On the first day of 2026, the global markets witnessed a historic turning point: China's assets "strike with three arrows," and Tesla's "kingdom falls" 🇨🇳⚡

The first trading day of 2026, the global capital markets made a historic vote with real money: Hong Kong's Hang Seng Index surged 2.76%, the Hang Seng Tech Index soared 4%, offshore RMB broke through 6.97 to hit a 30-month high, and the Nasdaq China Golden Dragon Index rose 4%. Even more shocking, BYD officially surpassed Tesla with an annual delivery of 4.6 million vehicles, claiming the top spot in the global electric vehicle throne; meanwhile, the National Big Fund increased its holdings in SMIC in a rush, raising its stake from 4.79% to 9.25%.

This is not an ordinary good start; it is the "Declaration of War Day" for the global market's revaluation of Chinese assets. As Tesla's sales decline for the second consecutive year and the halo of American tech giants fades, China's manufacturing and technological independence are rewriting the global industrial landscape with unstoppable momentum.

I. China's assets "strike with three arrows": the era of capital voting with their feet has arrived

Hong Kong stocks explode: not just a technical rebound

On the first trading day of 2026, the three major Hong Kong indices surged with momentum:

• Hang Seng Index up 2.76%, closing at 26,338.47 points, with a surge of over 700 points intraday

• Hang Seng Tech Index up 4%, closing at 5,736.44 points, led by AI, chips, and commercial aerospace sectors

• State-owned Enterprises Index up 2.86%, at 9,168.99 points, with a net inflow of HKD 9.269 billion from southbound funds

This is no coincidence. The newly listed stock "Biren Technology" (one of the four major domestic GPU players) skyrocketed 75.82% on its first day, with a market value soaring to HKD 81.3 billion; Baidu's stock surged 9.35% after announcing the spin-off of Kunlun Chip for listing; SMIC, Hua Hong Semiconductor, and other chip giants all gained over 5%. The market is betting with real money on China's technological independence.

The RMB strengthens past 6.97: global funds are flowing into China

Offshore RMB against USD broke through 6.97, hitting a new high since May 2023. West Pacific Bank strategists pointed out that the market is betting that the new Fed Chair may adopt more aggressive rate cuts, with the USD facing "extremely high structural downside risk" in January.

Behind the RMB's strength are three logical reasons:

1. Narrowing US-China interest rate differential: expectations of Fed rate cuts rise while the PBOC maintains stability

2. Trade surplus support: China's export resilience combined with industrial chain advantages

3. Accelerated capital inflows: foreign investment increases in Chinese assets, arbitrage funds flow back

Chinese concept stocks celebrate: the Golden Dragon Index surges 4%

Although the US stock market's three major indices diverged, the Nasdaq China Golden Dragon Index jumped 4%, echoing Hong Kong stocks. Tech giants like Alibaba, Tencent, JD.com all gained over 3%-4%.

Wall Street institutions are revising the "China risk" narrative: Goldman Sachs' latest report upgraded Chinese concept stocks to "overweight," citing policy support, attractive valuations, and bottoming profits. This is a 180-degree reversal from the "decoupling theory" of 2023-2024.

II. BYD "crowned new king": Chinese manufacturing tops globally

460,000 vs 1.63 million: the gap widens

According to the latest data, BYD delivered 4.603 million vehicles globally in 2025, up 7.7% year-over-year; Tesla's deliveries were only 1.636 million, down 8.6% YoY. This is the first time since 2010 that Tesla has been surpassed in annual sales.

More importantly, the trend:

• BYD Q4 deliveries hit 1.3 million, a new quarterly high

• Tesla Q4 deliveries reached 418,000, missing Wall Street expectations of 435,000 for the sixth consecutive quarter

• Yearly gap: BYD leads Tesla by nearly 3 million vehicles, a volume comparable to the combined sales of Ford, GM, and Stellantis' electric vehicles

Why BYD? It’s not luck, but a systematic advantage

Tesla's "innovator's dividend" is running out, while BYD's "systematic advantage" is fully erupting:

Technology: Blade battery safety certification, DM-i hybrid tech iteration, Yi Si Fang four-motor drive platform—BYD has achieved full-stack self-research from batteries, motors, control systems to chips.

Cost: Vertical integration allows BYD to have 15%-20% lower per-vehicle costs than Tesla, maintaining profit margins even in price wars domestically and abroad.

Market: In 2025, BYD's overseas sales exceeded 1.2 million, up 80% YoY, becoming a "national car" in Southeast Asia, Latin America, and the Middle East. Tesla still holds over 50% market share in the US, with growth plateauing.

Supply chain: While Tesla struggles with mass production of 4680 batteries, BYD's new bases in Jinan, Zhengzhou, and Shenshan have achieved full production and sales.

III. SMIC receives increased holdings from the Big Fund: "Precise irrigation" of national will

Stake from 4.79% to 9.25%: doubling the bet

The National Integrated Circuit Industry Investment Fund (Big Fund) increased its holdings in SMIC via private placement, raising its stake from 4.79% to 9.25%, with 740 million shares held. This is not just a financial investment but a "ammunition supplement" in the country's fight for advanced process technology.

Why now at the start of 2026? The timing is precise

• External pressure: New US export controls in December 2025 cut off supplies of equipment below 14nm

• Internal demand: Huawei, ZTE, and other downstream clients' AI chip orders will surge in 2026

• Technology node: SMIC's N+2 process (equivalent to 7nm) yield ramp-up to 65%, entering large-scale mass production soon

The logic behind the Big Fund's increased holdings is very clear: in the darkest moments of the semiconductor cycle, the national team must step up. This aligns with the strategic intent when the Big Fund Phase II was established in 2019, but the urgency and determination in 2026 are even stronger.

Market reaction: Hong Kong chip stocks surge collectively

SMIC rose 5% that day, Hua Hong Semiconductor up 9.4%, with the entire Hong Kong semiconductor sector adding over HKD 80 billion in market value in a single day. The capital market is re-pricing the value of "Chinese chips"—no longer "can they be made," but "how soon can they catch up."

IV. Tesla's "dusk": the fading of American tech giants

Tesla 2025: a disappointing year

• Total deliveries of 1.636 million, down 8.6% YoY, second consecutive year of decline

• Q4 deliveries of 418,000, below Wall Street's expected 435,000

• Cybertruck production hell: Texas factory's monthly capacity only 8,000 units, far below target

• FSD V13 accidents: NHTSA launched its fifth investigation, China and EU suspend access

Elon Musk's "divided attention"

In 2025, Musk's time was severely divided:

• X platform: ad revenue plummeted 60%, valuation shrank from $44 billion to $15 billion

• SpaceX: Starship's fifth successful test flight, but commercialization still far off

• Neuralink: first human subject experienced rejection

• Tesla: board urges focus on core business, but Musk "only goes to the factory once a week"

Wall Street begins to vote with their feet: Morgan Stanley lowered Tesla's target price from $350 to $220, citing "lack of execution" and "deteriorating competitive landscape."

Systemic challenges in US manufacturing

Tesla's predicament is not an isolated case. In 2025, Ford and GM laid off over 50,000 workers in North America, Stellantis closed three US factories. The US EV market penetration remains stuck at 18%, with charging infrastructure, supply chain costs, and technological iteration lagging behind China.

V. Deep logic behind the start of 2026

Macroe: US dollar liquidity wanes, RMB assets become more attractive

After three rate cuts by the Fed in 2025, the federal funds rate remains high at 3.5%-3.75%. But the market bets that rate cuts in 2026 may be more aggressive, with the USD index falling from 110 to 102. Meanwhile, the PBOC maintains strategic stability, narrowing the US-China interest rate differential, and the cost-effectiveness of RMB assets becomes more apparent.

Policy: China's "steady growth" combination takes effect

In December 2025, the Central Economic Work Conference set the tone for "more proactive fiscal policy and moderate easing monetary policy." From January 1, 2026, existing mortgage rates are lowered by 25 basis points, and housing provident fund loan rates are also reduced. Policy dividends are transforming into market confidence.

Industry: China's manufacturing shifts from "cost advantage" to "technological advantage"

The rise of BYD, SMIC, and Biren Technology proves that China's industrial upgrade has entered a harvest period. Global capital is re-evaluating China's manufacturing value: no longer just "the world's factory," but an "innovation hub."

VI. Investor response strategies: how to position in 2026?

1. Hong Kong stocks and Chinese concept stocks: from "valuation repair" to "value revaluation"

Currently, the PE of Hang Seng Index is only 8.3, in the 10th percentile historically; Hang Seng Tech PE is 12, far below Nasdaq's 28. There is at least 30%-50% room for recovery.

Focus on:

• Technological independence: SMIC, Hua Hong Semiconductor, Biren Technology

• New energy vehicles: BYD, Li Auto, Xpeng (valuations already at historic lows)

• Internet platforms: Tencent, Alibaba, Meituan (regulatory risks cleared, AI business accelerating)

2. RMB assets: appreciation + interest rate differential dual benefits

Holding RMB or HKD-denominated assets allows you to enjoy:

• Exchange rate appreciation gains (target 6.8-6.9)

• Asset price increases

• Interest rate differential gains (Chinese bond yields higher than Europe and the US)

3. Beware of the "valuation cliff" in US stocks

Nasdaq 100 PE is 35, in the 90th percentile historically. The "Seven Sisters" like Tesla, Apple, Nvidia account for 45% of the index; any underperformance could trigger a chain sell-off.

Allocation advice: keep US stock exposure within 20% in 2026, prioritize cash cow companies (like Berkshire Hathaway, Johnson & Johnson), avoid high-valuation tech stocks.

In conclusion: 2026 belongs to China's assets' "Normandy moment"

History will remember January 2, 2026. While the global markets are still debating "how many rate cuts the Fed will make," Chinese assets have already declared with a big bullish candle: our era has arrived.

This is not nationalist emotion venting, but a rational choice of capital voting with their feet. As the US sinks into debt quagmire and tech giants' innovation stalls, China, with its complete industrial chain, firm policy support, and huge domestic market, is building new global competitiveness.

Of course, risks still exist: geopolitical conflicts, Fed policy reversals, domestic economic transition pains. But as Buffett said, "Be greedy when others are fearful, be fearful when others are greedy." When Wall Street is still underestimating China, it is the golden window for long-term investors to enter.

2026 China's assets are not a rebound but a reversal.

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