The SSE Composite Index concluded the final full trading week of 2025 with a marginal 0.10% daily gain, reflecting a period of consolidation as investors digest a year of significant valuation recovery. In a global environment marked by holiday-thinned volumes, the Chinese market has demonstrated relative resilience, buoyed by consistent monetary support and forward-looking fiscal blueprints for the upcoming Five-Year Plan.

PBoC Stability Amid Mixed Economic Signals

A primary driver of market sentiment this week was the PBoC’s decision to hold the one-year LPR at 3.0% and the five-year LPR at 3.5%. This “wait-and-see” approach indicates that central authorities see less urgency for immediate monetary stimulus, given that industrial profits have maintained an upward trend since August and November retail sales grew by 1.0%. While the offshore yuan has hovered near a 14-month high, the central bank’s recent daily fixings suggest a tolerance for a measured currency descent to support the manufacturing base heading into 2026.

Urban Renewal: The New Growth Engine

Strategic focus has shifted toward the housing market and infrastructure, with the government surpassing its 2025 urban renewal targets by renovating over 25,800 communities in the first 11 months. Investors have reacted positively to reports from the national housing policy conference, which mapped out an “accelerated period” of modernization for 2026. This pivot from large-scale expansion to quality-driven upgrading—including smart city technologies and green real estate—is viewed as a vital de-risking mechanism for a property sector that has struggled since 2021.

Technology Leadership and Capital Inflows

The SSE Composite’s performance has also been underpinned by a breakthrough year for China’s technology sector, particularly in AI infrastructure and semiconductors. The successful launch of reasoning models like DeepSeek’s R1 in 2025 triggered a robust rebound in tech-heavy indices, attracting global Capital market participants seeking growth stocks at valuations that still remain below historical highs. For sophisticated investors in Israel and elsewhere, the A-share market’s 16% return in 2025 represents a compelling case for diversification as risks associated with geopolitical tensions begin to fade into the 2026 forecast.

Looking ahead, the outlook for the SSE Composite is centered on a transition from confidence-led re-rating to earnings-driven growth. Market analysts from Goldman Sachs and UBS project continued, albeit slower, appreciation, with a potential 38% rise by the end of 2027 if corporate profits hit the estimated 14% growth target for next year. Key risks to monitor include the pace of PBoC rate normalization and the efficacy of the new urban renewal projects in stabilizing household wealth. Investors should also watch for the January 2026 LPR fixing as an early signal of the government’s liquidity stance for the new fiscal year.