Poland Set To Cut Rates Again On Soft Inflation

Economic

Central Bank

Summary:

Poland's central bank is likely to deliver its sixth interest-rate cut this year after inflation slowed more than expected, slipping below policymakers' target.

The rate-setting Monetary Policy Council will cut the key rate by 25 basis points to 4%, the lowest level since March 2022, according to 27 of 32 economists surveyed by Bloomberg. The remaining six analysts expect borrowing costs to remain unchanged.

Governor Adam Glapinski hasn't ruled out further easing, though has given no time frame for potential cuts. Often setting the tone for the 10-member MPC, the central bank chief has indicated that a rate at 4% isn't excessive if inflation stabilizes.

A cut on Wednesday would be a fifth consecutive reduction as policymakers respond to inflation that's eased to 2.4% in November, down from 4.9% at the start of the year. The move would be in line with MPC members, including Wieslaw Janczyk and Ireneusz Dabrowski, who have signaled that further easing in December is possible if data continue to register slowing inflation.

"Taking our inflation forecast as face value, we struggle to see the terminal rate at 4% — as suggested by Glapinski's latest remarks — with the MPC likely facing increasing pressures to ease rates as the inflation outlook proves to be consistently favorable during 2026," said Juan Orts, Societe Generale SA's economist for central and eastern Europe, the Middle East and Africa.

Orts expects inflation to remain bellow the MPC's 2.5% target next year, while the central bank will reduce its benchmark to 3.5% in the second quarter — and possibly even lower later in 2026. A greater appetite for reductions — including a surprise cut in October — has belied recent "hawkish rhetoric," Orts said, prompting analysts to shift expectations.

"Actions count more than words, and after the surprise cut in October, it become clear to us that the MPC had a lot more appetite for rate cuts than what we had initially believed," the economist said.

Glapinski, who backed elevated rates throughout 2024 as he blamed the government for loose fiscal policy and uncertainty over a cap on energy prices, has eased off his rhetoric targeting the government in recent months.

He'll hold a news conference at 3 p.m. on Thursday.

Source: Bloomberg Europe

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Gerik

Economic

Local Government Debt Hits Record Amid Land Sale Collapse

China's local government debt burden has escalated sharply in 2025, reaching an estimated 134 trillion yuan (approximately $18.9 trillion USD). This includes both official local government bonds and off-balance-sheet borrowing through Local Government Financing Vehicles (LGFVs), institutions that fund infrastructure development.

This rapid debt accumulation is directly linked to the ongoing real estate downturn. Land sales, once a cornerstone of local government revenue, have fallen dramatically. From January to October, total land sales amounted to less than 2.5 trillion yuan down from 8.7 trillion yuan in 2021. Over 10% of land auctions now receive no bids, and 2025 sales are projected to decline to around 3 trillion yuan.

As land income dries up, local authorities have aggressively issued bonds. The volume of new local government bonds surpassed 10 trillion yuan by November, exceeding last year's total and marking the highest level on record. Total local bond debt now stands at 54 trillion yuan, while hidden debts through LGFV-issued corporate bonds are estimated at 87 trillion yuan.

Off-Balance-Sheet Debt and Weak LGFV Performance Raise Red Flags

While LGFVs remain operational, their profitability is increasingly in question. Nearly 10% are currently loss-making, and only 3% have a return on equity above 4%. Their 2024 net profit was around 550 billion yuan, but this figure was heavily propped up by over 1 trillion yuan in government subsidies. Without those supports, nearly half of LGFVs would be in the red.

This raises a structural concern: LGFVs are heavily reliant on state support but contribute little in sustainable income. Their role in low-margin infrastructure projects with long payback periods makes their debt servicing capacity inherently weak. Despite this, many continue to operate under the assumption of implicit government guarantees and benefit from ultra-low interest rates caused by ongoing deflationary pressure.

Monetary Easing Buys Time, But Does Not Eliminate Risk

The People’s Bank of China has implemented aggressive monetary easing to support the economy, pushing average LGFV bond yields down to 2.1% in 2025 a 1.4 percentage point decline from 2021. This matches the fall in sovereign bond yields, signaling that markets are treating LGFVs almost like government debt.

These lower yields are the result of extended deflation and weak domestic demand, which have pressured authorities to continue monetary stimulus. However, this support merely delays rather than resolves the risk of a financial crisis.

Applying the Domar sustainability condition (which states that debt stabilizes only if nominal GDP growth exceeds nominal interest rates), China’s trajectory appears increasingly fragile. Nominal GDP growth has slowed to just 3%, while interest rates remain below 2%. The narrowing gap suggests that debt is becoming less sustainable, especially in a prolonged deflationary environment.

Structural Vulnerabilities Exposed Amid Fiscal Strain

The fiscal stress has prompted Beijing to act. In autumn 2024, President Xi Jinping’s administration approved the issuance of 10 trillion yuan in additional bonds, intended to transfer some LGFV liabilities back to local governments to avoid a full-scale default crisis. This move confirmed the government’s awareness of the systemic threat posed by overleveraged LGFVs.

Yet such measures only shift liabilities, not reduce them. The implicit risk remains, and LGFVs continue to operate under distorted incentives. The current fiscal model, heavily reliant on debt-fueled growth through land sales and infrastructure, is under significant strain and Beijing is beginning to curtail discretionary spending, an indication that even central authorities are concerned about future debt sustainability.

A Dangerous Fiscal Spiral Amid Deflation

China’s local debt situation has entered a precarious phase. While monetary easing and implicit state guarantees have thus far prevented a crisis, structural imbalances falling land revenues, opaque LGFV finances, and sluggish nominal GDP growth are deepening.

Deflation, once a short-term relief for interest payments, is now becoming a threat in itself. Without meaningful reforms to fiscal policy and a rethinking of the infrastructure-led growth model, China risks entering a long-term debt spiral that could constrain national development goals and shake global investor confidence.

The country stands at a crossroads: delay decisive action and face growing risks, or embrace painful restructuring before markets force its hand.

Source: Nikkei Asia

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Justin

Stocks

Economic

Poland should prioritize cheaper land wind energy over offshore projects to stay competitive in the global economy, according to the head of the country's power grid operator.

The European Union's most coal-reliant state would be better off putting its ambitious offshore plans on the backburner until the potential of onshore turbines is fully unlocked, Grzegorz Onichimowski, chief executive officer of state power grid PSE, said in an interview.

His comments align Poland with a cooling sentiment in the European offshore industry, following failed auctions in Germany and Denmark within the past year due to rising costs.

"Why hurry? First we need to unlock the onshore wind energy, which will show us how much offshore wind we really need," he said.

The stark warning comes as Poland is gearing up for a December 17 tender to grant contracts for another 3 gigawatts of offshore capacity. Maximum prices are set between 486 zloty ($134) to 512 zloty a megawatt hour, significantly higher than current exchange levels with taxpayers poised to cover the gap.

"Even if the final prices are below the maximum limits, they will still be much above the market," he said. "This is not a contract for difference, this is a mechanism of stable subsidies."

Onichimowski suggested the auction should ideally be postponed, though he acknowledged projects are already at advanced stages.

Across Europe, offshore wind is seen as a crucial part of the continent's transition away from fossil fuels, but steep price increases for materials like steel as well as higher borrowing costs in recent years have forced governments to ramp up subsidies to ensure the projects are delivered.

Poland's preliminary strategy targets 18 gigawatts of Baltic Sea wind power and 35 gigawatts of onshore wind by 2040 as the nation phases out coal plants that now produce more than half of its electricity. Wind generation accounts for roughly 15% of the total power mix.

However, expansion on land has stalled since 2017 due to restrictive distance regulations. While Prime Minister Donald Tusk has promised to speed up onshore development, necessary regulatory changes are still pending. Tusk came to power two years ago with a pledge to accelerate transition into green energy sources, arguing that affordable power could fuel Poland's future economic growth.

First movers in the country's offshore sector, including Orsted AS and Northland Power Inc, are already constructing farms with a total capacity exceeding 4 gigawatts, with operations slated to begin next year.

For Polish industry, the stakes are high. Producers have long appealed for relief from soaring energy prices driven by coal dependency and distribution costs.

PSE's Onichimowski warned that inefficient spending on grid or generation assets that remain idle will double the financial blow, putting Poland at a disadvantage against developing economies.

"Every zloty we spend unnecessarily, every stranded cost we create by excessive investments, will hit us twice as hard," the CEO said. "The global competition will be lethal and it's already visible today."

Source: Bloomberg Europe

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Westpac

Forex

Economic

Meeting Demand Through Stockpiles Today, Productivity Tomorrow

· The September quarter National Accounts show growth slowed to 0.4%qtr – this was softer than both the 0.8%qtr expected by Westpac Economics and the 0.7%qtr expected by the market. Despite this, upward revisions to previous activity saw the year-ended outcome accelerate to 2.1%yr – this year-ended growth rate was in line with Westpac Economics forecasts of 2.3%yr.

· Domestic demand was strong, accelerating as Australia's economic upswing broadened to include business investment and the construction sector, while new public demand resumed its climb after going sideways over the past two quarters. However, the pickup in housing construction and business investment was a little softer than we expected.

· Inventory stockpiles were run down to meet this demand. Going forward increasing demand is likely to be met by more capacity with productivity growth accelerating to 0.8%yr. Looking at the market (ex-mining) sector, the productivity turnaround appears to be more impressive, accelerating to 1.4%yr.

First Impressions: Australian National Accounts, September Quarter 2025_1

The detail

The September quarter National Accounts show growth slowed to 0.4% over the quarter while upward revisions to previous activity saw the year-ended outcome accelerate to 2.1%yr – a touch above the RBA's updated trend estimate of +2.0%yr but slightly below Westpac Economics' estimate of trend.

Domestic demand (spending by consumers, businesses, and governments) grew a solid 1.2%qtr over the September quarter and 2.6% in year-ended terms – the strongest quarterly growth since the June quarter 2012 (outside the pandemic). There was no need for a 'handover' with both the private and public sectors contributing to the pickup in domestic demand.

New private demand grew a strong 1.2%qtr and 3.1% in year-ended terms – also the fastest quarterly pace since the March quarter 2012 (outside the pandemic). While the consumer contributed, the standout was new business investment which grew 3.4%qtr and 3.8%yr. Despite this lift, the outcome was a touch softer than our 5.8%qtr forecast as engineering construction disappointed on the downside (-0.7%qtr v forecast of 2.0%qtr). Victoria recorded an outsized sharp 8.0% fall in engineering construction activity. Timing difference with the construction work done partial is one possible explanation of this discrepancy.

The positive news was that we saw investment increases across most of the asset classes, including machinery (7.5%qtr and 6.2%yr); and new building (2.0%qtr and 2.1%yr). And while data centre fit outs and the purchase of civil aircrafts were the main contributors to the boost in machinery, capex data showed that the lift was broader to also include consumer facing industries (such as accommodation and food services) and some business facing industries (such as administrative and support services).

Housing construction activity grew 1.8%qtr and 6.5%yr. Here too the quarterly outcome was softer than we expected based on the partial data (+1.8%qtr v +3.2%qtr). However, the year ended outcome was in line with our forecasts as activity in previous quarters was revised higher. The quarterly outcome was driven by both the construction of new dwellings (2.6%qtr) and renovation activity (0.5%qtr). There remains a healthy pipeline of projects to work through, which should support housing construction activity going forward.

Firmer consumer spending extended into Q3, with household spending growing 0.5%qtr and 2.5%yr. This follows the bumper June quarter outcome of 0.9%qtr, which was partly driven by one-offs including the roll-off of state electricity rebates, larger than usual EOFY discounting, and holiday spend around Easter and ANZAC Day.

With population growth projections running at 1.7%yr, this implies consumption per capita has started to post sizable increases. The Aussie consumer continues to be supported by rising real incomes which grew 0.9%qtr and 3.8%yr. A key uncertainty is whether this income boost will fade if interest rates were to remain on hold for longer and as the Stage 3 tax cuts are chewed away by bracket creep (we saw personal income tax increase as a share of household income this quarter). Without this boost, consumption could slow which would have implications for the labour market.

On the flip side, the upswing is likely to gain greater momentum the longer it runs, which increases the likelihood it will become self-sustaining, boosting incomes and supporting consumption going forward. The Westpac–DataX Card Tracker Index shows spending picked up in October, suggesting momentum is extending to the December quarter.

Net exports and inventories were broadly in line with expectations. A rundown in mining, public sector, and consumer goods inventories has detracted around 0.5ppts from Q3 growth, while net exports added a further 0.1ppt drag.

Note, the statistical discrepancy detracted 0.1ppt from growth over the quarter, compared to a 0.2ppt contribution last quarter.

It's not only demand, supply is also responding

Labour productivity bounced to grow 0.8%yr. Digging a little deeper, we estimate that productivity in the market (ex-mining) sector grew at around 1.4%yr in Q3 (estimates will be finalised after Friday's Labour Accounts).

First Impressions: Australian National Accounts, September Quarter 2025_2

As well as moderating growth in the sector's unit labour costs to around 3.3% in six-month annualised terms, this supports the view that whole-economy productivity growth will recover as the sector-specific factors in mining and the care economy wash out.

First Impressions: Australian National Accounts, September Quarter 2025_3

Source: Westpac Banking Corporation

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Gerik

Economic

Deadliest Fire in Decades Reignites Public Dissent

The devastating blaze that swept through Wang Fuk Court in Hong Kong’s Tai Po district in late November 2025 has left more than 150 people dead, with many others injured, missing, or displaced. While the physical damage is immense, the fire has also reignited something unseen in Hong Kong in years: widespread public outrage, grief, and calls for government accountability.

This emotional surge has emerged in a city tightly controlled since the imposition of China’s national security law in 2020. Mourning residents, volunteers, and observers gathered in thousands at the scene, lining up for over a mile to pay their respects. Makeshift memorials of chrysanthemums and handwritten tributes filled the streets, but so did unspoken questions how could such a tragedy occur in one of the world’s most advanced cities?

Neglect and Systemic Failures Behind the Tragedy

Initial investigations revealed that the Wang Fuk Court housing complex, a subsidized residential estate from the 1980s, was undergoing a $330 million HKD renovation project when the fire erupted. Styrofoam panels and plastic netting used during renovations are suspected of accelerating the blaze. Critically, these materials had already raised red flags among residents more than a year before the fire. Complaints were made to the construction company, the labor department, and even on public television. Yet no significant action was taken.

Despite 16 government inspections, the hazardous materials remained in place. Bloomberg reporting confirmed that residents had even tested the panels themselves, discovering their flammability. Still, officials downplayed the concerns, arguing that styrofoam use was not technically illegal. The failure to respond, despite these warnings, is now seen as a direct causal factor that contributed to the scale and speed of the fire.

Scaffolding, Regulations, and a Culture of Overlooked Risk

Hong Kong’s longstanding use of bamboo scaffolding a rare practice globally also drew scrutiny. While structurally agile and cost-effective, bamboo is flammable. Experts believe that the fire may have spread rapidly due to the combined flammability of both the foam panels and the scaffolding’s protective netting.

Though bamboo itself is harder to ignite than many assume, the government has since pledged to accelerate its replacement with metal scaffolding in public construction projects. This decision signals a partial admission of regulatory shortcomings, even as the deeper issue remains systemic: a culture of minimum compliance rather than proactive risk prevention.

Swift Arrests But No Clear Closure

Authorities acted quickly after public pressure mounted. Three people from the contractor company were arrested for manslaughter, while the Independent Commission Against Corruption (ICAC) detained eight others tied to potential misconduct in project bidding. The fact that the renovation contract went to the most expensive bidder has heightened suspicion of mismanagement or corruption, especially given the project's immense value.

However, these arrests, while decisive, have not calmed the city. The public is demanding an independent inquiry, and although Chief Executive John Lee announced the formation of a committee, critics argue that its voluntary nature and lack of subpoena power fall short of true transparency. There is a growing recognition that accountability in this case may stop at mid-level operatives, not reach the top decision-makers or institutional frameworks that allowed the oversight to persist.

Security Law Casts Long Shadow Over Mourning and Protest

The fire has tapped into deep public resentment, evoking memories of the 2019 mass protests that swept the city. Small gatherings have already begun resembling pre-2020 civic mobilizations community-led support networks, volunteer supply chains, and public demands for reform. Authorities, wary of unrest, have responded swiftly under the national security framework.

At least three people have been arrested for sedition, including a student handing out leaflets calling for an inquiry. Social media accounts advocating for justice have been taken down. The government’s fear is clear: that mourning could escalate into protest, and that any reawakening of mass dissent could undermine Beijing’s tightly managed vision for Hong Kong.

This reaction reflects a causal concern on the part of authorities not just about the fire, but about how public sentiment, once ignited, can transform into a political challenge.

Beijing Watches Closely as Hong Kong Balances Image and Control

Chinese President Xi Jinping responded to the disaster within hours, expressing condolences and dispatching a task force to Hong Kong. While seen by some as a gesture of support, the immediacy also served as a signal to local leaders: this is not just a local issue it is a test of governance.

Chief Executive John Lee, a former police officer appointed to maintain stability, is now caught between preserving order and responding with sufficient openness to restore public trust. His government’s actions in the coming weeks whether he proceeds with a transparent inquiry or maintains a defensive stance will shape perceptions of Hong Kong’s autonomy and Beijing’s influence.

Jenni Marsh of Bloomberg framed the current moment as a "halfway house" for the city. Unlike mainland China, where grief is swiftly censored, Hong Kong still allows limited space for expression. But that space is shrinking. The city's leadership must now decide whether to confront uncomfortable truths or contain them and risk greater backlash.

A Tragedy That May Reshape Hong Kong’s Civic Landscape

The Wang Fuk Court fire is more than just a tragic accident. It is a flashpoint for Hong Kong’s identity under the national security regime. The scale of destruction, the visible regulatory failures, and the reawakening of collective grief have all converged into a moment of reckoning.

Whether this becomes a catalyst for deeper change or is remembered as another moment suppressed under the weight of political control will depend not just on investigations or arrests, but on how much space Hong Kong’s leaders are willing or permitted to give to public accountability in the shadow of Beijing.

Source: Bloomberg

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Gerik

Economic

Growth Picks Up But Falls Short of Forecasts

Australia’s economy posted its strongest expansion since late 2023, with GDP growing by 2.1% year-on-year in the third quarter of 2025. On a quarterly basis, growth reached 0.4%, below the Reuters forecast of 0.7%. Although the headline figure disappointed, economists argue it masks underlying strength within the domestic economy.

Oxford Economics’ Harry Murphy Cruise noted that once trade and inventory distortions are removed, domestic economic activity actually surged by 1.2% quarter-on-quarter the fastest pace in over two years. This distinction is crucial, as it highlights that the soft GDP figure is not reflective of weak fundamentals but rather the result of external accounting factors such as inventory write-downs and net trade effects.

Private Investment Surges On Infrastructure And Data Centers

A core contributor to the quarter’s expansion was a revival in private investment. Business spending rose at its fastest rate since March 2021, largely focused on machinery, equipment, and digital infrastructure, especially in New South Wales and Victoria. This investment wave reflects a structural commitment to productivity and long-term capacity-building in the face of technological transformation.

The increase in fixed capital formation appears to be causally linked to both private sector confidence and broader government incentives, particularly those tied to data center construction and green infrastructure.

Consumer Spending Remains Resilient

Household consumption, which accounts for over half of Australia’s GDP, also continued to rise. Growth was observed in essential categories such as rent, utilities, healthcare, insurance, and food a spending pattern that reflects both persistent cost-of-living pressures and continued labor market tightness.

This spending tilt toward necessities rather than discretionary goods may be an indirect result of inflationary concerns and rate sensitivity. Still, it demonstrates consumer resilience in the face of policy tightening, implying a lagged and uneven transmission of higher rates to household behavior.

Net Trade Becomes A Drag Amid Import Surge

Despite strong domestic demand, net exports detracted 0.1 percentage point from GDP, as import growth outpaced export expansion. The causal link here is straightforward: a stronger domestic economy boosts import consumption, especially for capital and intermediate goods, while export volumes struggled to keep pace.

This negative trade balance remains a recurring drag on overall growth, exacerbated by global demand volatility and commodity price fluctuations.

Inflation Risks Limit Monetary Flexibility

Before the GDP release, RBA Governor Michele Bullock had already signaled concern about the economy nearing its potential growth threshold. With October inflation accelerating to 3.8% year-on-year its fastest pace in seven months the central bank remains under pressure to maintain a tight policy stance. This inflation rate continues to sit well above the RBA’s 2–3% target range.

Cruise of Oxford Economics remarked that the Q3 figures confirm the economy is still “too hot” for the RBA to consider easing. He further warned that while a rate hike in the upcoming meeting is not guaranteed, it cannot be ruled out, especially if inflation data continues to surprise on the upside.

Policy Outlook Remains Restrictive

At its last meeting, the RBA held interest rates steady at 3.6%, citing persistent inflation and a strong labor market. While rate cuts are not on the horizon, a potential hike remains a live option depending on price pressures. Bullock has already hinted that the cutting cycle may be nearing its end, but any shift toward dovish policy will depend heavily on future inflation prints.

In response to the GDP data, Australia’s 10-year government bond yield rose by four basis points to 4.65%, bringing the total increase since mid-October to 55 basis points. This movement reflects mounting investor expectations that policy will remain tight for longer than initially anticipated.

Strong Domestic Fundamentals Meet External Constraints

Australia’s Q3 performance presents a mixed picture. While headline GDP growth missed expectations, the underlying data shows a robust domestic economy fueled by private investment and steady consumption. However, the enduring pressure from inflation, coupled with weak trade performance, limits the RBA’s policy flexibility.

Looking forward, Australia’s challenge will be to maintain this growth momentum without further fueling inflation. With the RBA’s next meeting approaching, markets are watching closely for signs of whether rate stability will hold or whether a preemptive hike is required to re-anchor inflation expectations heading into 2026.

Source: CNBC

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Gerik

Economic

A Fragile but Growing Hope for a Year-End Rally

Following a tumultuous November, U.S. markets appear to be regaining momentum in early December, with tech stocks and digital assets helping reverse recent pullbacks. Tuesday’s rally broke a brief downturn and reinvigorated investor sentiment, showing that risk appetite remains intact, albeit more selective.

Bitcoin, which recently experienced a sharp correction, recovered some losses, while equities across major U.S. indices posted gains. This rebound suggests that the sell-off was more of a temporary pause than a structural shift in investor positioning.

According to Doug Beath, global equity strategist at Wells Fargo Investment Institute, the market narrative is shifting toward renewed optimism. He noted that traders are now looking beyond the current economic weakness toward improved earnings projections and potential growth acceleration in 2026. This change in outlook provides a psychological anchor for equity markets to stabilize in the final weeks of 2025.

Rate Cut Bets Drive Risk Sentiment

One of the most significant drivers of the recent market optimism is the growing belief that the U.S. Federal Reserve will ease monetary policy. According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut at the upcoming December 10 meeting has surged to 89.2%, up dramatically from just a month ago when odds were near even.

This expectation has created a supportive backdrop for both equities and crypto assets. Lower interest rates reduce the cost of capital and typically boost the valuation of growth-oriented sectors such as technology. The relationship here is causal: as borrowing costs fall, investment activity and asset valuations are incentivized, fueling momentum in interest-sensitive segments.

Technology Leads Market Resilience

Tech stocks have once again taken the lead in lifting U.S. markets. Tuesday’s gains across all three major benchmarks reflect renewed confidence in the sector, possibly supported by strong fourth-quarter earnings projections. European markets, in contrast, remained more muted, with the Stoxx 600 barely finishing above the flatline.

A standout was Bayer, whose stock surged after the Trump administration moved to curb U.S. litigation risks linked to its weedkiller product. This development signals how regulatory actions continue to have material influence on corporate valuations, especially in sectors vulnerable to legal liabilities.

Crypto Volatility Raises Structural Questions

The crypto market, while partially rebounding, remains under pressure. Bitcoin’s recent 20% decline has led to renewed debate about whether the current downturn signals the onset of another crypto winter. Analysts remain divided. For digital asset-linked companies known as Digital Assets Treasury (DAT) entities falling token prices have caused their market valuations to diverge from the actual value of their holdings.

This discrepancy creates both risks and speculative opportunities. On one hand, DATs trading below net asset value suggest potential value traps; on the other, it raises questions about investor confidence in the underlying crypto ecosystem. If sustained, such misalignments could distort funding conditions and undermine transparency in crypto-linked equity markets.

Structural Headwinds: Tariffs and Housing Woes

Beyond asset prices, structural risks continue to challenge investor outlooks. One such issue is the lagging impact of renewed U.S. tariffs under President Trump’s administration. The Institute for Supply Management’s November survey showed a drop in employment metrics, with its hiring gauge falling to 44% the weakest since August suggesting that businesses are beginning to adjust staffing levels in anticipation of higher input costs.

Meanwhile, China’s real estate sector continues to deteriorate. Vanke, one of the country’s top property developers, is under scrutiny amid rumors of a potential state takeover, while November sales for the top 100 developers plunged 36% year-over-year. Morgan Stanley's estimate that average sales by 25 major firms dropped 42% paints a sobering picture of continued excess inventory and weak demand. These developments threaten to deepen the drag on China’s GDP and global construction-linked commodities.

Innovation Spotlight: French AI Startup Mistral Breaks New Ground

In a rare positive development out of Europe’s tech sector, French startup Mistral unveiled what it claims is the “world’s best” open-weight multimodal and multilingual AI model. Backed by €1.7 billion in funding from Nvidia and ASML, the launch positions Mistral as a serious competitor in the global AI race. It also signals continued investor appetite for frontier technologies, even in a climate of general economic caution.

The release could bolster Europe’s position in the global AI supply chain and add momentum to transatlantic tech collaborations. However, it also raises further demand for high-performance chips and cloud infrastructure, placing additional stress on already tight semiconductor supply chains.

Cautious Optimism with Caveats

Despite recent headwinds, markets are exhibiting signs of cautious optimism. Strong tech performance, expectations for monetary easing, and selective bullishness in crypto suggest that a year-end rally is not out of reach. However, the landscape remains fraught with risks from unresolved trade tensions and housing instability in China to potential crypto volatility.

Investors seeking a strong finish to 2025 may find a compelling story in recovering sentiment, but should brace for further turbulence and reassess risk exposure carefully as macro uncertainties persist.

Source: CNBC

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Poland Set To Cut Rates Again On Soft Inflation

Source: Bloomberg Europe

China’s Local Debt Spiral Deepens Amid Prolonged Property Slump and Deflation Fears

Local Government Debt Hits Record Amid Land Sale Collapse

Off-Balance-Sheet Debt and Weak LGFV Performance Raise Red Flags

Monetary Easing Buys Time, But Does Not Eliminate Risk

Structural Vulnerabilities Exposed Amid Fiscal Strain

A Dangerous Fiscal Spiral Amid Deflation

Source: Nikkei Asia

Polish Power Grid Chief Urges Pause To Costly Offshore Wind Energy Expansion

Source: Bloomberg Europe

First Impressions: Australian National Accounts, September Quarter 2025

Meeting Demand Through Stockpiles Today, Productivity Tomorrow

The detail

It's not only demand, supply is also responding

Source: Westpac Banking Corporation

Hong Kong Fire Disaster Sparks Public Anger, Raises Accountability Questions Under National Security Shadow

Deadliest Fire in Decades Reignites Public Dissent

Neglect and Systemic Failures Behind the Tragedy

Scaffolding, Regulations, and a Culture of Overlooked Risk

Swift Arrests But No Clear Closure

Security Law Casts Long Shadow Over Mourning and Protest

Beijing Watches Closely as Hong Kong Balances Image and Control

A Tragedy That May Reshape Hong Kong’s Civic Landscape

Source: Bloomberg

Australia’s Growth Reaches Two-Year High But Fails to Impress Markets Amid Inflation Risks

Growth Picks Up But Falls Short of Forecasts

Private Investment Surges On Infrastructure And Data Centers

Consumer Spending Remains Resilient

Net Trade Becomes A Drag Amid Import Surge

Inflation Risks Limit Monetary Flexibility

Policy Outlook Remains Restrictive

Strong Domestic Fundamentals Meet External Constraints

Source: CNBC

Markets Eye a Year-End Comeback Amid Tech Gains, Rate Cut Bets, and Cautious Optimism

A﻿ Fragile but Growing Hope for a Year-End Rally

Rate Cut Bets Drive Risk Sentiment

Technology Leads Market Resilience

Crypto Volatility Raises Structural Questions

Structural Headwinds: Tariffs and Housing Woes

Innovation Spotlight: French AI Startup Mistral Breaks New Ground

Cautious Optimism with Caveats

Source: CNBC

Risk Disclosure

A Fragile but Growing Hope for a Year-End Rally