Core Insights - The U.S. stock market experienced a significant decline, with the Dow Jones dropping by 1.9%, the S&P 500 by 2.71%, and the Nasdaq by 3.56% [3] - The VIX (Volatility Index) surged above 20, indicating increased market fear, while the dollar index fell by 0.57%, oil prices dropped nearly 4%, and Bitcoin decreased by approximately 5.5% [3] - Gold emerged as the only asset gaining value during this sell-off, as investors shifted from "faith" to "safe haven" assets [4] Market Dynamics - The current market turmoil is linked to growing skepticism about the AI bubble, with a potential for a larger market correction as investors rush to exit positions [4] - Systematic selling pressure is evident, with UBS warning that a 1% drop in the S&P could trigger around $20 billion in programmatic selling, escalating to $280 billion with a 3% decline [4] - The S&P 500 closed at 6652, and analysts caution that a drop below 6600 could lead to forced selling from previously stabilizing hedges [4] Future Outlook - The market may face further declines, with analysts predicting a "Black Monday" following the recent downturn [4] - The recent "tweet shockwave" has raised concerns about trust in the market, potentially marking the beginning of a trust crisis [4] - Upcoming reports will address the implications of the AI bubble, the demand for gold, and the fate of a significant stock that reflects the broader Chinese capital market [6][7]

Investment Rating - The report indicates a bearish outlook for the Hong Kong stock market, suggesting a potential decline of at least 8% following the fear and greed index reaching 80 [1][7]. Core Insights - The report identifies four bubbles in the market: artificial intelligence (AI), Bitcoin, credit markets, and the Chinese market, with a particular focus on the potential bursting of the Chinese market bubble [2][8]. - The report highlights that the Hong Kong stock market's performance is closely tied to the strength of the US dollar, raising concerns about a possible strengthening of the dollar impacting market expectations [1]. - The report notes that the Chinese stock market is experiencing an unusual rally, largely driven by margin trading, which has raised concerns among regulators [3][4]. Summary by Sections Market Indicators - The Hong Kong fear and greed index has reached 80, historically indicating a significant market downturn, with an average decline of 11% following such signals [1][7]. - The report mentions that a specific stock, which is heavily held and has a large margin trading volume, could see a decline of approximately 23.5% if current trends continue [7]. Chinese Market Analysis - The report discusses the high correlation between the Chinese stock market and margin trading since November 2024, suggesting that the current rally may not be sustainable [2][3]. - It draws parallels to the 2015 Chinese stock market bubble, indicating that regulatory measures may be implemented to prevent a similar situation from occurring again [3]. - The report expresses concerns over the stagnation of corporate earnings in China, with a noted 12% underperformance compared to investor expectations during the earnings season [5][6]. Investment Trends - The report highlights a shift in investment flows, with foreign investors moving funds from other Asian markets into China, driven by a low risk perception as indicated by the CDCH risk indicator [6]. - It notes that the current valuation levels in the Chinese market are at a high point, suggesting a potential bubble, especially in the context of stagnant earnings growth [6][8]. Broader Market Implications - The report warns that a bursting of the Chinese market bubble could trigger a chain reaction affecting other bubbles, including Bitcoin, which could see a price drop from approximately $112,000 to $102,000 [7]. - It emphasizes the importance of market positioning and investor sentiment in the formation and potential bursting of bubbles, drawing on historical examples from various markets [9].

Group 1: Hong Kong Stocks - Lehua Entertainment (02306) surged over 24% due to strong market performance of its toy IP "WUKUKU," with multiple new products setting sales records and the theme song exceeding 1 billion views [1] - United Energy Group (00467) rose over 7% after signing a 15-year production increase contract with Uzbekistan's UNG, involving 57.8 billion cubic meters of oil and gas production, with an initial investment of $100 million to expand into Central Asia [1] - Smoore International (06969) fell over 3% as shareholder Yiwei Lithium Energy plans to reduce its stake by 3.5% (216 million shares), resulting in a decrease of its holding to 27.23%, no longer being the controlling shareholder [1] - New World Development (00200) dropped over 5% after completing a "2 for 1" rights issue, issuing 758 million shares and raising HKD 771 million, with oversubscription of 13 times [1] - Fourth Paradigm (06682) increased over 7% after launching AI solutions for the manufacturing industry, covering production optimization to supply chain intelligence upgrades [1] - Shandong High-Tech Holdings (00412) rose over 4% as Zhongtai Securities highlighted significant synergy between its new energy and digital infrastructure, with a data center PUE value of 1.15, enhancing financial integration [1] - KANAT Optical (02276) increased over 4% due to an explosion in the smart glasses market (e-commerce transactions up 8 times), with Meta collaborating with Oakley to launch AI glasses, positioning the company with leading 3C enterprises [1] Group 2: Other Notable Stocks - Sipai Health (00314) rose over 7% after partnering with Anruijiaer to develop customized insurance, planning to sell 6 pharmacies for 5.89 million to focus on core medical insurance business [2] - SF Express (09699) increased over 5% after raising its delivery service revenue cap for 2025/26 to HKD 12.8 billion / HKD 20.5 billion, with demand growth exceeding expectations [2] - Liufu Group (00590) fell over 3% as it projected a 40% decline in profits for the 2025 fiscal year, primarily due to gold hedging losses and high base effects from acquisition gains [2] - Zhenjiu Lidu (06979) rose over 4% after announcing Yao Annan as the "Cultural Heritage Ambassador" for liquor, leveraging Huawei-related topics to boost brand visibility [2] - Ideal Auto-W (02015) dropped over 4% as Meituan's Wang Xing sold 5.73 million shares for HKD 600 million, reducing his stake to 20.61% [2] - Health Road (02587) surged over 7% as its liver disease AI management platform was selected for Beijing's digital medical verification program, supporting WHO's "2030 Hepatitis Elimination" goal [2] - Gilead Sciences-B (01672) rose over 5% after its psoriasis oral drug ASC50 completed the first dosing in Phase I clinical trials in the U.S., targeting the IL-17 pathway [2] - China Silver Group (00815) increased over 10% after partnering with Zefeng Gold to acquire a 55% stake in a lead-zinc exploration company, gaining exploration rights over 50.8 square kilometers in Tibet [2] Group 3: U.S. Stocks - Verve Therapeutics (VERV.US) skyrocketed over 80% as Eli Lilly prepares to acquire the gene-editing company for up to $1.3 billion, with $1 billion as an upfront payment and $300 million contingent on specific clinical milestones [4] - Solar energy stocks plummeted, with Sunrun (RUN.US) down over 40%, Solaredge Technologies (SEDG.US) down over 41%, and First Solar (FSLR.US) down over 22%, following a Republican proposal in the U.S. Senate to terminate wind and solar tax credits by 2028, raising concerns about the industry's outlook [4] - Reddit (RDDT.US) rose over 6% after launching the AI advertising tool Reddit Insights, enhancing ad targeting through real-time user trend analysis [4] - Bitcoin-related stocks fell, with CleanSpark (CLSK.US) down over 7% and Riot Platforms (RIOT.US) down over 5%, as Bitcoin prices dropped nearly 2% to $105,580 amid escalating tensions in the Middle East and high leverage positions in the derivatives market [4] - AMD (AMD.US) continued to rise 0.56% after officially launching the Zen5 architecture Ryzen Threadripper processors, covering the workstation and desktop markets, with a market share close to 50% in China for Q1, although there are concerns about its cost-performance ratio [5] - Brain Regen Technologies (RGC.US) surged over 30% after announcing a 38-for-1 stock split, coupled with FDA clinical trial approval news, although its actual business has no revenue and a very small float, indicating significant retail speculation [6] - Jabil (JBL.US) rose over 8%, reaching a new all-time high of $202.5, with Q3 revenue increasing 15% year-on-year to $7.83 billion, raising its full-year revenue forecast to $29 billion and planning a $500 million investment to support AI data center infrastructure [6] - Niu Technologies (NIU.US) increased over 11% after launching its new NX Play electric motorcycle on Douyin, integrating a smart riding system to enhance user experience [6] - T-Mobile US (TMUS.US) fell nearly 4% as SoftBank sold 21.5 million shares at $224 each, a 3% discount, triggering market sell-off [6] - The pharmaceutical sector saw widespread declines, with Eli Lilly (LLY.US) down over 2% and Novo Nordisk (NVO.US) down over 3%, as concerns grew over the potential impact of the U.S. Senate tax bill on the industry, coupled with profit-taking ahead of some companies' earnings reports [6] - The gold sector declined, with Gold Fields (GFI.US) down over 2.1%, and spot gold fell 0.27% to $3,375.53, as easing tensions in the Middle East reduced safe-haven demand, alongside Citigroup's bearish long-term gold price forecast [7]

Core Viewpoint - The U.S. bond market is experiencing significant turmoil, driven by concerns over rising debt levels and proposed tax cuts by the Trump administration, leading to a sharp increase in bond yields and a lack of investor interest in bond auctions [1][3]. Bond Market Summary - The 20-year U.S. Treasury bond auction faced extremely low demand, with interest rates soaring above 5%, marking the coldest auction in five years [3]. - The 30-year Treasury yield reached 5.1%, nearing a 20-year high, while the 10-year yield climbed to 4.595%, indicating that borrowing costs are increasing for both the government and consumers [3]. Stock Market Summary - The stock market reacted negatively, with the Dow Jones Industrial Average dropping 817 points, while the S&P 500 and Nasdaq fell by 1.4% and 1.6% respectively, reflecting investor concerns over fiscal policies [5]. - As the stock market declined, investors shifted towards gold and Bitcoin as safe-haven assets, indicating a flight to safety amid rising uncertainty [5]. Investor Sentiment Summary - Market participants are skeptical about the government's ability to genuinely reduce the deficit, as highlighted by comments from industry experts [5]. - The current state of the bond market is likened to a stressed individual facing financial pressures, exacerbated by proposed tax cuts without clear funding sources [5].

Market Overview - On the first day of China's holiday, global markets experienced a rally, with U.S. stocks rising across the board and the dollar index surpassing the 100 level, while Bitcoin approached the $100,000 mark. In contrast, gold prices fell nearly $90, testing the $3,200 level. This indicates that the Chinese market missed out on a significant upward movement due to a global risk appetite recovery linked to China [1]. U.S.-China Trade Relations - President Trump expressed a high likelihood of reaching an agreement with China. The White House's National Economic Council Director Hassett also conveyed optimism regarding progress on tariff issues. Reports indicated that the U.S. has been proactively engaging with China through various channels to negotiate tariff matters [2][3]. - Despite the positive sentiment, U.S. stock market movements suggested that the market had already priced in improvements in U.S.-China trade relations. Initial gains were followed by a gradual pullback, indicating a developing "news immunity" as the market became less responsive to repeated positive signals from Trump [3]. Interest Rate Expectations - A concerning development emerged as the market began to realize that expectations for a Federal Reserve rate cut may have been overly optimistic. The probability of a rate cut in June dropped to 58% from 68%. Recent data showed a significant increase in initial jobless claims and a decline in the ISM manufacturing PMI, which should have reinforced the necessity for a rate cut. If the market fully unwinds its rate cut bets, liquidity could tighten rapidly, increasing funding costs and exerting pressure on the stock market, credit markets, and emerging markets [3].