WE Think —Why was this holiday truly a 'Golden' week, as gold prices hit record levels?

1. Market Overview

China’s capital markets maintained their bullish momentum in September, with both A-shares and Hong Kong stocks performing strongly. The Hong Kong market, led by heavyweight Alibaba, saw particularly notable gains. Specifically, the Hang Seng Tech Index, Hang Seng Index, Wind All China Index , and CSI 300 rose by 13.95%, 7.09%, 2.8%, and 3.2%, respectively. Over the third quarter, Chinese assets delivered impressive returns: the Wind All China Index gained 19.46%, and the Hang Seng Tech Index advanced 21.93% — its strongest quarterly performance since the 2015 bull market.

Globally, several key events unfolded: the U.S. Federal Reserve cut interest rates by 25 basis points while the stock market hovered at record highs; Japan’s Liberal Democratic Party elected its first female leader, Kazuko Takaichi, who is widely expected to become the country’s first female Prime Minister; and gold prices surged past USD 4,000 per ounce, marking a new milestone.

This edition of WE Think explores these major developments.

2. Fed Rate Cut: The Start of a New Cycle or a Step Toward the Cliff?

The U.S. Federal Reserve opted to lower interest rates by 25 bps while equity markets remained at historic highs. This decision came against a backdrop of easing inflation, slowing job growth, high fiscal interest burdens, and political pressure from former President Trump.

Historically, the Fed tends to raise rates when inflation and economic activity are overheating, then cuts them later to stimulate asset prices and growth. However, this time is different: asset prices are already elevated, raising concerns about the risks of this counter-cyclical move.

While markets may continue rising in the short term, interest rates are ultimately determined by market forces. Unconventional easing at this stage could lead to inflationary pressures and a weaker U.S. dollar. Investors should remain wary of excessive optimism and respect the underlying economic fundamentals.

3.Japan’s Likely First Female Prime Minister: Will Easy Monetary Policy Continue?

In a traditionally male-dominated political landscape, Sanae Takaichi has made history as the first female leader of Japan’s Liberal Democratic Party — and is strongly positioned to become the country’s first female Prime Minister.

Her policy stance is seen as a firm continuation of “Abenomics,” emphasizing expansionary fiscal policy (including tax cuts, subsidies, and increased public investment) and accommodative monetary policy (keeping interest rates low). She also highlights economic security and supply chain resilience.

Her election signals strong party support for these policies, but it also raises concerns over rising inflation and Japan’s already high national debt. While Japan has emerged from deflation in recent years, persistent inflationary pressures and fiscal risks warrant close monitoring. Further easing may exacerbate these issues, with long-term consequences yet to unfold.

4. Gold Prices: Accelerating Gains

Gold topped USD 4,000/oz during China’s National Day holiday (YTD +52.94%), outperforming globally. We have long favored gold-related assets, with gold and gold mining stocks commanding a meaningful weight in our portfolio.

Ray Dalio (Bridgewater), a top gold bull, holds significant gold exposure. In Why Nations Go Broke: The Big Cycle, he outlines an 80±25yr long-term debt cycle (from short cycles), where excessive debt forces two paths: "harmonious" (local currency devaluation) or "painful" (default/austerity), both eroding cash/debt value. This "once-in-a-lifetime" cycle (unlike short cycles) demands macro adaptation—like varied flood impacts. As the traditional wealth store, gold’s demand shifts in late-cycle debt and geopolitical upheaval. Post-2022 Russia-Ukraine war, USD "weaponization" weakened its reserve role, driving investors (especially HNWIs/governments) to alternatives. 

Gold gains hedge status, but its sharp rise fuels dollar-system distrust. Its late-cycle pricing moment is a rare generational event.

5. Market Strategy: Patience and Insight in a Bull Market

The current bull market remains intact. Historically, upward cycles rarely end when valuations are merely reasonable. Investors should maintain patience and allow the market more time to mature, avoiding premature exits.

We are operating in an era of multiple global transformations. To navigate this “once-in-a-century shift,” investors must stay alert, think ahead, and respond decisively in order to seize opportunities. Ignoring change or indulging in pessimism may lead to missed opportunities — or worse, unnecessary risks.

In a bull market, patience and insight are your most valuable assets.

Wu Weizhi

8-October-2025

本期《偉志思考》簡體中文版鏈接：

伟志思考：这个小长假为何成了真正的“黄金”周