China Imposes 55% Tariff on Beef Imports Above Quota to Protect Domestic Industry 
Gold Prices Rebound in Europe as Geopolitical Tensions and Fed Outlook Support Bullion 
Oil Prices Slip Slightly as Markets Weigh Geopolitical Risks and Supply Glut Concerns 
China Manufacturing PMI Rebounds in December, Offering Boost to Economic Growth Outlook 
U.S. Dollar Slides Toward Biggest Annual Loss Since 2017 as 2026 Risks Loom 
South Korea Factory Output Misses Forecasts in November Amid Ongoing Economic Uncertainty 
U.S. Stocks Slip as Gold Rebounds Ahead of Year-End, Markets Eye 2026 Outlook 
Forex Markets Hold Steady as Traders Await Fed Minutes Amid Thin Year-End Volumes 
South Korea Factory Activity Returns to Growth in December on Export Rebound 
Federal Reserve Begins Treasury Bill Purchases to Stabilize Reserves and Money Markets 
Trump Delays Tariff Increases on Furniture and Cabinets for One More Year 
South Korean Won Slides Despite Government Efforts to Stabilize Currency Markets 
South Korea Exports Hit Record High as Global Trade Momentum Builds 
U.S. Dollar Steadies Ahead of Fed Minutes as Markets Eye Policy Divisions 
Oil Prices Stabilize at Start of 2026 as OPEC+ Policy and Geopolitical Risks Shape Market Outlook 
Singapore GDP Growth Surges in 2025 but Outlook Remains Cautious Amid Global Trade Risks 
China and Southeast Asian equities are set to outperform Asia’s markets in 2026, supported by improving liquidity conditions, tighter industrial discipline, and a clear policy pivot toward reform, according to a recent Deutsche Bank strategy note. Analysts believe these factors could help restore investor confidence and drive stronger equity returns across the region.
Deutsche Bank expects China to remain in a sustained “bull upcycle,” with market performance underpinned by three main drivers. First, although global liquidity growth is no longer accelerating, China continues to benefit from residual domestic liquidity support. Elevated household bank deposits mean there is significant potential for funds to rotate into equities as the opportunity cost of holding cash declines. Second, corporate profitability is expected to improve as years of aggressive capacity expansion give way to greater investment discipline, helping margins stabilize across key industries. Third, a shift in political priorities toward consumption-led growth and structural reform is likely to further bolster market sentiment.
Additional tailwinds are expected from industrial policy initiatives and government directives aimed at shortening payment cycles by state-owned enterprises. These measures could ease cash flow pressures for companies and improve overall corporate confidence. Deutsche Bank also highlighted the importance of so-called “anti-involution” policies, which seek to reduce excessive competition and chronic oversupply. Early signs of these policies are emerging across several sectors, potentially setting the stage for healthier profit growth after prolonged overcapacity.
Looking ahead to 2026, analysts anticipate a broader political pivot toward reform and greater economic “opening up.” Increased emphasis on boosting consumption, investing in human capital, and easing regulatory pressure is expected to feature prominently in government work plans and the upcoming 15th Five-Year Plan, reinforcing a more market-friendly environment.
From a global allocation perspective, Deutsche Bank notes that international investors remain significantly underweight China. The bank estimates that even a one-percentage-point reallocation by major global funds could translate into approximately $270 billion in equity inflows. Combined with global fiscal easing and potential interest rate cuts, these inflows could push Chinese and Hong Kong equities beyond previous market peaks.
Overall, Deutsche Bank favors China, select anti-involution sectors, and Southeast Asian markets, while maintaining a cautious stance on certain high-tech industries that may face renewed supply pressures.
