Market Performance - The U.S. stock market experienced a significant decline, with the S&P 500 and Nasdaq Composite indices falling by 2.71% and 3.56% respectively, marking the largest single-day drop since April [1] - The Dow Jones Industrial Average also saw a decrease of 1.9% [1] Volatility Indicators - The Chicago Board Options Exchange Volatility Index (VIX) surged by 31.65% to 21.63, breaking above 21 for the first time in over two months [1] - Historically, the VIX and S&P 500 have an inverse relationship approximately 80% of the time [1] Market Context - Prior to this drop, the VIX had been suppressed, remaining below 17 for multiple instances, while the S&P 500 had seen five consecutive months of gains [4] - The market had not experienced a single-day price movement exceeding 2% for 100 trading days before this event [4] Investor Sentiment - Despite the recent downturn, there is a strong buying support in the market, with investors quickly entering during dips, particularly betting on artificial intelligence to offset macroeconomic concerns [5] - Analysts suggest that the recent decline is viewed more as an opportunity for volatility sellers rather than a time for hedging [5] Historical Comparisons - The current VIX level of 21 is considered not alarming compared to historical peaks during market turmoil, such as during the 2008 financial crisis and the early COVID-19 pandemic [4] - The VIX had previously reached levels above 89 during the 2008 crisis and above 85 at the onset of the pandemic [4]

Group 1 - The influx of hot money into Hong Kong has led to a rise in the Hong Kong dollar (HKD) exchange rate to 7.75, but it has recently dropped to a low of 7.84, marking the weakest level since September 2023 [1][2] - Factors such as increased IPO activity, southbound capital inflows, low deposit rates in mainland China, and capital returning from the US are driving liquidity into Hong Kong [1][2] - The Hong Kong Monetary Authority (HKMA) may intervene further in the market due to the negative interest rate differential between the US dollar and the HKD [2] Group 2 - The HIBOR (Hong Kong Interbank Offered Rate) is expected to rise in the coming months due to dividend distributions, quarter-end funding demands, and the absorption of liquidity from bond and stock issuances [1][2] - The current loan-to-deposit ratio in Hong Kong is 20 percentage points lower than in 2019, indicating low credit demand despite a liquidity-rich environment [2] - The HKMA's currency peg system has remained intact since 1983, despite historical foreign exchange crises [2]