years; this year\u2019s cumulative 50 bps increase is the largest since 1998.<\/p>\n\n\n\n

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Market Recap 1:
Tech Earnings Outlook Fuels AI Profitability Concerns; Tech Stocks Dip Then Rebound This Week<\/h2>\n\n\n\n

Market Recap 2:
Tech Earnings Outlook Fuels AI Profitability Concerns; Tech Stocks Dip Then Rebound This Week<\/p>\n\n\n\n

From Oracle\u2019s weak backlog-to-revenue conversion to Broadcom\u2019s softer margins, tech earnings reignited concerns over AI profitability, leading tech stocks to drive consecutive declines in U.S. equities over the past week. The selloff eased after Micron\u2019s results beat expectations, with an outsized outlook for next quarter: EPS guidance of about USD 8.4 versus consensus of USD 4.7\u20134.8\u2014nearly doubling. HBM capacity serving AI data centers is fully utilized, with 2026 capacity almost fully booked, helping to alleviate AI profit concerns. Combined with inflation data that came in below expectations, the four major U.S. indices stabilized, though losses were not fully recovered. The SOX underperformed for the week, down over 7%.<\/p>\n\n\n\n

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Market Recap 2:
U.S. November Inflation Cools Sharply Below Expectations; Bonds Rally<\/h2>\n\n\n\n

U.S. headline CPI slowed to 2.7% YoY in November from 3.0% in September, below the 3.1% consensus, mainly due to falling energy prices. Core CPI eased to 2.6% YoY from 3.0%, also below expectations, with shelter inflation decelerating from 3.6% to 3.0% as the key driver. Cooling inflation reduces the Fed\u2019s concern, shifting policy focus more toward labor-market conditions, where the downturn is accelerating. We expect scope for two 25 bps cuts in 1H26 and one additional cut in 2H26. Bond markets welcomed the softer inflation print and prospects of deeper easing, pushing yields lower, with long-dated Treasuries leading the move.<\/p>\n\n\n\n

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What\u2019s Trending:
SpaceX Reportedly Targets 2026 IPO, Opening a New Era in Space Development<\/h2>\n\n\n\n

Bloomberg reports that SpaceX is targeting a 2026 IPO, seeking to raise over USD 30bn. Post-listing valuation is estimated at USD 800bn\u2013USD 1.5tn, potentially making it the largest IPO on record. As SpaceX remains private, ownership details are undisclosed; market estimates suggest Elon Musk holds over 40% as the largest shareholder. Notably, Alphabet ranks among the top three institutional investors, offering public-market exposure alongside private vehicles such as ARK and Fidelity funds.<\/p>\n\n\n\n

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In Focus 1:
AI Remains the Core Growth Theme into 2026, with Net Margins Outperforming Non-AI Peers<\/h2>\n\n\n\n

Despite lingering concerns over an AI bubble, we believe three key indicators support a durable long-term AI growth story. First, AI-related companies continue to ramp capex. JPMorgan estimates that the 30 most representative AI companies in the S&P 500 will see mid-2026 capex exceed USD 550bn\u2014nearly double versus end-2024. Second, capacity expansion (e.g., TSMC\u2019s CoWoS) remains insufficient to meet demand, with corporate capex consistently exceeding plans, underscoring urgent compute needs. Third, CSPs are accelerating in-house ASIC development, shifting AI investment from general-purpose hardware to customized optimization, while R&D spending at leading AI firms continues to rise steadily.<\/p>\n\n\n\n

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In Focus 2:
Tech Buybacks Remain Robust; Retail Flows Also Rotating into the AI 30<\/h2>\n\n\n\n

Beyond long-term fundamentals, strong profitability has driven a sharp rise in tech-sector share buybacks since 2023. While financials saw a notable pickup this year, AI-led technology companies have exceeded USD 300bn in buybacks for two consecutive years starting in 2024. Buybacks enhance ROE and provide valuation support.<\/p>\n\n\n\n

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Bloomberg estimates indicate that the four major cloud providers (Amazon, Microsoft, Google, Meta) continue to raise future capex. Although growth is slowing, absolute spending remains high. In this environment, investor focus for AI-led tech stocks is shifting from capex scale toward the ability of such investment to generate revenue and earnings, and increasingly toward free cash flow as a measure of monetization strength.<\/p>\n","protected":false},"author":10,"featured_media":78162,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_uag_custom_page_level_css":"","footnotes":""},"categories":[35],"tags":[],"class_list":["post-82866","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-markets-weekly-updates"],"aioseo_notices":[],"uagb_featured_image_src":{"full":["https:\/\/www.kgieworld.sg\/research\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929.jpg?wsr",851,1280,false],"thumbnail":["https:\/\/www.kgieworld.sg\/research\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929-150x150.jpg?wsr",150,150,true],"medium":["https:\/\/www.kgieworld.sg\/research\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929-199x300.jpg?wsr",199,300,true],"medium_large":["https:\/\/www.kgieworld.sg\/research\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929-768x1155.jpg?wsr",768,1155,true],"large":["https:\/\/www.kgieworld.sg\/research\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929-681x1024.jpg?wsr",681,1024,true],"1536x1536":["https:\/\/www.kgieworld.sg\/research\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929.jpg?wsr",851,1280,false],"2048x2048":["https:\/\/www.kgieworld.sg\/research\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929.jpg?wsr",851,1280,false]},"uagb_author_info":{"display_name":"Keith Tan","author_link":"https:\/\/www.kgieworld.sg\/research\/author\/keithtan\/"},"uagb_comment_info":0,"uagb_excerpt":"Bloomberg estimates indicate that the four major cloud providers (Amazon, Microsoft, Google, Meta) continue to raise future capex. Although growth is slowing, absolute spending remains high. In this environment, investor focus for AI-led tech stocks is shifting from capex scale toward the ability of such investment to generate revenue and earnings, and increasingly toward free…","_links":{"self":[{"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/posts\/82866","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/comments?post=82866"}],"version-history":[{"count":2,"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/posts\/82866\/revisions"}],"predecessor-version":[{"id":82868,"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/posts\/82866\/revisions\/82868"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/media\/78162"}],"wp:attachment":[{"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/media?parent=82866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/categories?post=82866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kgieworld.sg\/research\/wp-json\/wp\/v2\/tags?post=82866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}