On December 13, next Friday is an important time, and Japan may raise interest rates for the fifth time. The previous four rate hikes had a significant impact on the Nikkei Index and the US stock market. If rates are increased on Friday, will the Shanghai Composite Index experience a sharp decline?

First, it must be clarified that before next Friday, there have already been four rate hikes. March 2024 was the first, July 2024 was the second, January 2025 was the third, and October 2025 was the fourth. If there is another rate hike next Friday, it will be the fifth.

Looking back at the previous four rate hikes, the market performance of the Nikkei Index in the respective months was an increase of 3.07%, a decrease of 1.22%, a decrease of 0.81%, and an increase of 16.64%. There were two significant increases and two small decreases. Rate hikes are not a major negative for the Nikkei Index; on the contrary, there were two significant rises.

In terms of the US stock market's performance corresponding to the four rate hikes, the increases were 2.08%, 4.41%, 4.7%, and 2.51%. For the four rate hikes, the US stock market rose in all months without a single decline. Rate hikes are not negative for the US stock market; instead, they tend to lead to significant rises.

Recently, there has been a viewpoint that Japan's rate hikes are a major negative and that global stock markets will experience significant declines. In summary, rate hikes have limited effects on both the Nikkei Index and the US stock market. The same reasoning applies to the Shanghai Composite Index, which has no substantial impact.

As December approaches the end of the year, funds tend to be cautious. The Shanghai Composite Index will hover around 3900 points, fluctuating widely. As long as the US stock market remains stable, there is no expectation of a significant decline in the Shanghai Composite Index. In a bull market, it is important to ignore short-term fluctuations and to look at the longer term. Wishing everyone good luck next week!