Source: Zhitong Finance Author: Zhao Jinbin

The stock market has always been difficult to predict, and US stocks in the first half of this year proved this: almost no one anticipated a rebound in AI-driven 5 trillion US dollars of technology stocks, and no one estimated a banking crisis.

In the first half of the year, chip manufacturers$NVIDIA (NVDA.US)$It became the epitome of the artificial intelligence boom, and$Tesla (TSLA.US)$It has once again become the darling of investors. In stark contrast to this, a large number of regional banks in the US went out of business, and Credit Suisse was forced to sell to competitors$UBS Group (UBS.US)$.

Despite the ups and downs of the market, in fact, for stock investors, returns have been stable this year after a harsh 2022. Among them, Japan's performance was particularly outstanding, and the country's stock market experienced a world-leading rebound.

$Apple (AAPL.US)$with$Microsoft (MSFT.US)$Big tech companies such as these have almost single-handedly contributed to the rise in the S&P 500 index because people think that at a time when the economy is on the brink of recession, these companies' strong balance sheets and enduring revenue streams provide investors with a safe haven.

However, there are some things that haven't changed much. High inflation and interest rates continue to dominate investor sentiment, and as COVID-19 control measures are lifted, economic recovery remains the focus of market attention.

Looking ahead, Julien Lafargue, chief market strategist at Barclays Private Bank, predicts that the stock market will fluctuate narrowly over the next six months. “High interest rates will be an issue that will slowly have an impact and will erode profits over time,” he said in an interview.

As a result, investors need to work harder to find the next successful bet, Lafargue said, noting that the valuations of energy and bank stocks are attractive.

The following is a review of stock market hot spots in the first half of the year:

AI frenzy

The buzz surrounding artificial intelligence has caused investors to invest record amounts of money in the technology industry and increased the market value of the NASDAQ 100 index's constituent stock companies by nearly 5 trillion dollars. Among them, Nvidia, a major player in the field of artificial intelligence, had the highest increase, with its stock price nearly tripling and its market capitalization exceeding 1 trillion US dollars.

In response, some people think that the reason for the rise is that artificial intelligence will improve the efficiency and profit margins of various industries, while others believe that the rise in technology stocks is driven by fear of being replaced (FOBR).

Tesla's market capitalization doubles

After a record 65% drop in 2022, Tesla's market capitalization more than doubled this year, including a record 13-day increase up to mid-June. However, this has also triggered some warning signs. The Relative Strength Index has further entered the overbought region and recently reached its highest level since late 2021.

In addition to the broader rise in technology stocks, positive news also fueled Tesla's stock price soaring, including General Motors (GM.US) and Ford Motor (F.US) announcing that their electric vehicles would connect to Tesla's supercharging network, and Model 3 cars eligible for full US tax credits.

Banking crisis

Banks on both sides of the Atlantic have experienced turmoil. In Europe, the unease caused by Credit Suisse eventually turned into a full-blown panic, causing customers to withdraw their capital from the former iconic Swiss financial industry. It also pushed the country's government to hastily arrange a takeover and prompted UBS to buy the company.

In the US, many regional banks with total assets exceeding 500 billion US dollars have gone out of business. Two of these companies — Silvergate Capital (SICP.US) and Signature Bank (SBNY.US) — ended up bankrupt due to their links with cryptocurrencies. Meanwhile, Silicon Valley Bank (SIVBQ.US) and First Republic Bank (FRCB.US) went out of business due to the central bank's rapid interest rate hike.

The return of the Japanese bull market

As Japan's Eastern Stock Index hit a 33-year high, the Japanese stock market rebounded sharply. People are increasingly accepting inflation, which may be a factor driving the rise in the stock market. Furthermore, there are also signs that the country's corporate governance has improved. Although there has been a sharp rise, for now, the country's stock market is still very cheap. A large number of companies have stock prices below book value, or net cash levels are at a high level.

It's no wonder that the Japanese stock market has even been recognized by “stock god” Buffett.

edit/lambor