An in-depth analysis of the current capital market trends, short-term risk inflection points, and future major trends was recently presented.
Back in early May, the speaker predicted the characteristics of this summer's market movement, describing it as an "N-shaped" pattern with a rally in May, followed by a risk of a pullback from June to August.
The market has since validated the call for a May rally. Regarding the potential trigger for the next phase of this N-shaped pattern, the speaker explicitly identified two key dates in June as possible inflection points: the release of U.S. inflation data and the subsequent Federal Reserve meeting along with the new Chair's commentary.
This scenario was metaphorically described as "one gray rhino and three black swans" that could lead to a "summer chill" in overseas markets, potentially synchronously causing volatility in domestic markets.
Specifically, the "gray rhino" refers to the resurgence of U.S. inflation, which may prevent the Fed from adopting a dovish stance and could instead force it to turn more hawkish.
If the yield on the 10-year U.S. Treasury note breaks above 4.5% and surges towards 5%, it would pose a significant shock to global risk assets.
The "three black swans" include:
First, global funding pressures, such as the siphon effect from mega-listings like SpaceX, combined with a major wave of share lock-up expiries in Hong Kong.
Second, potential financial vulnerabilities in emerging markets.
Third, excessively crowded market sentiment and high retail leverage, with Japan's margin balance hitting a record high and leveraged products becoming prevalent in South Korea, reminiscent of the 2015 A-share market scenario.
Despite these concerns, the view is that this would represent a mid-game shakeout, not the end of the technology bull market.
Both A-shares and Hong Kong stocks are still in the first phase of the rally, though the overall valuation repair is nearing its end.
Following the expected volatility, the market is anticipated to enter a more exciting, diversified, and expansive second phase starting in the second half of the year.
The re-rating of Chinese assets is currently just a spark that is growing brighter, but this spark is overly concentrated in AI, specifically in optical modules and optical communication. This is expected to spread like wildfire later.
The speaker believes the true systematic opportunity for Chinese assets has not yet arrived.
It is projected that between the fourth quarter of this year and sometime before 2028, a broad re-rating of Chinese assets will be witnessed.
Finally, retail investors were advised to avoid using leverage.
With the TMT sector's trading volume exceeding 40% of the total and the margin balance hitting a record high, avoiding leverage is crucial to prevent being wiped out by volatility before the dawn.
Simultaneously, any pullback is seen as a good opportunity to position in technology, and investors should not miss the era's红利 due to short-term disturbances.
Summer Market's "N-shaped" Path: The Gray Rhino is Already on the Move
When asked to elaborate on the "summer chill," the speaker reiterated the metaphor of one gray rhino and three black swans.
A strategy report titled "Summer Chill" was released in early June, forecasting a volatile next quarter with an N-shaped trajectory: a rally in May, downside risks in June, July, and possibly August, followed by a renewed upward move and potential new highs after September.
The reason for caution regarding June-August risks is that the adjustment could lead to significant product净值 drawdowns, substantially impacting investor wealth, rather than being just a short-term sentiment fluctuation.
The "gray rhino" specifically points to the certainty of inflation rebounding in the U.S. and emerging markets, especially against the backdrop of the Strait of Hormuz not yet returning to normalcy.
This would force the Fed away from a dovish pivot, potentially pushing it towards a more被动 hawkish stance.
A hawkish Fed is undoubtedly a major headwind for risk assets, with a key indicator being the long-end U.S. Treasury yield, particularly whether the 10-year yield can decisively break above 4.5%.
It has been oscillating around this level recently. Whenever it approaches 4.6%, U.S. officials have intervened verbally to calm markets.
However, recent strong U.S. employment data and job openings hitting multi-year highs suggest underlying strength.
Leading indicators for inflation also point to potential upside surprises in the May inflation data due on June 10th.
A key catalyst for the earlier surge in long-end yields from around 4% to 4.6% was a poor 30-year Treasury auction with a bid-to-cover ratio hitting a yearly low of 2.3x, demanding higher risk compensation.
Currently, major Asian economies like China and Japan have slowed or even reversed their purchases of U.S. Treasuries, and Middle Eastern funds also show little interest.
This gray rhino is already running. At the start of the year, expectations were for a rate-cutting cycle and yields below 4%. Now, there are even expectations of rate hikes—a significant shift.
Funding-Related Black Swan: Global IPO Wave and Hong Kong Lock-Up Expiries
The three black swans are: first, funding pressure; second, emerging market crises; third, crowded trades and excessively high retail leverage.
The first black swan is funding pressure. SpaceX is expected to list in June, potentially raising $60-70 billion with a valuation around $1.75 trillion.
Such a behemoth could have a siphon effect on existing index constituents, the "Magnificent Seven," AI-related stocks, and even global markets.
Furthermore, potential future listings like Anthropic and OpenAI add to this pressure. While not necessarily this year, the mere expectation of such massive融资 can dampen risk appetite.
Simultaneously, AI giants are making serious capital expenditure commitments, confirming this as an epic revolution beyond mere炒作.
Companies across sectors are increasing AI capex. A key支撑 for the U.S. stock market—share buybacks—is now weakening as companies prioritize investing in AI over repurchases.
While the future is bright, concentrated fundraising at elevated interest rates pressures both stocks and bonds, constituting a black swan.
Similarly, for China, Hong Kong faces its own funding pressure, entering an unprecedented wave of share lock-up expiries this year.
Analysis indicates two critical periods: June-July and September-October.
While the September-October period involves a larger nominal amount (~HKD 600bn), the actual selling pressure is expected to be limited.
The June-July expiries are more concerning regarding real减持 pressure, as they involve several AI-related hard-tech and high-tech companies focused on multi-modal models and large language models.
These companies currently carry higher valuations than overseas peers, embodying high expectations. While看好 long-term, short-term pressure exists from early investors like PE funds and financial institutions seeking to realize profits and distribute returns to their limited partners.
Thus, the first black swan involves overseas micro-funding pressures affecting market risk appetite, compounded by the aforementioned tight macro liquidity in June-July.
Geopolitical Black Swan: Hidden Financial Risks in Emerging Markets
The second black swan stems from the aftermath of the U.S.-Iran tensions, leading to global supply chain inflation and subsequent financial shocks to emerging markets in Latin America, Southeast Asia, and South Asia.
While history may not repeat exactly,相似 rhymes seem to be approaching quickly.
For instance, since the start of the year, Southeast Asian markets like Indonesia have performed poorly, with Indonesian stocks down ~30% and Indian stocks down ~10% year-to-date.
Considering currency depreciation, the USD-denominated losses are even greater.
If the Strait of Hormuz does not return to pre-conflict自由通航 status soon, global inflation could exceed expectations, hitting these emerging markets harder than the U.S.
Sentiment Black Swan: Crowded AI Trades and High Retail Leverage
The third black swan is the excessive crowding in AI-related trades, which warrants caution.
Recently, Japan's margin balance hit a record high, with the ratio of margin buying to total trading volume reaching a five-year peak.
While the Japanese market remains foreign-institution-dominated, the retail investor share has doubled from less than 10% five years ago to around 25%, indicating rising retail sentiment.
More notably, the South Korean market has seen a proliferation of各种杠杆产品. However, a reversal in fund flows could trigger a cascade of selling.
Currently,信念 is strong with a "hold at all costs" mentality. History shows惊人相似, recalling the A-share market of April-June 2015, albeit with a different narrative.
Two Critical June Dates: Potential Downward Inflection for the "N-shaped" Pattern
The discussion highlighted June 10th (U.S. inflation data) and mid-June (Fed meeting) as key观察 nodes.
If the 10-year Treasury yield indeed challenges 4.5% and 5%, the impact on global equities could be significant.
The view is that May and June inflation data may show deterioration, making a hawkish Fed tilt and rising long-end yields a high-probability event.
At the start of the year, the consensus was for rate cuts, and funding arrangements were made assuming rates below 5%.
Now, if the risk-free rate challenges levels above 5%, even if it doesn't hold, it could cause a liquidity threshold shock, impacting bonds, U.S. private credit, and equities with a阶段性 liquidity冲击.
Therefore, June 10th and June 18th are crucial. June 10th brings the May inflation report.
June 18th marks the first post-meeting speech by the new Fed Chair, Kevin Warsh, which is likely to be hawkish.
Beyond his speech, the focus will be on the Fed's dot plot and the behavior of voting members around June 16th-17th.
For example, at the late April meeting, four FOMC voters dissented—three for more hawkishness, one for more dovishness. The dovish dissenter has since resigned.
By mid-June, the faction within the Fed advocating for cuts or aligned with certain political views may be even more isolated, unable to push through宽松 policies.
Thus, the potential downward inflection point for the summer's "N-shaped" pattern likely lies between June 10th and June 18th.
Long Bull Market Still in Early Summer; Second Phase Begins in H2
Regarding the current stage of the long-cycle rally for A-shares, the belief remains firm in a long-term bull trend for both A-shares and Hong Kong stocks—this is the most significant difference.
From this perspective, the market is still in its early stages, transitioning from excessive pessimism about China's economy and capital markets to recognizing structural bright spots.
Currently, this optimism is heavily concentrated in the AI产业链, particularly optical communication, modules, interconnects, and CPO.
From a macro logic standpoint, this reflects the核心驱动力量 of new quality productive forces for this Chinese equity cycle.
In terms of phases, A-shares and Hong Kong stocks are still in their "early summer," which was predicted to be volatile.
The subsequent move is expected to involve扩散, not necessarily a simple rotation from high to low valuation ("高低切").
Many expect a switch to old economy sectors due to crowding. However, if one believes in the underlying支撑, the most进攻性的 growth direction representing the era's beta remains科技赋能.
From this dimension, sectors related to AI and new quality productive forces will gradually扩散: from optics to broader AI applications, then to areas like commercial aerospace and humanoid robots, further to supporting sectors like power equipment and energy tech, and finally to transforming traditional industries, making them more intelligent and AI-enabled.
This empowers them with stronger动能 for global布局, extending into competitive出海 chains.
Therefore, the current market is seen as only in Phase One, primarily a valuation repair phase, now entering its later stages.
Recent volatility alongside overseas markets is possible. Traditional顺周期 and consumer sectors (the "old economy") may become more bond-like or fixed-income-like, focusing on dividends rather than rapid growth.
This differentiation is合理, but the current state is an overcorrection, where traditional sectors have become a source of funds ("血包"), continuously drained to fuel the hottest, increasingly concentrated areas.
This represents an unhealthy internal structure for both A-shares and Hong Kong stocks at this stage. If the overseas gray rhino materializes with a significant June-July冲击, A and H-shares will inevitably be affected.
However, a washout could be healthy. After the shakeout, the market may shift from被动, panic-driven chasing of热门 themes to a more stable心态, considering which sectors in the "second half" of AI will be truly empowered and transformed, driving盈利.
Thus, starting in the second half of this year, A-shares, Hong Kong stocks, and even overseas markets are expected to enter the second phase of the行情.
Potential for Broad Asset Re-rating After the Second Half
On the stage of Chinese asset re-rating, two points were made.
First, if we consider a certain date in late 2024 as the starting point of this bull market, we are likely nearing the end of the first half.
While market信心 in innovation has strengthened,信心 in its ability to扩散, drive industrial upgrade, lift the economy out of low inflation, and enhance social wealth (including real estate) remains不足.
Starting from late Q3 this year, assuming海外 changes, potential improvements in China's property market across more cities, and sustained strong export competitiveness, the period from September 2024 through 2028 could represent the true扩散 and高潮期 of this bull market—where百花齐放 replaces a single bloom.
The current extreme "K-shaped" concentration is expected to eventually扩散, both within technology and from tech to traditional industry transformation—this is the first point.
Second, globally, we are in a similar AI wave, which, from a Juglar cycle perspective, is also in its middle phase.
This AI-driven Juglar cycle arguably began in 2021 when U.S. equipment investment growth bottomed and turned up.
It is now entering its second half, which will also have an end point—when penetration rates can no longer accelerate rapidly, leading to supply-demand imbalance and potential oversupply.
However, that risk belongs to the 2028-2030 period. From a fundamental拐点 perspective, it is far from "game over."
While issuing a "summer chill"预警 akin to a哨兵, this is not seen as the end of the technology mega-bull market.
Rather, it is a mid-game震荡 for the tech bull market occurring within this Juglar cycle context, including China's. After the震荡, a more exciting, diversified, and expansive second half will follow.
In conclusion, the re-rating of Chinese assets is currently a growing spark, but it's overly concentrated in AI, optical modules, and communication. This spark is destined to spread.
The true systematic opportunity for Chinese assets is yet to come. It is projected that between Q4 this year and sometime before 2028, a broad re-rating of Chinese assets will be witnessed.
Avoid Leverage; Fish Where the Fish Are
For the summer market, the primary advice is that survival is paramount—avoid using leverage.
Currently, structural overheating is evident. In A-shares, for example, the TMT sector's市值规模 and成交额占比 are at record highs.
TMT trading volume exceeds 40% of the total, coupled with a record margin balance of RMB 2.93 trillion.
The ratio of margin buying to total turnover is also around 10%, at a relatively high level.
If overseas troubles spill over, a significant回撤 is likely. Without leverage, one can endure, experiencing mere volatility.
With leverage, one risks being wiped out before dawn.
Secondly, from a 2-3 year perspective, while June-July present gray rhinos and black swans, these can be seen as mid-term funding-driven risk扰动, not the final结局 of this tech mega-bull market.
When a轰轰烈烈的时代红利 and产业大潮 arrives, it's best to believe early.
Currently, the first half of Phase One of the AI revolution is at halftime, and the second half of Phase One may be even more exciting.
Therefore, instead of fixating on rotation, it's better to look for opportunities within the core areas, "fishing where the fish are most abundant."
Unless constrained by specific mandates (e.g., family offices focused on drawdowns), being overly apprehensive in the face of a technological era潮 is counterproductive.
The purpose of highlighting risks is to foster accurate认知, preventing over-exuberant chasing at highs.
As long as leverage is avoided, even if one mis-times the market, selecting the right companies within the larger时代潮流 allows for adding positions during pullbacks, increasing wealth allocation to tech assets at lower levels.
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