The anticipated "summer chill" for global capital markets arrived as predicted last week. Following a peak in sentiment, the pullback of momentum relative to value exceeded the -2% threshold, the NYSE net new highs turned negative for the first time, market breadth contracted significantly, and institutional short positions in the Nasdaq 100 increased further. Regarding active manager positioning, the NAAIM Exposure Index fell rapidly to 77.34 last week, indicating that some active managers have begun reducing their exposure to U.S. stocks.
Investors should remain vigilant about volatility risks this summer. On one hand, the "summer chill" (negative impacts) is likely to intensify over the next one to two months, evolving from current trading focused on NACHO (NACHO = Not A Chance Hormuz Opens) to trading inflation anxiety, which will ultimately translate into trading interest rate hikes and liquidity shocks. The transmission path is as follows: as prolonged semi-blockade/abnormal conditions in the Strait become the new normal, high oil prices transition from a short-term shock → sustained high oil prices → a rebound in U.S. inflation in May → continued hawkish stance from the Fed in June → the 10-year U.S. Treasury yield rising to between 4.5% and 5% in June and July → significant fluctuations and volatility in the global technology bull market this summer.
On the other hand, the comprehensive sentiment indicators, concentration, and crowding levels for the global technology bull market remain elevated. As of last Friday, the U.S. stock market's comprehensive sentiment indicator for May rose to +1.5σ, further increasing from April and now residing in a relatively high range since 2010. In terms of valuation, the price-to-sales (PS) ratio of the Nasdaq 100 index has climbed to 7.0, exceeding its 10-year average by more than two standard deviations.
Looking ahead at the market's rhythm: adjustments are unlikely to occur in one swift move; subsequent fluctuations and differentiation are expected to release negative risks. At least until the Federal Reserve's June policy meeting, overseas stock markets may experience a pattern of "decline - rebound - tug-of-war," making short-term directional trading less favorable.
Last Friday witnessed a dual sell-off in global stocks and bonds, with major global indices broadly under pressure. Notably, South Korea's KOSPI index plunged 6%.
Driven by U.S. CPI and PPI figures exceeding expectations and escalating Middle East tensions fueling inflation concerns, market expectations for a Fed rate hike in December have risen to 39%. Consequently, the 10-year U.S. Treasury yield surged 23.7 basis points for the week to 4.59%, while the 30-year yield climbed 18.2 basis points to 5.12%, marking a near one-year high.
Japan's April PPI rose 4.9% year-over-year, surpassing expectations and reaching a near three-year high. This propelled the yield on Japan's 30-year government bonds to break the 4% threshold for the first time, reaching 4.08%.
Last week, Brent crude oil posted a weekly gain of 8.1%, reaching $109.5 per barrel, while WTI crude rose 10.7% for the week. In contrast, precious metal prices faced pressure. Gold fell 3.7% for the week to settle at $4,539.4 per ounce, and silver declined 5.5% to $75.9 per ounce.
A-shares: From May 11 to May 14, margin financing and securities lending (两融) funds continued to accelerate net inflows, totaling 80.3 billion yuan; broad-based ETFs saw continued significant outflows of 95.0 billion yuan, while sector-specific ETFs experienced net outflows of 27.5 billion yuan. Inflows were observed in securities, communications, innovative pharmaceuticals, aerospace, and consumer electronics ETFs. Outflows were noted in robotics, semiconductors, chemicals, chips, and artificial intelligence ETFs.
Hong Kong Stocks: Southbound capital turned to a net inflow of 9.3 billion Hong Kong dollars last week. Tencent saw a net outflow of 1.2 billion Hong Kong dollars, Alibaba's net outflow expanded to 4.5 billion Hong Kong dollars, and SMIC continued its net inflow of 700 million Hong Kong dollars. At the sector level (May 7-13), financials and energy saw accelerated inflows, while discretionary consumption and metals experienced outflows. Information technology and communication services showed mixed flows. Last week (May 7-13), foreign capital in Hong Kong stocks shifted to a significant net inflow of 16.8 billion Hong Kong dollars, and local Hong Kong intermediaries continued a net inflow of 3.5 billion Hong Kong dollars. Mainland China's Hong Kong Stock Connect ETFs continued net outflows of 2.4 billion yuan, with innovative pharmaceuticals continuing to see inflows, while financials, technology, consumption, and dividend-focused ETFs saw outflows of 1.2 billion, 2.8 billion, 300 million, and 200 million yuan, respectively. Last week, the market value of Hong Kong stock lock-up expirations reached 7.57 billion Hong Kong dollars, with an expected 5.2 billion Hong Kong dollars this week.
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