Last week saw a broad recovery in global stock markets, with Hong Kong equities also stabilizing and rebounding. However, the situation this week is more complex. Despite preparations for Russia-Ukraine negotiations, military conflicts have escalated. Additionally, reports indicate that U.S. President Trump directly threatened Venezuelan President Maduro, warning of potential military action if Maduro refuses to step down—a development that could unsettle global markets.

With the Federal Reserve's December policy meeting approaching, the central bank has entered its blackout period. Markets are now awaiting the release of the PCE report—the Fed’s preferred inflation gauge—on Friday, which will provide critical insights ahead of the meeting.

On Monday, December 1, Bank of Japan Governor Kazuo Ueda is set to speak in Nagoya, with markets watching for any hints of rate hikes. Given these uncertainties, investors are expected to adopt a cautious, wait-and-see approach this week. Gold and silver sectors are likely to see heightened activity.

**Robotics Sector**: UBTECH ROBOTICS (09880) has completed IPO mentorship under CITIC Securities and met pre-application conditions. Separately, Changan Automobile announced plans to establish a robotics company, potentially catalyzing sector interest.

**Domestic Demand Focus**: A recent commentary emphasized expanding domestic demand as a strategic priority, particularly boosting consumer spending, with attention on the trendy toy sector.

**Battery Industry**: The Ministry of Industry and Information Technology convened a meeting to address "cutthroat competition" in power and energy storage batteries, urging rational market behavior. While the sector rallied last Friday, caution is advised against potential pullbacks.

**AI Phones**: ZTE’s AI phone, featuring high-authority Agent capabilities, is set for early December release. While sales remain uncertain, ZTE stands to benefit.

**Stock Pick: UBTECH ROBOTICS (09880)** On October 16, 2025, UBTECH secured a ¥126 million order for its latest humanoid robot, WalkerS2, which features autonomous battery-swapping capabilities tailored for industrial use. With 2025 orders exceeding ¥630 million, the company leads global commercialization efforts. WalkerS2’s deployment in Guangxi marks a shift from pilot applications to batch commercialization. UBTECH is expanding production capacity to meet surging demand, signaling strong growth prospects.

**Silver Market Dynamics** Global silver faces an annual supply deficit of 6,000–7,000 tons, largely driven by photovoltaic (PV) demand. Even if copper substitution halves PV silver use by 2026, a 3,000-ton deficit would persist, depleting inventories in London, New York, and Shanghai. With Shanghai’s exchange holding just 1,300 tons and London’s 6,000 tons reserved locally, New York’s 4,300 tons of deliverable silver may not suffice. Historical trends show price surges accompany large inventory shifts, suggesting further upside as stocks dwindle. Key stocks to watch: CHI SILVER GP (00815), MMG (01208), and LOCO HK (08162).

**Market Data** HKEX data shows 111,796 open December Hang Seng Index (HSI) futures contracts, with a net open interest of 48,540. The HSI, currently at 25,859, faces resistance near its mid-axis but shows upward momentum. Fed rate-cut expectations are rising, supporting a bullish HSI outlook.

**U.S. Market Risks** Despite ongoing rallies, U.S. tech stocks remain overvalued, with the S&P 500’s Shiller P/E ratio at 40.42—near 1999’s peak of 44.19. Sectors like finance, communications, consumer goods, and industrials may face mid-term corrections, potentially pressuring Hong Kong equities.

Interestingly, research notes that U.S. stocks, A-shares, Hong Kong stocks, and gold are all in bull markets. While A-shares and Hong Kong have rallied for 1.2 years (close to median cycles of 1.7–1.8 years), gold’s 3-year run and U.S. stocks’ 3-year rally (versus median 5.6 years) suggest extended cycles.