Global liquidity is tightening marginally, putting clear pressure on high-valuation sectors as funds rotate from high-valuation tech names to lower-valuation defensive sectors.
Background to the Liquidity Tightening
The Federal Reserve is keeping rates high, and global liquidity is tightening at the margin. A stronger U.S. dollar is pressuring emerging markets with capital outflows.
Impact on A-shares
1. High-valuation sectors under pressure: Tighter global liquidity is unfavorable for high-valuation growth stocks.
