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• Global equity funds attracted a significant inflow of $49.066 billion last week, marking the 11th consecutive week of positive inflows, primarily driven by easing geopolitical tensions and major corporate IPO events.
• The U.S. market dominated global fund flows last week, achieving a net inflow of $37.471 billion, while Europe, Latin America, and China experienced varying degrees of outflows.
• Due to rising expectations of the Federal Reserve's tightening policy, foreign capital showed signs of withdrawal from emerging Asian markets, with Taiwan and South Korea's stock markets experiencing net sales of $9.049 billion and $2.833 billion, respectively.

Geopolitical Easing and Epic IPO Resonance

The global capital market received a double boost last week. The major news of an impending peace agreement between the U.S. and Iran effectively alleviated market concerns over Middle Eastern geopolitical tensions, with the anticipated opening of the Hormuz Strait significantly reducing potential risks to global supply chains and energy routes. Meanwhile, Space Exploration Technologies Corp (SpaceX:US) made its historic debut on the capital market with the largest initial public offering (IPO) ever, recording a nearly 20% increase in stock price on its first trading day. These two factors strongly boosted risk appetite for risk assets, accelerating fund allocation towards equity assets and driving a substantial net inflow of $49.066 billion into global equity ETFs over the past week.

Extreme Divergence in Regional Fund Flows

Amid this wave of capital frenzy, the U.S. market demonstrated a strong magnetic effect. Data shows that $37.471 billion flowed into the U.S. stock market last week, accounting for over 70% of the global total inflow. The Asian market received $3.151 billion in support. In stark contrast, the European market faced a net outflow of $1.45 billion, while Latin America and China saw outflows of $547 million and $453 million, respectively, with Japan's stock market also experiencing a minor outflow of $29 million. In terms of industry allocation, funds were highly concentrated in thematic, technology, and healthcare sectors, while materials, core consumer, and non-core consumer sectors were among the top net outflows, reflecting a shift in market funds from small-cap defensive sectors to high-growth technology frontiers.

Tightening Expectations Pressure Major Emerging Asian Markets

Despite the overall growth in global funds, Asian domestic markets were pressured by the external macro environment. Strong U.S. non-farm employment data, coupled with a rise in inflation data, heightened market expectations for the Federal Reserve (Fed) to maintain its tightening policy. As a result, foreign investors adopted a more cautious stance towards emerging Asian economies, with stock markets in Taiwan, South Korea, India, and Indonesia all experiencing net foreign sales. Taiwan's stock market became a primary target for cashing out, with a net foreign sale of $9.049 billion in a single week; South Korea followed closely with a weekly net sale of $2.833 billion. The phased withdrawal of foreign capital led to a certain degree of valuation adjustment pressure on the major indices in these regions in the short term.

Technological Demand Supports Fundamental Expansion

Mainstream market analysis institutions, such as Franklin Templeton Investments, believe that although U.S. stocks may face potential volatility and pullbacks after high-level operations and new stock booms, the demand for real entities represented by artificial intelligence (AI) and frontier technology remains strong. It is expected that the U.S. GDP growth rate will likely remain near 3% this year, and the annual growth rate of U.S. stock earnings per share (EPS) will maintain double-digit growth by 2026. The reusable rocket technology represented by SpaceX is expected to lower space access costs while spawning new business models from satellite communications and defense to space data centers and AI applications, providing solid fundamental support for the long-term bullish pattern of overall risk assets.