After experiencing a plunge on Monday, the US stock market faced another sell-off last night, with all three major indices at one point dropping more than 1%. By the close, the Dow Jones fell by 1.14%,$S&P 500 Index (.SPX.US)$the S&P 500 declined by 0.76%, and the Nasdaq fell by 0.18%.

Chinese Assets surged against the trend, $NASDAQ Golden Dragon China (.HXC.US)$ with a significant increase of 2.83%. $Direxion Daily CSI China Internet Index Bull 2x Shares ETF (CWEB.US)$ Increased more than 4%. $Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$ Increased by 3.91%.

Analysts claim that foreign capital is still in the process of gradually increasing its holdings in Chinese assets, and the funds inflowing into Chinese assets are mainly from Emerging Markets, such as from the stock markets of India and South Korea to the Hong Kong stock market.

After experiencing a fierce selling wave, the focus topics for investors in the US stock market are whether this wave of decline is approaching its end.

Chinese assets explode.

On March 11, Eastern Time, the selling wave in the US stock market continued, and as of the close, all three major indices fell across the board, with the Dow down 1.14%, the S&P 500 Index down 0.76%, and the Nasdaq down 0.18%. The large tech stocks in the US fluctuated in mixed directions.$Tesla (TSLA.US)$、$Broadcom (AVGO.US)$it rose by over 3%, $NVIDIA (NVDA.US)$、$Amazon (AMZN.US)$、 $Meta Platforms (META.US)$ Increased by more than 1%; $Apple (AAPL.US)$ Dropped nearly 3%, $Alphabet-A (GOOGL.US)$ Decreased by 1.1%.

Analysts claim that the tariff policies continuously escalated by President Trump have caused panic among investors in the US stock market, with the VIX fear index rising steadily. Additionally, the uncertainty of the Trump administration's policies has cast a shadow over the US economy.

Mike Wilson, Chief Investment Officer and Chief US Equity Strategist at Morgan Stanley, stated that concerns over US government tariffs compressing corporate profits and reduced fiscal spending could drive the US stock market down an additional 5% in the short term. He warned that if the US economy enters a recession, the S&P 500 Index could see a decline of 20%.

It is worth mentioning that Chinese Assets have once again surged against the trend. By the close, the Nasdaq China Golden Dragon Index rose by 2.83%; $Direxion Daily CSI China Internet Index Bull 2x Shares ETF (CWEB.US)$ Increased by over 4%, $Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$ up over 3%, $Direxion Daily CSI 300 China A Share Bull 2X Shares (CHAU.US)$ 、 $Invesco China Technology ETF (CQQQ.US)$ and the China Overseas Internet ETF increased by over 2%.

China Concept Stocks are rising across the board,$Hesai (HSAI.US)$soaring more than 50%,$ZEEKR (ZK.US)$increasing by more than 18%,$NIO Inc (NIO.US)$and rising by more than 17%,$XPeng (XPEV.US)$A surge of over 14%,$KINGSOFT CLOUD (03896.HK)$up more than 10%.$Li Auto (LI.US)$rose by over 7%,$Alibaba (BABA.US)$、$Bilibili (BILI.US)$Increased by over 4%,$Baidu (BIDU.US)$Weibo,$MINISO (MNSO.US)$rising over 2%,$PDD Holdings (PDD.US)$、$NetEase (NTES.US)$、$iQIYI (IQ.US)$Increased by over 1%, $JD.com (JD.US)$ Increased by 0.27%.

During Tuesday's Asian trading session, Chinese assets demonstrated strong resilience, with the A-shares and Hong Kong stock markets collectively surging at the end of the session, as of the close, $SSE Composite Index (000001.SH)$ increased by 0.41%, $Shenzhen Component Index (399001.SZ)$ Up 0.33%, $Chinext Price Index (399006.SZ)$ Up 0.19%,$Hang Seng Index (800000.HK)$Slightly down 0.01%,$Hang Seng TECH Index (800700.HK)$Up 1.39%.

Regarding the recent independent trends of China assets, Manishi Raychaudhuri, CEO of Emmer Capital and former Asian equity strategist at Société Générale and UBS, stated on Tuesday that as funds flow into Asia, undervalued and still underweight China assets remain the preferred choice. Even after a certain degree of pullback from the seven major tech companies in the USA, he remains Bullish on China Technology Stocks.

Raychaudhuri believes that China Technology Stocks are about to showcase the monetization prospects of China's technological strengths, and that China's technology can significantly reduce the costs of what is known as the "AI application layer." He does not doubt that American Technology Stocks, especially companies with a monopoly in the "selling shovels" sector, can recover, but the current market trend clearly favors this side of Chinese capital.

On March 11, Dongming Fang, head of UBS Group's Global Financial Markets in China, also indicated that overseas investors have been increasingly active in participating in the Chinese stock market over the past month, and that global large funds are still in the assessment phase. Overall, foreign capital is still in the process of gradually increasing their positions. The current observation is that the funds flowing into Chinese assets are primarily from Emerging Markets, such as shifting from Indian and South Korean stock markets to the Hong Kong stock market.

According to minutes from a closed-door meeting of Morgan Stanley titled "Reversal of the US-China Narrative," Morgan Stanley pointed out on March 10 that the current rebound in the Chinese market involves various funds, including hedge funds and southern capital. Long-term capital participation is relatively limited, but the market's risk premium for China has clearly decreased.

According to EPF2 data, foreign long-term funds have flowed into the Chinese stock market for three consecutive months, and in February there was a net inflow led by passive funds. Global funds are still underweight in their allocation to China, indicating a significant room for recovery compared to historical peaks.

Goldman Sachs' team believes that global long-term investors have recently increased their participation in China IPOs and stock issuance markets, and due to the increasing volatility of the US stock market, they are increasingly inclined to purchase stocks of Chinese companies.

Regarding the outlook for China assets, Dongming Fang pointed out that under the uncertainty of the larger environment, while Hong Kong stocks may have the possibility of consolidation, they are still expected to outperform the global market from the perspectives of valuation, liquidity, and institutional Hold Positions.

Citi strategists pointed out that even after a recent rebound, the Chinese stock market still possesses attractiveness for several reasons, including breakthroughs by DeepSeek in the field of AI technology, government support for the technology industry, and still relatively low valuation levels.

Is the sell-off in the US stocks approaching its end?

After experiencing a severe sell-off, the focus of investors is on whether the current downturn in the US stock market is close to its end?

According to the latest analysis from Goldman Sachs, the main technical force leading to the recent significant drop in US stocks—the sell-off of CTA trend-following quantitative funds—has come to an end, which brings a possibility of short-term stabilization for the US stock market.

Goldman Sachs CTA strategist Cullen Morgan stated that CTA has sold $39 billion (approximately 280 billion yuan) worth of US stocks over the past five trading days and currently holds short positions of about $10 billion, completely clearing out approximately $200 billion of global long positions held until mid-February.

Morgan pointed out that such a scale of sell-off has occurred only 15 times in Goldman Sachs' database, with the remaining instances happening in 2018 and 2020, apart from three occurrences in 2023.

Looking ahead to the next week’s flow of CTA capital, Goldman Sachs predicts that if the market remains flat, $39 billion will be sold globally; if the market rises, $24 billion will be sold globally; and if the market declines further, $53 billion will be sold globally.

Extending the time frame to one month, Goldman Sachs predicts that if the market remains flat, $47 billion will be sold globally; if the market rises, $66 billion will be bought globally; and if the market drops, $126 billion will be sold globally.

Goldman Sachs believes that although other global markets may still face significant selling pressure (mainly due to the recent strong performance of European and Japanese stock markets compared to the USA), the sell-off of CTAs on US stocks is likely over in almost all scenarios.

Editor/Somer