Zhongtai: How will overseas liquidity tightening expectations affect A-shares?

Zhongtai released a research report stating that the significant pullback in the US technology sector this Friday may create some pressure on the opening of A-shares on Monday, but the market may still maintain a certain resilience before and after major IPOs. The probability of experiencing a particularly large-scale systemic risk overall is limited, and the market may exhibit a fluctuating pattern with resistance above and support below. Areas of focus include: 1. The triple catalysis of El Nio, AI electricity usage, and tightened safety supervision, indicating that there may still be some room for coal. 2. Sectors in the technology industry chain that are closely related to IPO giants, such as storage and Siasun Robot&Automation. While there may be some pressure on the technology sector on Monday, it may still benefit from the catalysis of the intensive IPO period in June. 3. New energy/batteries/power equipment, as global energy security concerns triggered by the Iran situation may accelerate investments in green energy worldwide, and the outlook for mid-term reports is expected to significantly improve. Key points from Zhongtai include: - The market as a whole experienced fluctuations this week, with the AI and energy sectors performing well. - The market saw a decline this week, with a focus on the AI and energy sectors. The rising temperatures have led to increased attention on summer electricity usage, and the coal sector has performed well. However, dividend sectors like banks have not performed as strongly. - In terms of technology, Huang Renxun and Murphy stated in a dialogue that connectivity is currently indispensable. The A-share communication sector saw a significant increase this week. Bocom announced its performance for the second quarter of fiscal year 2026 on Thursday, causing its stock price to plummet by over 13% due to unsatisfactory revenue and AI performance guidance for the next fiscal quarter. As a result, Korean technology stocks led the decline in the Asian market on Friday, causing a pullback in the A-share technology sector. The significant decline in the US technology sector on Friday was mainly due to the interest rate disturbance caused by the non-farm data. The US Bureau of Labor Statistics reported on Friday that there were 172,000 new non-farm jobs added in May, nearly double the market's expectation of 88,000. As a result of the non-farm data, risk assets experienced a significant pullback on Friday. COMEX gold fell by 3.35% on Friday, the Nasdaq 100 index fell by 4.77%, and the S&P 500 index fell by 2.64%. Overall, the increased risks in overseas interest rates may have two impacts on A-shares. Firstly, pressure from the funding and debt sides: the surge in US bond yields reshapes global fund flows. Following the unexpectedly strong non-farm data in May, market expectations for the Federal Reserve to raise interest rates before the end of the year quickly rose. The rise in US bond yields means that the central risk-free rates globally are shifting upwards, increasing the attractiveness of US dollar assets and leading to capital outflows from emerging markets. Hong Kong stocks, due to their high proportion of foreign capital and strong sensitivity to liquidity, are more directly pressured. As for A-shares, the amount of A-shares held by foreign investors in terms of market capitalization is relatively low compared to Hong Kong and Japanese stocks, so the liquidity pressure from US dollar outflows is relatively limited. Secondly, overseas technology transmission: the sharp drop in the Philadelphia Semiconductor Index has temporarily suppressed the A-share computing power chain, but the core independent logic of A-share technology has not been disrupted. Influenced by the non-farm impact and the disappointing Bocom financial report, the Philadelphia Semiconductor Index plummeted by over 10% on Friday. The leading companies in the A-share optical module and computing power hardware sectors have close linkages to the US technology chain. The significant decline in US stocks on Friday may bring about pressure for A-shares to open low. Moreover, the market's current structural fragility is worth noting. In recent times, market volatility has significantly intensified, with trading and funds exhibiting a clear centralization feature, highly focused on a few technological race tracks such as AI computing power and optical modules. However, the majority of component stocks have struggled to keep up with index performance, leading to a weakening of the market's profit-making effect. This "index strong but individual stocks weak" structure fundamentally reflects the deep clustering of institutional funds in the technology sector. When a large amount of profit is concentrated in a few directions, it is easy to trigger concentrated selling and amplified volatility in the event of external shocks (such as the adjustment of global interest rate expectations triggered by the unexpectedly strong non-farm data this time). On the other hand, looking at the driving factors of this current bull market, the impact of overseas risks may be more of a short-term reflection. This bull market is not primarily driven by macroeconomic risks, but rather by the realization of China's scientific and technological investment achievements and the rapid development of the AI industry. The independent support factors for A-share technology sectors remain solid: First, the escalation of US chip export regulations actually strengthens the urgency and policy certainty of domestic substitutes; Second, the capitalization of the domestic AI industry is still accelerating. The demand-driven characteristics of the A-share technology market are strengthening, and short-term interest rate shocks do not alter the medium to long-term trend. Therefore, the pressure on A-share technology sectors next week may be more of an emotional impact in terms of "opening with downward pressure", rather than a trend reversal. Subsequently, differentiation will be based on individual performance realization capabilities. Looking ahead, the path to interest rate hikes by the Federal Reserve may be lower than expected. On one hand, the new chairman has a close relationship with the White House, and monetary policy stance tends to be more dovish. Second, the marginal easing of US-Iran tension reduces imported inflationary pressures. Additionally, Trump faces pressure from midterm elections, which may exert influence on the Federal Reserve. Risk warning: Unexpected tightening of global liquidity, complexity beyond market game expectations, and pace of policy changes exceeding expectations, etc.