China CPI Hits 32-Month High but PPI Slump Continues, Signaling Partial Deflation Exit
China's consumer price index (CPI) rose 0.7% year-on-year in November, marking the highest reading since March 2023, while the producer price index (PPI) fell 2.2%, extending its decline to 38 consecutive months since October 2022, data from China's National Bureau of Statistics showed.
Food prices reversed from a 2.9% decline in October to a 0.2% increase in November, with fresh vegetable prices surging 14.5% and fresh fruit prices rising 0.7%. Beef and lamb prices also climbed 6.2% and 3.7%, respectively. However, pork prices dropped 15.0% and egg prices fell 12.5%, showing continued downward pressure on key food items.
Raymond Yeung, Greater China chief economist at ANZ, pointed out that the larger-than-expected PPI decline clearly demonstrates that China's deflation has not eased.
**Silver Breaks $60 Barrier**
Silver futures on the New York Mercantile Exchange (COMEX) surged 4.17% to close at $60.84 per ounce on December 9, breaking through the $60 level for the first time on a closing basis. Silver prices have jumped 102% this year, far outpacing gold's 59% gain.
The rally comes as the dollar index has fallen 8.5% since the start of the year amid concerns over U.S. President-elect Donald Trump's tariff policies, driving investors toward alternative assets such as gold and silver.
Industrial demand for silver in electric vehicles, batteries, and semiconductors accounts for more than half of total consumption, and demand has surged sharply as the artificial intelligence boom adds further momentum. Meanwhile, a surge in silver-backed ETF demand in India in October has increased supply pressure on the London market.
**Asia Markets Seen as Attractive Investment Destination**
Joshua Crabb, head of Asia-Pacific equities at Dutch asset manager Robeco, emphasized on December 10 that Asia will emerge as a key investment destination in global markets next year.
As of late October, the price-to-earnings ratio (PER) for Asia-Pacific markets stood at 16.7 times, compared with 27.5 times for the U.S. and 17.4 times for Europe. Meanwhile, earnings growth forecasts for next year stand at 13%, exceeding the U.S. by more than 2 percentage points.
Crabb assessed that the revaluation trend in South Korea's market will continue next year, driven by dividend expansion, increased share buybacks, and the legislative enactment of the value-up program. Japan's market strength is improving through better corporate governance and the elimination of zombie companies, while China is expected to see gradual improvement after passing through a low point.
**SK Hynix ADR Could Narrow Valuation Gap with Micron**
Shares of SK hynix (000660.KS) rose 3.71% to close at 587,000 won on December 10 after the company disclosed it is reviewing listing its shares on a U.S. exchange.
Based on this year's expected earnings, SK hynix trades at a PER of approximately 11 times, significantly lower than Micron's 29 times. Analysts suggest that issuing American depositary receipts (ADRs) could attract inflows from U.S. long-only and passive funds, narrowing the valuation gap with Micron.
Meritz Securities noted that SK hynix's expected price-to-book ratio (PBR) for next year stands at 2.7 times at current prices, below Micron's 3.7 times, while its PER of 7.8 times is also undervalued compared to Micron's 12.6 times. The brokerage set a target price of 910,000 won.
**SpaceX Eyes $1.5 Trillion Valuation in 2026 IPO**
SpaceX, the space company led by Elon Musk, is pursuing a U.S. stock market listing targeting a valuation of $1.5 trillion next year.
Bloomberg reported on December 9 that SpaceX executives are targeting a listing as early as mid-to-late 2026. With SpaceX currently estimated at approximately $800 billion, the valuation would nearly double within a year.
If the IPO proceeds as planned, it would surpass Saudi Aramco's $25.6 billion offering in 2019 to become the largest IPO on record. Satellite internet service Starlink is at the center of growth, with revenue projected to increase from approximately $15.5 billion this year to up to $24 billion by 2026.
**K-Defense Order Backlog Surges 50% in Three Years**
Following Hyundai Rotem's (064350.KS) successful first export of K2 tanks to Peru, the order backlog of major domestic defense companies is projected to exceed 100 trillion won to reach 110 trillion won.
According to the Financial Supervisory Service's electronic disclosure system, the combined order backlog of five major defense companies—Hanwha Aerospace (012450.KS), Korea Aerospace Industries (047810.KS), LIG Nex1 (079550.KS), Hyundai Rotem, and Hanwha Systems (272210.KS)—stood at 99.67 trillion won as of the end of September, up 47% from 67.64 trillion won three years ago.
Hyundai Rotem's contract with Peru for K2 tanks and wheeled armored vehicles is valued at approximately 2.9 trillion won. Hanwha Aerospace, LIG Nex1, and Hanwha Systems signed L-SAM mass production contracts totaling 1.23 trillion won, while Korea Aerospace Industries concluded contracts worth 803.7 billion won.