$172.7 billion poured into money market funds, the largest single-week scale since the pandemic! Ahead of the AI selloff, global capital built up a cash defense line.

Latest fund flow data shows that global capital has not yet fully withdrawn from equities, but its requirements for liquidity, cash flow, and certainty of investment returns have risen markedly. LSEG fund flows show that in the week ended November 4, global equity funds saw net inflows of US$38.63 billion, attracting money for a seventh consecutive week; at the same time, global money market funds saw net inflows as high as US$172.71 billion, the largest single-week scale since the global COVID-19 pandemic outbreak in April 2020, of which US money market funds took in US$117.97 billion. In addition, global bond funds also received net inflows of US$9.91 billion. This combination of simultaneous inflows into equities, bonds, and cash management tools reflects that investors continue to retain allocations to risk assets while significantly enhancing their ability to cope with elections, AI capital expenditure, and interest rate uncertainty. The above LSEG fund flow data, as of Wednesday this week, can be said to reflect changes in global capital allocation that had already formed before the subsequent tech stock selloff. Thursday's market further amplified this pessimistic pricing and investors' cautious sentiment. The Nasdaq 100 index plunged 6.36%, the largest single-day drop since March 2020; the Philadelphia Semiconductor Index fell 12.25%, and the S&P 500 index fell 4.36%. After the Democratic Party regained control of both chambers of Congress, the market worried that stricter data center regulation could delay project delivery and change the pace of order fulfillment for chips, servers, and related equipment. Previous doubts surrounding the scale of AI investment, financing burden, and commercial returns were thus concentratedly reflected in share prices. The VIX volatility index, known as the "fear index," rose 69.66% in a single day to 28.18 points, showing that investors' pricing of recent market volatility rose sharply; trend strategy deleveraging, leveraged product rebalancing, and active investors reducing risk exposure further amplified the price adjustment. On Friday, the shock transmitted to Asia's technology supply chain, but market performance was not uniform. South Korea's KOSPI fell below 5,000 points during the session and triggered a circuit breaker, eventually closing at 5,059.69 points, down 6.02%; Japan's Nikkei 225 closed down 5.96%, and Taiwan Weighted Index closed down 4.51%. India's Nifty 50 index, however, rose 2.01%, and the Sensex rose 2.17%: falling crude oil prices eased the energy import burden, and relatively low exposure to capital-intensive AI investment also made India and some Asian stock markets without a dazzling "AI halo" important directions for capital reallocation. Asian markets appear to be trading two things at onceexport pressure brought by cooling expectations for AI capital expenditure, and growth repair brought by lower energy costs. From chasing AI expansion to screening cash flow! Tech inflows cool, financials, healthcare, and bonds receive increased allocations, capital reweighs growth and defense LESG data flows also show that net subscriptions to equity funds and index plunges can occur at the same time, mainly because fund subscriptions and redemptions, adjustments to existing holdings, and derivatives deleveraging do not belong to the same statistical scope and occur at different times. Equity inflows as of Wednesday cannot be directly interpreted as dip-buying funds after Thursday's plunge; even if continuous subscriptions exist, reductions in concentrated holdings, futures selling, and hedging demand may still overwhelm short-term buying. The large inflows into money funds enhance the liquidity of funds, but their uses also include corporate cash management and deposit allocation, and they cannot all be regarded as funds about to return to the stock market. A more accurate judgment is that investors are still willing to bear equity risk, but are increasingly emphasizing portfolio structure and cash reserves to avoid market selloffs and panic sentiment. LSEG fund flows show that global money market funds unexpectedly attracted net inflows as high as US$172.71 billion, setting the largest single-week scale since April 2020. Regional and sector allocations already reflect this screening. LSEG fund flows show that European equity funds saw net inflows of US$13.25 billion, the largest scale since August 12; global technology sector funds' net inflows fell to US$623.61 million, the lowest in three weeks, while US technology sector funds saw net outflows of US$160.23 million. Global healthcare and financial sector funds took in US$1.33 billion and US$1.2 billion respectively, meaning incremental capital is no longer continuing to concentrate in AI in one direction. Falling energy prices help reduce production costs for European companies, ease pressure on household purchasing power, and reduce the constraint of inflation on policy rates. As of the pre-market trading session on Friday, Brent crude oil had fallen about 15.6% for the week, while the European STOXX 600 index was still up slightly by 0.05%, clearly stronger than the MSCI All Country World Index, which fell 2.91%. The investment implication behind these fund flows and the latest market dynamics is that as the inputs and returns of AI expansion begin to come under stricter scrutiny, improved energy costs, diversified profit sources, and cash flow visibilityat the same time, European equity markets' lower exposure to AI computing-power risk assets and higher exposure to industrials and healthcare stocks that act as real assetscan also become important bases for attracting global capital. Bond allocation reflects another set of trade-offs. LSEG fund flows show that global government bond funds took in US$3.07 billion, US longer-dated government bond and Treasury funds took in US$2.66 billion; at the same time, global high-yield bond funds still received net inflows of US$2.02 billion. These bond fund data flows indicate that during the week there was both demand for falling interest rates and safe assets, while the willingness to obtain credit returns was also retained. For global equity market valuations, falling government bond yields can ease discount rate pressure, but if the decline is accompanied by deteriorating growth expectations, rising risk premiums, and downward revisions to earnings forecasts, tech stocks may still continue to come under pressure. Therefore, whether expectations of lower interest rates/expectations of falling yields on 10-year and longer-term US Treasuries can a tech stock rebound depends on whether companies' ability to deliver cash flow can stabilize market expectations, and whether concentrated deleveraging pressure can ease. Midterm elections combined with AI cash-burn concerns, US money market fund inflows hit a six-month high In the week ended November 4, US money market funds recorded their largest single-week net inflows in six months. Caution ahead of the US midterm elections, as well as concerns over increased AI spending and intensified cash burn at large technology hyperscale cloud computing companies, boosted investor demand for safe-haven assets. LSEG fund flows show that investors net invested US$117.97 billion into US money market funds during the week, unexpectedly setting the largest single-week net investment scale since May 6. LSEG fund flows show that US equity funds attracted net inflows of US$14.81 billion, reversing the previous week's net outflows of US$6.54 billion. Falling energy prices and US Treasury yields retreating from October highs supported market sentiment. The Democratic Party won control of the Senate and House of Representatives in Tuesday's US midterm elections, triggering market concerns that increased regulatory scrutiny could curb the rapid expansion of the AI industry. These concerns weighed on the market on Thursday, with the Nasdaq Composite, S&P 500, and Dow Jones Industrial Average falling 5.52%, 4.36%, and 3.44%, respectively. Investors net bought US$10.35 billion of US large-cap funds, US$1.64 billion of multi-cap funds, and US$422.77 million of small-cap funds during the week, while net selling US$1.07 billion of mid-cap funds. LSEG fund flows also show that among US sector-specific funds, technology, industrials, and communication services funds saw net outflows of US$160.23 million, US$624.67 million, and US$965.68 million, respectively. In contrast, financials and healthcare funds attracted net inflows of US$1.3 billion and US$1.09 billion, respectively. LSEG fund flows show that US bond funds received net inflows of US$7.31 billion, the highest in four weeks. In addition, general domestic taxable fixed income funds, as well as longer-dated government bond and US Treasury funds, recorded significant net inflows of US$2.72 billion and US$2.66 billion, respectively. Investors also bought US$794.32 million of short-to-intermediate government bond and US Treasury funds.