Asia-Pacific Stocks Retreat as China Data Disappoints and AI Optimism Cools

Economic

Summary:

Asian markets slumped on Monday, led by steep losses in South Korea, as investors digested weaker-than-expected Chinese economic data and a global pullback from AI-driven stocks....

South Korea Leads Regional Declines Amid Global Caution

Asian equities opened the week under pressure, mirroring Wall Street’s Friday retreat and reflecting growing investor caution around AI stocks and underwhelming economic indicators from China. South Korea’s KOSPI took the heaviest hit, tumbling 2.16% as semiconductor giants like SK Hynix and Samsung Electronics saw sharp sell-offs, dropping over 4% and 3.3% respectively. The tech-heavy Kosdaq also declined by 1.17%.

This move echoes broader global risk-off sentiment, with portfolio managers citing fatigue in the AI rally and a general sense of nervousness heading into year-end positioning. Jed Ellerbroek of Argent Capital Management summed it up: “Investors are definitely skittish as it relates to AI not outright pessimistic, but just cautious and hesitant.”

Chinese Data Underdelivers, Pressuring Regional Sentiment

Markets were particularly sensitive to China’s latest economic releases for November. Retail sales rose just 1.3% year-over-year, significantly missing the 2.8% growth forecast and marking a notable slowdown from October’s 2.9% pace. Fixed asset investment and industrial production figures also fell short of expectations, with the latter rising only 4.8%, down from 4.9% previously.

These readings dampen optimism about a near-term rebound in Chinese domestic demand. As China remains a key trading partner and growth driver for the region, any weakness there reverberates across Asia, particularly in export-dependent economies like South Korea, Japan, and Australia.

Japan's Tankan Survey Offers a Glimmer

Contrasting China’s sluggishness, Japan’s latest Tankan survey brought a rare positive surprise. The business sentiment index for large manufacturers rose to +15 in the fourth quarter its highest level in four years meeting economist expectations and suggesting resilience in Japan’s industrial base. The non-manufacturing index also showed strength at +34, reinforcing signs of recovery in the service sector.

However, Japan’s stock markets didn’t escape the regional downturn. The Nikkei 225 dropped 1.3% and the broader Topix fell 0.27%, dragged lower by global cues and profit-taking.

Broader Regional Moves and Australian Tragedy

Across other markets, Australia’s S&P/ASX 200 lost 0.66%, with sentiment further dampened by tragic domestic news its deadliest mass shooting in three decades, which left at least 15 dead. In Hong Kong, the Hang Seng index slipped 0.79%, while the mainland’s Shanghai Composite edged down 0.12%, with the CSI 300 remaining flat amid mixed investor reactions to China’s data dump.

India’s Nifty 50 remained unchanged, while Taiwan and Southeast Asian markets showed modest movements ahead of regional central bank decisions later this week.

Wall Street’s AI Reversal Sets the Tone

The regional mood was further darkened by Friday’s U.S. session, where major indices pulled back sharply from recent highs. The S&P 500 slid 1.07%, while the Nasdaq tumbled 1.69%, weighed down by sharp losses in AI-related stocks. Broadcom plunged over 11% after its earnings report failed to match lofty investor expectations. AMD, Palantir Technologies, and Micron also saw declines, raising concerns about an overextended AI trade.

This global reset in tech optimism is feeding into Asia, where semiconductor stocks and AI-adjacent sectors are crucial market drivers.

Outlook: Volatility Ahead

As the year winds down, investors remain highly sensitive to macro signals, with China’s faltering recovery and AI trade fatigue clouding near-term visibility. Unless China unveils more aggressive policy support or global tech sentiment stabilizes, Asia-Pacific markets could continue facing downward pressure.

Market watchers now look to upcoming central bank meetings and U.S. data releases to assess whether the recent correction is a pause or the start of a broader risk-off shift.

Source: CNBC

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Samantha Luan

Political

Economic

· Gun control system faces scrutiny after Bondi shooting

· More than 4 million guns owned legally in Australia, above pre-1996 levels

· One of Bondi attack suspects had licence for six weapons

After Australia's worst mass shooting in 1996, it took the government 12 days to ban semi-automatic weapons, organise a gun buyback scheme and introduce a licensing system to weed out people considered unfit to carry a weapon.

Sunday's shooting at a beachside Jewish celebration in Sydney's Bondi, which left 15 people dead as well as one of the two suspects, has shaken the country's long-standing faith in that gun control system - among the world's toughest - and raised new questions about whether it remains fit for purpose.

Australia's gun ownership system has been widely credited with one of the lowest gun homicide rates, per capita. But the number of guns held legally has risen steadily for more than two decades and now, at four million, exceeds the number before the 1996 crackdown, think-tank the Australia Institute said earlier this year.

The fact that one of the Bondi suspects had a gun licence and six registered weapons raises questions about whether Australia should toughen its laws further, gun control groups and researchers said.

"Events like this feel unimaginable here, which is a testament to the strength of our gun laws," said Gun Control Australia president Tim Quinn in a blog post about the attack.

"It is essential that we ask careful, evidence-based questions about how this attack occurred, including how any weapons were obtained and whether our current laws and enforcement mechanisms are keeping pace with changing risks and technologies."

Members of the forensic team work at the scene of a shooting during a Jewish holiday celebration at Bondi Beach, in Sydney, Australia, December 15, 2025. REUTERS/Hollie Adams

Speaking to reporters on Monday, Prime Minister Anthony Albanese said that "if there is any action required in terms of legislative response, we will certainly have it."

Chris Minns, New South Wales state premier, whose jurisdiction includes Sydney, said he would consider recalling state parliament to fast-track new gun legislation.

"It's time we have a change to the law in relation to the firearms legislation ... but I am not ready to announce it today. You can expect action soon," Minns told reporters, without going into detail.

As things stood, the licence held by one of the suspects entitled him to own the weapons he had, NSW police commissioner Mal Lanyon told reporters.

Minns, the premier, said police had recommended an audit of gun licences in Australia's most populous state, adding that "the granting of a firearms licence in perpetuity is clearly not fit for purpose".

Maya Gomez, a lecturer in criminology at Swinburne University of Technology, said NSW gun licence holders must first prove a genuine reason for needing a weapon.

In the aftermath of the Bondi shooting, "questions may turn on the genuine reason provided in terms of the amount, as well as the reasons linked to the types of guns registered and used in the attack", Gomez said in an email.

Source: Reuters

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Gerik

Economic

Commodity

Copper: The Red Metal’s Meteoric Rise

Copper has reasserted itself as the star commodity of 2025, smashing through historical highs and grabbing headlines across financial markets. Often dubbed “Dr. Copper” for its role as a leading indicator of global economic health, the metal is now at the center of an aggressive rally fueled by a potent mix of geopolitical tension, tariff speculation, and U.S. hoarding behavior.

Recent trading sessions have seen copper breach previous resistance levels, marking all-time highs on major commodity exchanges. Analysts point to an increasingly bullish narrative around supply-chain nationalism, with the U.S. stockpiling industrial metals, including copper, as part of broader economic security measures. This hoarding, viewed by many as preemptive stock insurance against escalating global trade friction, is tightening an already constrained market.

Tariff Fears as a Catalyst

The latest leg of the rally is being significantly accelerated by concerns over potential tariffs. While policymakers have not yet enacted sweeping copper-specific tariffs, the rising tensions between China and Western economies, especially the U.S., are prompting businesses to build buffer inventories. Traders are also front-running policy risks, adding to the speculative surge.

The hoarding behavior aligns with what was seen in other strategic commodities rare earths, lithium, and aluminum where future supply concerns have created self-fulfilling pricing spirals. As copper is critical for electric vehicles, data centers, renewable energy systems, and grid upgrades, any perception of disrupted access sends ripple effects through industrial supply chains.

Supply Constraints Add Fuel

Beyond geopolitical catalysts, copper is also facing deep-rooted structural constraints. Many of the world’s largest mines especially in Chile, Peru, and Indonesia are dealing with declining ore grades, regulatory headwinds, and environmental pushback. The development pipeline for new copper projects has thinned out due to high capital intensity and long lead times, meaning demand outstripping supply could persist into the next decade.

Moreover, global green energy transitions are copper-intensive, from EVs to solar farms to high-voltage cabling. As nations race to meet net-zero goals, demand for copper is expected to outpace supply growth significantly unless major new investments are unlocked quickly.

Market Outlook: How High Can It Go?

Industry insiders now warn that copper prices may be entering a phase of “stratospheric new highs” if the current dynamic continues unchecked. Futures traders are pricing in continued upward pressure, with some analysts forecasting copper breaching the $12,000 per metric ton threshold by early 2026, particularly if China’s stimulus measures bolster demand or the U.S. formalizes new trade restrictions.

While some caution that prices could overshoot fundamentals in the short term, the convergence of real demand, speculative momentum, and long-term structural imbalance presents a bullish case few investors can ignore.

Copper’s surge is not just a commodity rally it’s a reflection of deep structural realignments in the global economy. With supply tightening, governments stockpiling, and energy transitions accelerating, the market appears poised for a sustained high-price era. Unless global production responds quickly or policy shocks are averted, copper may be on a trajectory that rewrites commodity price history.

Source: CNBC

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Justin

Political

Hong kong pro-democracy media mogul Jimmy Lai poses during an interview with AFP at the Next Digital offices in Hong Kong, June 16, 2020. AFP-Yonhap

Jimmy Lai , the pro-democracy former Hong Kong media mogul and outspoken critic of Beijing, was convicted in a landmark national security trial in the city's court on Monday, which could send him to prison for the rest of his life.

Three government-vetted judges found Lai, 78, guilty of conspiring with others to collude with foreign forces to endanger national security and conspiracy to publish seditious articles. He pleaded not guilty to all charges.

Lai, 78, was arrested in August 2020 under a Beijing-imposed national security law that was implemented following massive anti-government protests in 2019. During his five years in custody, Lai has been sentenced for several lesser offenses, and appears to have grown more frail and thinner.

Among the attendees were Lai's wife and son, and Hong Kong's Roman Catholic Cardinal Joseph Zen. Lai pressed his lips and nodded to his family before being escorted out of the courtroom by guards.

Lai's trial , conducted without a jury, has been closely monitored by the U.S., Britain, the European Union and political observers as a barometer of media freedom and judicial independence in the former British colony, which returned to Chinese rule in 1997.

His verdict is also a test for Beijing's diplomatic ties. U.S. President Donald Trump said he has raised the case with China, and U.K. Prime Minister Keir Starmer has said his government has made it a priority to secure the release of Lai, who is a British citizen.

The founder of the now-defunct pro-democracy newspaper Apple Daily was convicted on two counts of conspiracy to commit collusion with foreign forces to endanger national security, in addition to one count of conspiracy to distribute seditious publications.

Under Hong Kong's sweeping national security law, the collusion charge could result in a sentence ranging from three years in jail to life imprisonment, depending on the offense's nature and his role in it. The sedition charge carries a maximum of two years' imprisonment. A four-day mitigation hearing was set to begin Jan. 12 for Lai to argue for a shorter sentence.

The Apple Daily was a vocal critic of the Hong Kong government and the ruling Chinese Communist Party. It was forced to shut in 2021 after police raided its newsroom and arrested its senior journalists, with authorities freezing its assets .

During Lai's 156-day trial, prosecutors accused him of conspiring with senior executives of Apple Daily and others to request foreign forces to impose sanctions or blockades and engage in other hostile activities against Hong Kong or China.

The prosecution also accused Lai of making such requests, highlighting his meetings with former U.S. Vice President Mike Pence and former Secretary of State Mike Pompeo in July 2019 at the height of the protests.

It also presented 161 publications , including Apple Daily articles, to the court as evidence of conspiracy to publish seditious materials, as well as social media posts and text messages.

Reading from an 855-page verdict, Judge Esther Toh said that the evidence showed Lai had been thinking about what leverage the U.S. could use against China long before the security law and said he extended "constant invitations" to the U.S. to help bring down the Chinese government. She said he used helping the people Hong Kong as an excuse.

She said the court was satisfied that Lai was the "mastermind" of the conspiracies and that the only reasonable inference from the evidence was that Lai's intent was to seek the downfall of the ruling Communist Party even at the sacrifice of the people of China and Hong Kong.

Lai testified for 52 days in his own defense, arguing that he had not called for foreign sanctions after the sweeping security law was imposed in June 2020.

Teresa Lai, center, and Lai Shun-yan, right, the respective wife and son of pro-democracy media tycoon Jimmy Lai, and Cardinal Joseph Zen, left, the former bishop of Hong Kong, arrive at the West Kowloon Law Courts building for Lai's expected verdicts in the national security trial in Hong Kong, Dec. 15. AFP-Yonhap

His legal team also argued for freedom of expression.

As the trial progressed, Lai's health appeared to be deteriorating.

Lai's lawyers in August told the court that he suffered from heart palpitations. His daughter Claire told The Associated Press that her father has become weaker and skinnier, and lost some of his nails and teeth. She also said he suffered from infections for months, along with constant back pain, diabetes, heart issues and high blood pressure.

"His spirit is strong but his body is failing," she said.

Hong Kong's government said no abnormalities were found during a medical examination that followed Lai's complaint of heart problems. It added this month that the medical services provided to him were "adequate and comprehensive."

Before sunrise, dozens of residents queued outside the court building to secure a courtroom seat.

Former Apple Daily employee Tammy Cheung arrived at 5 a.m., saying she wanted to know about Lai's condition after reports of his health.

She said she felt the process was being rushed since the verdict date was announced only last Friday, but added, "I'm relieved that this case can at least conclude soon."

Originally scheduled to start in December 2022, Lai's trial was postponed to December 2023 as authorities blocked a British lawyer from representing him, citing national security risks.

In 2022, Lai was sentenced to five years and nine months in prison over separate fraud charges involving lease violations at Apple Daily's headquarters. He was also previously sentenced for his roles in unauthorized assemblies in other cases related to the 2019 protests.

Source: Koreatimes

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Gerik

Economic

Consumer Spending Falters Despite Policy Pledges

Fresh data released by China’s National Bureau of Statistics reveals a sobering picture of the world’s second-largest economy: retail sales in November rose a mere 1.3% year-over-year, significantly below the 2.8% forecast and a sharp slowdown from October’s 2.9% gain. This figure reflects not only subdued household consumption but also the broader structural weakness in China’s post-pandemic recovery, where domestic demand has failed to gain meaningful traction.

Retail performance was further hampered by a fall in auto sales and a weaker-than-expected Singles’ Day shopping season. While platforms extended promotional periods, gross merchandise value only grew 12%, compared to 20% in 2024. According to Syntun, this suggests consumers are still wary about spending amid economic uncertainty.

Industrial Output and Investment Also Disappoint

The malaise isn’t limited to consumer spending. Industrial production increased 4.8% in November, slightly below the 5% forecast, while fixed asset investment an important gauge of long-term confidence fell 2.6% between January and November. This decline was the steepest since 2020 and deeper than the 2.3% contraction predicted by economists.

The property sector remains a key drag. Real estate investment plummeted 15.9% in the first 11 months of 2025, with new home prices in tier-1 cities dropping 1.2% and resale prices falling 5.8% year-on-year. The steepening drop across 70 major cities signals that the bottom of the housing slump may still be out of reach.

Policy Response: Stimulus Plans Gain Momentum

In response to the deteriorating indicators, Chinese policymakers have pledged more fiscal support. The Ministry of Finance announced plans to issue ultra-long-term special bonds in 2026, with proceeds aimed at infrastructure, equipment upgrades, and consumer trade-in programs. Additionally, an increase in the central government budget for investment is being planned to reverse the ongoing slump in fixed asset investment.

Still, the outlook remains clouded. As Zhiwei Zhang from Pinpoint Asset Management noted, the weakening in investment and falling property prices are eroding consumer sentiment, making stronger, faster policy intervention essential especially in Q1 2026.

Structural Concerns and Global Imbalance

Despite domestic headwinds, China’s trade remains robust. The country posted a record trade surplus of $1.1 trillion by November, already surpassing the 2024 full-year record. However, this raises global concerns about China’s continued overreliance on exports. IMF Managing Director Kristalina Georgieva recently urged Beijing to pivot more decisively toward internal consumption.

Economist Eswar Prasad echoed this sentiment, warning of unsustainable growth patterns. In a recent article, he highlighted the urgent need for structural reforms such as enhancing the labor market, strengthening social safety nets, and revitalizing private enterprise to restore consumer confidence and rebalance the economy.

November’s data shows a clear deceleration in China’s consumer economy, industrial output, and investment confidence. While the government’s pledge to expand fiscal spending and issue long-dated bonds signals a willingness to act, economists remain concerned about the lack of urgency and clarity around structural reforms. With unemployment stagnant at 5.1% and domestic demand weak, China may struggle to meet its “around 5%” growth target in 2026 unless bold and targeted measures are rolled out soon.

Source: CNBC

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Samantha Luan

Forex

Commodity

Iron ore futures declined, after top buyer China announced it would introduce a licensing system on the export of certain steel products from next year.

The steelmaking ingredient fell as much as 1.6%, after the Ministry of Commerce said Friday that exporters must seek permission from Jan. 1 to ship a broad range of products, including steel used in construction, cars and consumer goods.

The ministry did not give a reason for the new regulations, but the move comes as China's steel exports are on track for a record in 2025. Shipments exceeded 100 million tons in the year through November, according to the most recent trade data, despite rising trade barriers.

China is pushing for its steel to move up the value chain by reducing the proportion of low value-added products in its export mix, industry consultancy Mysteel said in a note. "China's steel industry is facing an unprecedented pressure for transition," it said, adding that the new policy aligns with Beijing's carbon-emission goals.

Producers of low value-added products may shift a proportion of their exports to the domestic market in the short term, Mysteel said, while shipments to markets in Africa and Latin America might also increase. The share of high-end "green" steel products in the export mix would increase gradually, the consultancy said.

Meanwhile, China's crude steel production fell for a sixth straight month. The country produced a little under 70 million tons in November, down 11% from a year earlier, China's statistics bureau said on Monday. That left the year-to-date figure 4% behind last year's.

Iron ore futures fell 1.3% to $100.70 a ton in Singapore as of 11:00 a.m. local time, following a 1.4% drop last week. Yuan-priced futures in Dalian declined 1.3%. Steel futures in Shanghai edged higher.

Source: Bloomberg Europe

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Gerik

Economic

Stocks

Market Sentiment: Fear Overshadows Fundamentals

The U.S. stock market ended last week on a sour note, with tech stocks leading the retreat. Broadcom fell over 11% on Friday despite delivering earnings and guidance that exceeded analyst expectations. Instead of rewarding the company’s robust AI-driven performance, investors zeroed in on lower margins and uncertainty surrounding major deals, triggering a chain reaction across related AI players including Nvidia, AMD, and Oracle.

This wave of pessimism reflects a deeper anxiety about what some are calling an "AI bubble" a narrative that, although speculative, has begun to exert real influence on short-term trading behavior. The S&P 500 dropped 0.6% and the Nasdaq Composite declined by 1.6% for the week, even as the Dow Jones Industrial Average edged up 1.1%, thanks to resilience in financial stocks.

Disconnect Between Performance and Perception

Ironically, Broadcom’s AI momentum is not in question. Bernstein analyst Stacy Rasgon reaffirmed a “buy” rating, citing that the company’s AI story is “not only overdelivering but doing it at an accelerating rate.” UBS also remains optimistic, projecting strong 2026 performance driven by themes like artificial intelligence, power infrastructure, and longevity.

Yet, the current market mood suggests that even strong fundamentals may not be enough in the near term. With valuations stretched and earnings volatility looming, investors are in a risk-off mindset quick to punish any hint of imperfection, even in market darlings.

Broader Tech Pressure and AI Skepticism

This week’s tech weakness was part of a larger pattern, not just a Broadcom-specific story. The Nasdaq’s underperformance aligns with growing scrutiny over AI-driven business models and a potential recalibration of investor expectations. As the AI theme matures, markets may begin to favor cash flow certainty over speculative future growth.

Oracle’s firm denial of delays in its data center timeline contrary to Bloomberg reports was one attempt to steady the ship. Yet, without more concrete positive signals, such as profitable deliveries or margin improvement in AI services, skepticism may linger.

What Else is Moving Markets

Beyond tech, macroeconomic factors added to the cautious tone. The U.K. reported a surprise 0.1% contraction in GDP over the three months to October, signaling weakness in Europe. Meanwhile, tensions between the U.S. and China over agricultural trade and domestic production continue to influence global strategy, with Goldman Sachs suggesting domestic plays in China’s agriculture sector as a hedge.

Adding to the geopolitical fog, U.S. President Donald Trump criticized European leadership, calling the bloc “decaying” and its leaders “weak.” This rhetorical assault comes as the EU faces several critical tests this week, including decisions over Russian asset use for Ukraine and key policy signals from the European Central Bank.

Broadcom’s sell-off despite strong results underscores a fragile investor psyche one where valuation jitters, AI fatigue, and geopolitical instability converge. Until markets receive more affirming news be it Oracle’s positive cash flow or policy clarity from Brussels the appetite for tech risk may remain subdued. In a market that seems to demand perfection, even excellence may not be enough.