I. Performance of Global Equity Indices (in US dollars) Source:Bloomberg,2024/06/03-2024/06/09 II. Key Market Themes i. Contradictory US May Economic Data: Rate Cut Expectations Pushed Further Away? Last week, the US released May employment data. The increase in non-farm payrolls was 272,000, far exceeding the market expectation of 185,000. The service sector maintained strong momentum, aligning with previous PCE and PMI data, and wage growth also rebounded more than expected, indicating that service sector inflation remains under significant pressure. Interestingly, the unemployment rate also rose in May, reaching 4%, which was higher than market expectations and seemingly contradictory to the non-farm payroll results. However, this discrepancy is due to different statistical methods. Th

I. Performance of Global Equity Indices (in US dollars) Source:Bloomberg,2024/05/27-2024/06/02 II. Key Market Themes i. The "National Integrated Circuit Industry Investment Fund Phase III" has landed with a concentrated effort of 344 billion yuan to address weaknesses. On May 24th, the National Integrated Circuit Industry Investment Fund Phase III Co., Ltd. (referred to as "National Fund Phase III") was established, with a registered capital of 344 billion yuan, marking a significant increase compared to the previous two phases. Looking back, "Fund Phase I" was established in September 2014 with a scale of 98.72 billion yuan, mainly investing in downstream integrated circuit manufacturing, design, packaging, and testing equipment. "Fund Phase II" was established in October 2019 with a sca

I. Performance of Global Equity Indices (in US dollars) Source:Bloomberg,2024/05/20-2024/05/26 II. Key Market Themes i. The outlook for small and medium-sized businesses in the United States is not optimistic, with middle-income earners potentially becoming the key trigger. Recently, Federal Reserve officials have been speaking frequently. Among them, current director Waller, who is seen as a future Fed chairman, stated, "The current economy is very robust, maintaining high interest rates for 3-4 months will not be a problem, and the Fed's current focus is still on inflation." However, the economic damage from Fed rate hikes has a delayed effect. Historically, signs of recession have typically appeared around 10 quarters after the start of each rate hike cycle, and currently, it is the ni

I. Performance of Global Equity Indices (in US dollars) Source:Bloomberg,2024/05/13-2024/05/19 II. Key Market Themes i. U.S. CPI Growth Rate Declines for the First Time This Year, Fed's Rate Cut Path Becomes Clearer! In April, the U.S. core PPI increased by 0.5% month-on-month, significantly exceeding market expectations. However, this was mainly due to the government sharply revising down last month's data, with the March increase being revised from the previous 0.2% to -0.1%, directly leading to the "explosive" April PPI data. The market reacted quickly to this, and there was no significant decline. The following day, the U.S. April CPI increased by 3.4% year-on-year, and the core CPI increased by 3.6% year-on-year, both in line with market expectations. This marks the first decline i

I. Performance of Global Equity Indices (in US dollars) Source：Bloomberg, 2024/05/06-2024/05/12 II. Key Market Themes i. Favored by capital and entering the market in haste, how much further can the Hong Kong stock market rise? •In the past month, the Hong Kong stock market has shown a remarkable increase, with both the Hang Seng Index$恒生指数(HSI)$ and the Hang Seng Tech Index $恒生科技指数(HSTECH)$ significantly outperforming other major global stock indices. Regarding this, opinions in the market vary. From a valuation perspective, the Hong Kong stock market is currently in a relatively low range. The forward price-to-earnings ratios (P/E ratios) of the Hang Seng Index and the Hang Seng Tech Index are 8.9 and

I. Performance of Global Equity Indices (in US dollars) Source：Bloomberg, 2024/04/29-2024/05/05 II. Key Market Themes i. Powell denies rate hike option, US economy unexpectedly cools, capital markets regain confidence •In May, the FOMC decided to continue maintaining the current interest rates unchanged. Additionally, Powell's remarks once again leaned dovish, explicitly stating that "the current position is well positioned, and the next rate adjustment is unlikely to be a hike"; not only that, he also played down concerns about recent wage increases, stating that "the Fed does not target wage inflation, but rather price inflation". •Regarding the economy, Powell stated that the current US economy still maintains a robust 3% growth, being quite healthy and completely unrelated to "stagflat

I. Performance of Global Equity Indices (in US dollars) Source：Bloomberg, 2024/04/22-2024/04/28 II. Key Market Themes i. When the GDP falls short of expectations while the PCE remains high, the specter of "stagflation" looms over the United States once again •Last Wednesday, the United States released quarterly economic data, with actual GDP growing by 1.6% year-on-year, falling below expectations, while the core PCE for the quarter surged by 3.7%, far exceeding expectations. Concerns about "stagflation" emerged in the market, suggesting that the United States may face an economic recession while interest rates remain high, posing the most unfavorable situation for pricing various risk assets, with the yield on ten-year US Treasury bonds jumping by over 6 basis points. •However, on the fol

I. Performance of Global Equity Indices (in US dollars) Source: Bloomberg, 15/04/2024-21/04/2024 II. Key Market Themes i. US Retail Exceeds Expectations Again, Fed Officials Speak Intensively, Market Adjustment Volatility Intensifies •In March, US retail sales rose by 0.7% month-on-month, exceeding the market's expectation of 0.3%. At the same time, the month-on-month growth rate for February was revised up from 0.6% to 0.9%. This reflects the continued strong consumption by US residents and confirms the resilience of the US economy. •Recently, Powell reiterated in a public speech that "the economy is robust, labor force is strong, and the decline in inflation lacks data support, so there is currently no sufficient confidence to cut interest rates." This time, Powell also clearly sided wi

I. Performance of Global Equity Indices (in US dollars) Source: Bloomberg, 25/03/2024-31/03/2024 II. Key Market Themes i. The U.S. Core PCE Aligns with Expectations; Powell Reiterates “No Rush to Cut Rates” •Recently, the U.S announced its Core Personal Consumption Expenditures (PCE) data for February, which showed a 0.3% MoM increase, aligning with market expectations and avoiding a consecutive "punch" to the markets. •In the meantime, during a speech at the Federal Reserve Bank of San Francisco, Powell reiterated his stance of "no urgency to cut interest rates." He also stressed that "the latest data is not as strong as it was in the second half of last year, and more data is needed to support the inflation eventually returning to 2%." •We believe that the PCE data and Powell's statemen