To The Moon

Performance of Global Equity Indices(in US Dollar)

Source: Bloomberg, Tiger Brokers

Key Market Themes

Increased Volatility in Greater China, Trump Announces New Restrictions on China—How to Plan for the Future Market?

• Recently, Greater China tech stocks continue to lead the global market. Alibaba’s quarterly capital expenditure of 31.7 billion yuan has once again ignited investment enthusiasm for AI in Greater China. However, over the weekend, the White House released a presidential memorandum on "America First" investment policies, which both restricts Chinese capital from investing in critical U.S. assets and limits American capital from flowing into Chinese companies. This has caused significant turbulence in the Greater China market.

• Regarding this memorandum, while there will certainly be short-term emotional impacts, there is no need for excessive interpretation at this stage. First of all, this memorandum can be seen as a continuation of Trump 1.0, not exceeding market expectations for the U.S.-China competitive landscape. Moreover, according to calculations by international investment banks, European and American institutions currently have only about 2% exposure to Greater China, and they have hardly participated in the recent surge. Therefore, the overall impact on Greater China assets remains limited.

• Currently, the valuation of the Greater China tech sector is still very attractive. As of February 19, the forward P/E ratio of the Hang Seng Tech Index is just 18.4, with approximately 30% room for recovery compared to the 5-year average. Furthermore, the earnings of the Hang Seng Tech Index are catching up, with the forward ROE showing steady growth for two consecutive years. Therefore, we believe that, despite the current volatility, and despite the fact that macroeconomic data may take time to fully recover, the Greater China tech sector remains worth actively positioning for at this moment.

Source: Bloomberg, Tiger Brokers

Economic Instability, High Inflation, and the Fed’s Dilemma—The Stock-Bond See-Saw Deserves Attention!

• Recently, the U.S. stock market has been volatile, especially with the tech-heavy Nasdaq continuing its downward trend, causing concern among global investors. As we’ve previously discussed in our market observations, the U.S. stock market is currently facing three major uncertainties: interest rate cuts, tariffs, and political issues. Any one of these could trigger a shock at any time, and such a shock would only increase market anxiety and panic.

• The latest spark for this turmoil was the University of Michigan's consumer sentiment survey. The consumer confidence index was significantly downgraded, with the preliminary reading of 67.8 already showing signs of weakness, and the final reading dropped to 64.7—hitting a new low since December 2023. Furthermore, consumers’ inflation expectations for the next year and five years surged to 4.3% and 3.5%, respectively, both surpassing the highest levels since 2023. The combination of rising inflation concerns and worries about tariffs has triggered fears of stagflation in the market.

Source: Tradingeconomics, Tiger Brokers

• Interestingly, according to the Bank of America (BOA) Fund Manager Survey, while cash levels are currently at a low of just 3.5%, the lowest since 2010, 89% of respondents believe U.S. stocks are overvalued. Although the MAG-7 remains the most crowded trade right now, the status of "American Exceptionalism" is being challenged. This indicates that, while investor sentiment towards global markets remains optimistic, there are significant concerns about U.S. stocks.

• At this point, the Federal Reserve finds itself in a difficult position. Although the minutes suggest that internal officials remain confident about controlling inflation, the uncertainty around tariffs looms large, and some officials have even mentioned stagflation scenarios in their speeches. We believe that, while the Fed is not in a rush to cut rates, its future statements will likely be relatively dovish,offering the market some confidence and hope. As a result, the market may adjust its expectations for rate cuts, and long-term bonds could present more certain opportunities compared to U.S. stocks.

Source: Bloomberg, Tiger Brokers