Bank of China Securities said markets remained volatile at elevated levels this
week. Structurally, previously strong technology sectors faced profit-taking as
capital rebalanced from crowded high-fliers into lower-valued, higher-certainty
sectors. Drivers: oil prices remain elevated; expectations of tighter offshore
liquidity have strengthened recently; Kevin Warsh formally assumed the Fed chair
and market odds of a hawkish U.S. policy path have risen. Market pricing for a
Fed rate increase in 2026 has notably increased. The combination of high oil and
higher rates has materially compressed the space for global liquidity easing. On
the sector side, anticipated summer peak power demand supports utilities and
coal supply tightness is driving prices higher; amid greater market volatility
and muted fundamentals, investors are placing higher weight on dividend yields
and lower-risk valuation cushions.
