The war premium is receding, and the "pre-war script" is restarting! Wall Street sounds the horn of market counterattack, and the "AI computing power team" takes the lead in the charge.

Top hedge fund managers from Wall Street say that a diversified pre-war investment portfolio consisting of themes involving AI computing power, short-term US treasury bonds, Asian currencies hit hard by weakening exchange rates, and even instant noodle stocks that suffered heavy losses since the end of February due to the Iran conflict, appears to be one of the early beneficiaries of the peace agreement between the US and Iran. As the risk premium of the conflict with Iran fades, hedge funds are unanimously restarting their rush towards those pre-war trading themes dominated by short-term US bonds, Asian currencies, and the AI computing power industry chain. The so-called "pre-war trading script" refers to the market logic that was mainly traded before the conflict in Iran erupted at the end of February: low oil pressure, controllable inflation expectations, no need for hawkish policy stance by the Federal Reserve, weak market safe-haven demand surrounding the US dollar, continuous rise in risk appetite around stock market and cryptocurrencies, dominated by the AI computing power industry chain leading the global stock market in the technology growth sector. The AI computing power industry chain led by companies like Nvidia, AMD, ARM, SK Hynix, and Micron is considered the strongest investment theme within the pre-war trading script. Stocks directly related to AI computing infrastructuresuch as Nvidia, SK Hynix, and AMD leading the "AI computing super team," are often the most sensitive, early movers in overall market and technology stock rebound logic; the core logic behind their pioneering resurgence is extremely "hardcore": directly tied to the record-breaking trillion-dollar AI capital expenditure by tech giants, rather than just storytelling. The next key anchor for investment in the pre-war trading script is short-term US bonds, the Japanese yen, Southeast Asian stocks, Asian consumer stocks, US consumer stocks, and some cryptocurrency investment projects that can quickly transition to AI data centers. With the temporary ceasefire memorandum reached between the US and Iran, stock market traders are showing increasingly bullish sentiment towards the future market conditions surrounding the AI computing power industry chain. As risk appetite strengthens, global stock markets saw a significant surge in hot tech stocks related to AI on Monday. Major companies like Arm Holdings Plc, the owner of the ARM instruction set architecture and a big shareholder in SoftBank Group Corp., saw their stock prices in the Japanese market soar by over 10%. Storage chip giants, as well as super-weighted stocks in the KOSPI, like Samsung Electronics and SK Hynix, rose by over 6%. In pre-market trading on Monday, the AI computing power industry chain saw a collective surge, with Micron Technology up by over 7%, Advanced Micro Devices up by over 5%, AMD up by nearly 5%, Intel up by nearly 4%, ARM up by nearly 4%, ASML up by nearly 3%, and SpaceX, which had its US stock market debut on Friday, rose by over 6% in pre-market trading. With the dissipation of war premiums, fast money forces are restarting the "pre-war trading script" As high-leverage hedge fund institutions and other "fast money investors" dig out their pre-war trading scripts, investment institutions such as Grey Value Management based in Florida are bullish on the value of short-term US government bonds, while Reed Capital Partners based in Singapore shares a similar view and has begun actively buying the weakening Japanese yen that has been persistently soft since the beginning of the year. Vantage Point Asset Management believes that battered stocks in Southeast Asia could outperform the MSCI global stock market benchmark. Thomas Hayes, the chairman of the New York hedge fund Great Hill Capital, says that the institution is looking for major opportunities to buy US consumer stocks, mainly because consumer confidence is significantly recovering. "With a sharp drop in inflation expectations after the agreement, this trade is all about going back to the future, which means going back to those effective trading themes from January or February before the war," Hayes said. The hedge fund manages assets exceeding $1 billion. The US-Iran peace agreement planned to be signed on Friday is expected to eliminate a major macroeconomic pressure over the global financial markets. The geopolitical conflict that lasted for months caused the largest oil supply interruption in history, sparking concerns about a global inflation resurgence. Crude oil futures prices fell sharply on Monday, driving stock and bond markets up. Simultaneously, with a significant decrease in demand for global safe-haven currency assets, the US dollar has weakened, leading to a substantial rebound of Asian currencies such as the Korean won and Japanese yen that have suffered heavy losses in recent months. On Monday, US Treasury bond yields across all maturity terms increased, primarily due to the sharp drop in oil prices prompting traders to drastically cut back on their aggressive expectations for Fed rate hikes. For Chauwei Yak, the CEO of GAO Capital Pte in Singapore, the winners of the so-called "pre-war trading script" may be concentrated in Asian companies. Considering that the major economies in the region are oil-importing countries, Asian stocks were heavily hit by the ongoing war between the US and Iran. Stock indices in India and Indonesia are among the worst-performing stock markets globally this year, and the currencies of these two countries have dropped to record lows. "If the war is accidentally prolonged into the summer, we can reassess some oil price-affected companies, such as companies related to instant noodle manufacturing that rely on palm oil," Yak said. While the MSCI Asia Pacific stocks index has risen by over 7% since the start of the Middle East geopolitical conflict at the end of February, technology is the only sector in this benchmark index that has seen growth, with the other 10 sector groups showing declines. In the technology sector of the MSCI Asia Pacific index, stocks related to AI computing infrastructure dominate, including many companies involved in core chip manufacturing like TSMC, as well as various AI computing infrastructure manufacturers like Foxconn, SK Hynix, and Samsung. Therefore, in the eyes of Wall Street analysts, the future of the Asian AI computing infrastructure industry chain will likely be the biggest beneficiary of the "AI disrupts everything" trend. The strongest theme in the current AI investment theme undoubtedly lies in the AI computing infrastructure manufacturing/outsourcing sector where "supply is constrained and technological barriers are high"including advanced process manufacturing, advanced packaging, HBM/high-end server storage, critical power, liquid cooling, and heat dissipation equipment, as they shift the unit economics of AI training/inference systems to "computing power and energy consumption per token," and these components are mainly concentrated in Asia. According to Ecaterina Bigos from the asset management arm of BNP Paribas in France, the "structurally supported investment themes" mainly include beneficiaries of AI computing infrastructure construction and the trend towards renewable energy transformation. BNP Paribas Asset Management manages assets over 1.6 trillion globally. Bigos is the institution's chief investment officer and provides advice for long and short strategies in core investments in Asia excluding the Japanese market. Nick Ferres from Vantage is one of those strategists who believe there are significant investment opportunities in Southeast Asian stocks that were heavily sold off during the Iran conflict. "Markets that have been underperforming and long neglectedlike Southeast Asiamay present significant opportunities after the signing and implementation of a peace agreement between the US and Iran, although investors may still focus on the dominant hot investment themes, namely AI and AI enablers," Chief Investment Officer Ferres said. Cryptocurrencies have also surged significantly, with Bitcoin trading prices reaching near two-week highs, having previously dropped to their lowest levels since Donald Trump won the US presidential election in 2024. However, cryptocurrency traders remain cautious as they await clearer signs to confirm that the geopolitical conflict that started in late February has indeed ended. Despite the rebound, Bitcoin is still down by about 48% from its record high set in October last year. "During the weekend, we used a portion of our cash reserves to buy cryptocurrencies, primarily projects related to AI in cryptocurrencies," said Richard Galvin, the chairman of the cryptocurrency investment company DACM. "But we still remain cautious, as the final peace agreement between Iran and the US has not yet been signed." Meanwhile, some hedge funds believe that the outlook for currency and bond markets has become more nuanced and speculative. Matthew Haupt, a senior investment strategist at Wilson Asset Management, with assets over AUD 6 billion (USD 4.3 billion), is one of the veteran investors who are bullish on buying global bond assets. "There is a strong case for going long on bonds, especially short-term US bonds," said the Sydney-based hedge fund manager. "Major central banks like the Federal Reserve are no longer as hawkish." In Palm Beach Gardens, Steven Grey said that he is "cautiously optimistic" about the latest progress in the US-Iran peace negotiations and believes that short-term US treasury bonds seem to be favorably valued. On Monday, the yield on the US two-year Treasury notes fell by 6 basis points to 4.02%, while the yield on the benchmark 10-year US Treasury bonds, which serves as a global risk-free rate benchmark, dropped by 5 basis points to 4.43%. "With a spread of only about 40 basis points between the 10-year US Treasury yield and the two-year Treasury yield, we don't see a reason to further lengthen the duration in our allocation strategyor delve deeper into credit qualityto simply chase yield," said the chief investment officer of Grey Value Management. On the other hand, as geopolitical risks gradually ease and demand for safe-haven and global reserve currency assets weakens, the US dollar is losing its appeal to some hedge funds. The Bloomberg Dollar Index fell by 0.3% on Monday, and riskier emerging market currencies saw some of the most significant gains relative to the US dollar. The Japanese yen has regained some supporters who are bullish on its return; previously, due to Japan's high dependence on an imported energy system, the yen was severely sup-pressed, forcing the Japanese Ministry of Finance to intervene multiple times in the foreign exchange market from the end of April to early May. "We are buying the yen, both as a bet on the overvaluation of the dollar and as a wager on the structurally positive outlook for the Japanese currency," said Gerald Gan, the chief investment officer of Reed Capital. The company manages assets worth $600 million. AI computing power chain + undervalued Asian stock assets usher in a significant recovery window With the dissipation of the risks of war in Iran, hedge funds and institutions globally have begun to embrace the "pre-war trading script" once again. However, this is not an indiscriminate return to risk appetite but a cross-asset reallocation strategy centered around leaders in the AI computing power industry chain, falling oil prices, cooling inflation expectations, reduced hawkish pressures from central banks, and the fading safe-haven premium on the US dollar. After the initial agreement to end the war between the US and Iran and reopen the Strait of Hormuz, the international oil price benchmarkBrent crude futures prices fell by over 5%, and Asian stock markets, as well as pre-market US tech stocks, surged significantly. While the agreement still needs to be signed and nuclear issue negotiations are ongoing, it has been enough for the market to anticipate the sharp reduction of residual energy risks. Just as Great Hill Capital said, the theme of returning to the trading themes from January or February before the war: apart from the AI computing power industry chain, short-term bonds, non-US currencies, Asian oil-sensitive assets, US consumer stocks, and some AI cryptocurrency projects are all recovering from the mispricing caused by the Iran war. The AI computing power industry chain remains the main investment theme in global stock markets, but after the risks of war have dissipated, Asian markets and consumer chains affected by oil prices, exchange rates, and input inflation are beginning to show significant recovery potential. Sectors such as Indian, Indonesian, Japanese, and Southeast Asian consumer stocks, aviation tourism, automobiles, and other energy-sensitive sectors theoretically benefit from falling oil prices and lower import costs. Moreover, the European market provides a similar positive validation for the Asian market in the "pre-war trading themes." Following the preliminary peace agreement between the US and Iran, the benchmark European stock indexthe STOXX 600 indeximmediately hit a new record high in the early trading session on Monday. The travel and leisure sector saw an uptick, aviation stocks surged, while energy stocks weakened with falling oil prices. Therefore, what Vantage said about "overlooked markets in Southeast Asia presenting opportunities" is not simply bottom-picking but is betting on Asian stock assets that were collectively pushed down by input inflation, weak exchange rates, and capital outflows during the war period, beginning a double restoration of valuation and profit expectations. As Wall Street investors and global retail investors begin to block out the noise of war, the AI computing power industry chain is undoubtedly capitalizing on a "superwind of a counterattack," which is why on Monday South Korean and Chinese A-share markets and those stocks related to AI computing infrastructure construction saw a collective surge and drove benchmark stock indices to rebound significantly. ASM's latest forecast also significantly reinforces the long-term bullish logic behind the global AI computing power industry chain, emphasizing that AI data centers, Starlink satellites, embodied AI like Siasun Robot & Automation, autonomous driving, and future superchip factories like the TeraFab level will expand the chip demand from a singular cloud training to a broader cloud inference system, physical AI, edge AI cloud connection needs, and that these parts are mainly concentrated in Asia. ASM CEO predicts that the global semiconductor market could reach a staggering $15 trillion by 2030, compared to an estimated market size of around $800 billion by 2025. From the latest mainstream views on Wall Street, although the stock prices of global stocks in the AI computing power industry chain, including ARM, Micron, SK Hynix, and Samsung, have significantly fallen back recently, there is no pessimistic consensus on the end of the "AI super bull market" in the Wall Street community. The decline is seen more as a healthy correction trend under crowded long positions, and more and more large investment institutions are increasing their target positions in benchmark stock indices, almost all of which are related to the wave of AI capital expenditure, the hot AI infrastructure construction process, and the profit expansion driven by AI. Observing the global capital flows, it currently feels more like the AI super bull market is entering its second stage. The first stage is driven by massive training clusters dominated by AI GPUs and ASICs; the second stage is beginning to spread to data center power chains, HBM/DRAM/NAND, advanced packaging, liquid cooling and heat dissipation, data center CPUs, optical communication/optical interconnection in data centers, high-performance Ethernet network infrastructure/data center DCI high-speed interconnection, as well as PC, wearable consumer electronics, humanoid Siasun Robot & Automation, autonomous driving, and terminal AI applications, and even the "new AI center" represented by SpaceX's space AI computing infrastructure. According to the analysis team at Bank of America, the AI computing infrastructure is entering a more persistent and broader capital expenditure cycle. Nearly simultaneously, another Wall Street behemoth, Morgan Stanley, released a research report showing that the AI computing arms race has entered a phase of systemic expansion, with AI infrastructure demand showing a rare "inelastic" trendmeaning that regardless of cost curves, tech giants continue to ramp up construction of AI data centers, and this "inelastic demand" will continue to reinforce the resilience of the US economy and the overall earnings growth of the S&P 500 index. It predicts that by 2028, close to $30 trillion in AI-related infrastructure investment will flow through the global economy, and over 80% of the spending is still ahead. According to Morgan Stanley, historically, whether it's a cloud computing super cycle, a smartphone cycle, or an IT internet cycle, trends in leading industries often come with 2040% phase adjustments; as long as the global AI data center construction process drives the massive expansion and growth of AI GPUs/AI ASICs, data center high-performance CPUs, DRAM/NAND/HBM storage, high-performance network infrastructure, AI PCB, liquid cooling systems, data center optical interconnect systems, ABF/ glass substrates and a broad range of wafer foundries, and other full-stack AI computing infrastructure layer demand continues to expand and grow on a large scale, such a pullback is closer to digesting crowded long positions and valuations in an AI bull market, rather than a turning point to a bear market.