Overseas markets saw a sharp adjustment on Thursday, with increased volatility in cross-border ETFs on Friday. QDII products that were previously strong in A-share market, such as Nasdaq Technology ETF, USA 50 ETF, and Nikkei ETF, had a significant decline.
Asia-Pacific Selected ETF, which has recently performed the best, fell more than 6% on July 12, with a cumulative decline of nearly 15% in three days, and the latest premium discount convergence to 1.62%.
Nasdaq Technology ETF, Nikkei ETF, and Nasdaq 100 ETF fell by 5.26%, 5.08%, and 5.05%, respectively. Statistics show that the number of cross-border ETFs with a daily decline of more than 3% reached 18.
Since the beginning of this year, overseas stock markets have continued to soar, and cross-border ETFs that layout overseas markets in A-share market have skyrocketed. The data shows that 51 cross-border QDII ETFs have achieved positive returns, of which 20 ETFs such as Nasdaq Technology ETF, USA 50 ETF, and Nasdaq 100 ETF have risen more than 20% this year.
Due to the limited foreign exchange quota of fund companies, QDII funds will generally suspend off-site subscription when the quota is exhausted. Investors will turn to purchase relevant on-site products, which causes the net asset value of on-site funds to be higher than that of off-site funds, resulting in a rise in the premium rate.
Take the Asia-Pacific Selected ETF as an example. As of July 9, this ETF had risen by more than 22% for four consecutive trading days, and the premium rate surged to more than 22%. Other cross-border ETFs of the same type have also experienced a high premium rate to varying degrees.
In response to this, fund companies have also issued consecutive risk premium prompts. According to incomplete statistics, there have been hundreds of such risk prompts, but the market's enthusiasm for chasing after the ETFs has not been hidden. Some investors chasing after on-site ETFs have also kept the premium rate high.
US stocks fell on Thursday this week, and the recent market sentiment cooled down, making short-term relief for the premium situation of cross-border ETFs. As of July 12, there was only one fund with a premium rate of more than 5% among the cross-border ETFs.
Last week, US stocks experienced adjustments. One detail that caused market discussion was that while technology stocks plummeted, small-cap stock indexes saw rare rises, showing market divergence.
The current debate mainly focuses on whether several major technological leaders can continue to perform. The data shows that several major technological leaders have contributed most of the gains in the current US stock market.
In the first half of this year, nearly 60% of the gains in the US stock market were contributed by only five technological giants, of which only Nvidia alone contributed 31% of the gains. In the second quarter, Nvidia, Apple, and Microsoft contributed more than 90% of the gains of large-cap stocks.
In other words, if these giants were not held earlier, then the bull market would have been missed. Recently, some well-known institutions have expressed concerns: whether the capital investment of technological giants in this AI wave can be transformed into benefits.
Can these technological giants laugh last? Recently, the world's largest hedge fund wrote a report by studying the US stock market history for more than 120 years, including a lot of valuable information.
In the report released by Bridgewater Fund in June, they reviewed the ups and downs of different leading stocks in the US stock market since 1900, and gave some valuable information:
1. A notable feature of the current US stock market environment is that a few companies are dominating the market.
The top 10 companies with the largest market value in the United States almost account for one-third of the market value of US stocks, a concentration level we have not seen in decades.
These leading companies occupy such a large market share because they have achieved stunning achievements, and the market also believes that this situation will continue.
2. Although the duration in which the leading stocks in the US and Chinese stock markets perform strongly varies across different periods, the commonality is that the majority of leading stocks will be beaten by new rising competitors; some companies have fallen into decline, while others still exert their influence but have been in a decline.
We can say with great certainty that it will be difficult for a company to maintain its leading position without creativity, and only a very few companies can continue to succeed for a long enough period of time.
Starting from 1900, we have displayed the market share changes of each batch of leading companies in the future several years at the beginning of each decade. In the following one or two decades, about half of the market leaders performed worse than the market and fell out of the top 15. Pulling the time span longer, almost all leading companies will be eliminated from the market.
Throughout history, market leaders have always existed: the US railroad company, which occupied more than one-third of the market share and led the US economy, was a market leader more than a century ago, until the rise of automobiles and airplanes broke the monopoly of the railroad. Chemical enterprise giants are also the same. They rose with the invention of plastics, but slowly declined with failed innovation and changing demand patterns. Another typical example is the petroleum giants of the past century, which now face challenges from the rising new energy industry and the emergence of shale oil in the United States.
Bridgewater Associates summarized that the different leading stocks in the United States over the past 120 years often have two factors that are essential for their rise: firstly, they have a first-mover advantage in rapidly growing industries and can quickly and continuously innovate; secondly, they have a strong moat.
Bridgewater Associates pointed out that if they lose their innovation and fail to maintain their moat, leading companies may fall off their pedestals. Moreover, government regulations often influence the fate of leading enterprises.
