US and HK mid-year market recap: Short squeezes take turns; Major US indexes hit

Moomoo News Global wrote a column · Jun 28, 2021 03:36

In the first half of 2021, the global financial market is extremely active: U.S. Treasury yields have skyrocketed, cryptocurrencies have gone up and down, chip shortages, US retail investors staged an epic short squeeze, and commodity prices surged as well...

Let us review the performance of the global market in the first half of 2021 and see institutions' outlook for the second half of the year.

Major indexes performance

In 2021, major financial markets had a good start, among which Hong Kong stocks continued their strong liquidity-driven growth last year, with hundreds of billions of southward funds and overseas funds flowing into the Hong Kong market quickly.

However, this trend came to an abrupt end at the end of February due to the tightening of liquidity by the central bank. Coupled with the sharp rise in U.S. bond yields, HK stocks experienced a significant correction, almost reversing all the gains at the beginning of the year, and lagging behind A shares and other developed markets.

US and HK mid-year market recap: Short squeezes take turns; Major US indexes hit

As of the close on June 25, the $Hang Seng Index(800000.HK)$ has risen 7.55% this year, the $Hang Seng China Enterprises Index(800100.HK)$ has risen 1.3%, and the $Hang Seng TECH Index ETF(03032.HK)$ has fallen 2.26%, making it the bottom of the world's important indexes.

Hot HK stocks performance

Hot US stocks performance

The US stock market also experienced a short and deep correction in mid-February, but soon began to fluctuate upwards from late March. Although the Fed recently hinted to raise interest rates early, the market was fearless. The $Nasdaq Composite Index(.IXIC.US)$ and $S&P 500 index(.SPX.US)$ hit a record high.

In terms of other star stocks, $NVIDIA Corp(NVDA.US)$ has surged nearly 46% this year, leading the rise of star tech stocks. $Alphabet Inc-CL C(GOOG.US)$ soared nearly 45%, $Facebook Inc(FB.US)$ gained about 25%, $Microsoft Corp(MSFT.US)$ rose nearly 20%, $Amazon.Com Inc(AMZN.US)$ advanced about 4%, while $Apple Inc(AAPL.US)$ was flat.

However, $Netflix Inc(NFLX.US)$ fell 2.53% and $Tesla, Inc.(TSLA.US)$ fell 4.79%, significantly lagging behind traditional auto stocks such as $Ford Motor Co(F.US)$ and $General Motors Co(GM.US)$.

Hot China-concept stocks performance

In terms of market cap and YTD changes, the top China-concept stocks in the first half of 2021 are as follows:

According to moomoo, among the 43 popular China-concept stocks in the US market, 17 have recorded a rise so far this year. Among them, Futu Holdings has risen nearly three times, and the BOSS, which was freshly listed in June, has more than doubled. However, 26 companies fell, most of which are in the education and e-commerce sectors.

Major events in the past 6 months

- US treasury yield skyrocketed in March

In March, the news that always appeared on the headlines was the surge of US 10-year Treasury yield. Global stock markets plummeted as a result, technology stocks suffered, gold, silver and Bitcoin were also significantly affected.

The reason was that, under the premise of the expected strong recovery of the US economy in 2021, the upward trend of U.S. bond yields has become a consensus in the market. Many catalysts during the period, such as the milestone progress of vaccination and fiscal stimulus plans, led to the upward.

- Bitcoin slumped after hitting record

In February, since Tesla's purchase of Bitcoin, cryptocurrencies became the focus of the market. BlackRock, Goldman Sachs and other institutions stepped into the field as Bitcoin refreshed its record one after another. The world's largest cryptocurrency exchange Coinbase was directly listed on the Nasdaq.

However, with the tightening of regulations, the cryptocurrency slipped from its peak. Bitcoin fell from $60,000 to $30,000 in 2 months. According to JPMorgan, cryptocurrency market value has evaporated by $1 trillion from its peak in May.

- The epic Archegos collapse

Archegos is the family investment vehicle owned by Mr. Hwang. Archegos took big, concentrated positions in companies and was heavily leveraged. Thus, the fund collapsed very fast and lost $20 billion in 2 weeks as the stock price of companies in which Archegos had significant exposure began to sell off.

Institutions were largely hurt by the crisis. Credit Suisse said it will take a $4.7 billion hit and two top executives will leave their roles. Nomura warned investors of a $2 billion loss.

- The battle between retail investors and institutions

The short squeeze battle between retail investors and institutions was under the spotlight in January and June.

In January, $GameStop Corp(GME.US)$ began its surge and doubled in just 4 trading days, after which the founder of Citron, a well-known short-selling agency, and individual investors started the battle on social media, pushing the fight to a climax.

Short-squeezing made a comeback in June. $AMC Entertainment Holdings Inc(AMC.US)$'s turnover topped the US stock market during the peak and has gained 2450% year to date.

Institutions' outlook for the second half of 2021

- BlackRock: Closing in on fully reopen

The breakneck pace of the COVID-driven decline and restart has made for one unprecedented economic and market cycle. We begin the second half positioned for recovery while also safeguarding against potential bouts of market angst. BlackRock sees an attractive midcycle opportunity in quality stocks and inflation and tax concerns drive volatility.

- Credit Suisse predicts global growth of 5.9% for 2021

In its investment outlook for the second half of 2021, Credit Suisse predicted the world economy will grow 5.9% this year and 4% in 2022.

Economic expansion will lead to a sharp recovery in global earnings growth that is set to fuel the stock market. We are looking for equities to be the asset class that is going to outperform over the next six months to a year. As long as earnings continue to trend higher, history suggests that equities will grind their way up.
-Ray Farris, CIO for South Asia at Credit Suisse

- Charles Schwab: Eurozone stocks will take the lead

The new economic cycle has seen stock market leadership pass from the U.S. to Europe. European countries are only now starting to ease their restrictions on economic activity just as Europe's largest ever stimulus plan is about to be deployed. This suggests Eurozone growth still has some way to go before peaking and that Eurozone stocks can likely still deliver further gains after outperforming in the first half of the year.