Since Israel launched attacks on Iran late last week, both WTI crude oil, the US benchmark, and Brent crude oil, the global benchmark, have experienced significant volatility. One indicator might help illustrate just how serious investors' concerns are about the potential scope of this conflict... Rebecca Babin, Senior Energy Trader and Managing Director at CIBC Private Wealth, said that the CBOE Crude Oil ETF Volatility Index hit its highest closing level in over three years on Tuesday, indicating that "the market is pricing in multiple tail risks." "This is a clear signal that traders are increasingly concerned about how the situation might evolve—not just short-term supply disruptions, but broader regional instability," Babin noted. According to Dow Jones Market Data, the index surged by 26% on Tuesday, closing at $71.56, its highest closing level since March 2022. Described as an estimate of the 30-day expected volatility of crude oil priced by the United States Oil Fund (USO), the index has "doubled" in the past five trading days, rising by 104%. It's worth noting that the index has also surged after key geopolitical events in the past, but none have been as dramatic as this one. For example, after Hamas attacked Israel on October 7, 2023, the index rose by 11.7% the following Monday, closing at $39.85, its highest closing level since June of that year. On the day after Trump's April 2 "Liberation Day" tariff announcement, the index rose by 18%, closing at $35.45. Fawad Razaqzada, Market Analyst at GAIN Capital, said that the situation between Israel and Iran this time is "quite different." "US President Trump stated in a social media post that 'we now have complete control of Iranian airspace,' indicating that the US is engaging in the conflict," he said. According to multiple media reports, US President Trump is considering a range of options, including joining Israel in air strikes against Iran. He also posted on social media on Tuesday demanding Iran's "unconditional surrender." This has raised questions about whether the US might take action to deepen its involvement in the conflict. Market data shows that the price of the most-traded July WTI crude oil futures contract in the US rose by $3.07, or 4.3%, on Tuesday, closing at $74.84 per barrel, its highest closing level for the most-traded contract since January this year. The most-traded August Brent crude oil futures contract, the global benchmark, also rose by $3.22, or 4.4%, closing at $76.45 per barrel, its highest closing level since February. Matt Polyak, managing partner at Hummingbird Capital, said that a key factor driving market volatility is the potential impact on global supply from Iran's export of approximately 1.5 million barrels of oil per day. According to data from the US Energy Information Administration (EIA), around 20 million barrels of crude oil and condensate were transported through the Strait of Hormuz to global markets each day in 2024, accounting for roughly one-third of global oil trade. From the perspective of market positioning, Polyak of Hummingbird noted that CFTC data showed that the net managed money position in crude oil on the New York Mercantile Exchange (NYMEX) was in line with the average over the past three years but below the five-year average, suggesting there is still room for long positions to increase. Meanwhile, Denton Cinquegrana, chief oil analyst at Oil Price Information Service, pointed out that the open interest in WTI contracts is in "free fall, so short positions are undoubtedly being covered." Short positions refer to bets on falling oil prices, and covering refers to investors buying back the oil they previously sold short. For example, FactSet data showed that the open interest in the most-traded July WTI crude oil futures contract was around 81,660 lots in Tuesday's trading, down from 144,493 lots on Friday. Regarding how high oil prices could rise from current levels, CIBC's Babin said that if the situation is limited to Iran-Israel tensions, "some of the gains may already be priced in by the market—especially since the spare capacity of Saudi Arabia and the UAE provides some cushion." However, she stated, "if there are signs that the situation is escalating into a full-blown regional conflict with direct strikes on infrastructure, then there is still significant upside risk for oil prices."

As reminded by a Caixin article on Tuesday evening, overnight and into the morning, overseas markets have been busy reassessing the prospects of the Middle East conflict, with the three major US stock indices collectively under pressure and declining. As of Tuesday's close, the S&P 500 fell 0.84% to 5,982.72 points; the Nasdaq Composite Index fell 0.91% to 19,521.09 points; and the Dow Jones Industrial Average fell 0.7% to 42,215.8 points. As a bellwether for the Middle East conflict, international oil prices surged again. (Daily chart of Brent crude oil, source: TradingView) According to CCTV News, as the military conflict between Israel and Iran continues, the market's focus has shifted to whether the US military will intervene. According to reports, US President Trump met with his national security team in the White House Situation Room on Tuesday to weigh whether to further intervene in the ongoing conflict between Israel and Iran. US Treasury bond prices also rose simultaneously, though this was also related to weak US retail, housing, and industrial output data. Later on Wednesday (early Thursday Beijing time), the US Fed will announce its latest interest rate decision and hold a press conference. The market generally expects that before a series of uncertainties that could trigger inflation are resolved, Fed officials will have no room to cut interest rates. Meanwhile, Andrew Tyler, head of global market intelligence at JPMorgan Chase, who successfully predicted the April rebound, said this week that despite the success of investors' strategy of buying the dip in the US stock market this year, with negative news always being rewarded after fading away, it is now best to reduce risk exposure. Regardless of the Israel-Iran situation, the US stock market itself is already ripe for a correction. The latest Bank of America Fund Manager Survey also shows that about 54% of institutional investors expect international stocks to be the best-performing asset class over the next five years, while only 23% choose US stocks. Performance of Popular Stocks Tech giants generally fell on Tuesday, with Apple down 1.4%, Microsoft down 0.23%, Amazon down 0.59%, Nvidia down 0.39%, Google-A down 0.46%, Tesla down 3.88%, and Meta down 0.7%. Chinese ADRs also weakened due to market sentiment, with the Nasdaq Golden Dragon China Index closing down 1.77%. As of the close, Alibaba was down 0.8%, JD.com was down 0.93%, Baidu was down 1.42%, Pinduoduo was down 0.25%, Bilibili was down 2.6%, NIO was down 2.27%, NetEase was down 1.12%, and Futu Holdings was down 1.47%. The "Traditional Chinese Medicine + Brain-Computer Interface" concept stock that captured market attention yesterday, Brain Regeneration Technology, continued to rise by 30%, reaching a market capitalization of $38.5 billion, with a cumulative increase of 59,900% since the beginning of the year. It should be emphasized that the core reason for the stock's speculative surge lies in its extremely small free float. Company News [Amazon CEO Issues Warning on "AI Taking Jobs"] On Tuesday local time, Andy Jassy, CEO of Amazon, the world's largest e-commerce and cloud computing platform, publicly wrote that as the company widely adopts AI to enhance efficiency, it is expected that the overall workforce will be reduced. [US Energy Giant Chevron Officially Enters Lithium Industry] US energy giant Chevron announced on Tuesday its entry into the lithium industry. The company acquired two oilfield areas with the intention of building a "commercial-scale" lithium business in the US. Chevron stated that in the future, it will utilize the "Direct Lithium Extraction" (DLE) process at oilfields to extract lithium from brine. [Coinbase to Seek SEC Approval for Tokenized Equities] Paul Grewal, Chief Legal Officer of Coinbase, a cryptocurrency exchange and newly added member of the S&P 500 Index, revealed that the company is seeking approval from the US Securities and Exchange Commission (SEC) to launch a "tokenized equities" service. [Eli Lilly to Acquire Gene-Editing Startup Verve for $1.3 Billion] On Tuesday Eastern Time, US pharmaceutical giant Eli Lilly announced that it would acquire gene-editing startup Verve Therapeutics for up to $1.3 billion. In response to this news, Verve's stock price closed up 81.50% on Tuesday. [JPMorgan Chase Launches Deposit Token JPMD, Emphasizing It's Different from Stablecoins] JPMorgan Chase stated on Tuesday that it plans to launch a so-called deposit token, JPMD, on Coinbase's public blockchain Base, which is built on the Ethereum network. The token will provide customers with 24/7 settlement services and the ability to pay interest to holders. The Wall Street giant stated that this is a so-called "permissioned token," meaning it is limited to JPMorgan Chase's institutional clients only—different from most publicly circulating stablecoins. [Tesla's Stock Falls Due to Temporary Production Halt News] Tesla's stock price fell by 3.88% on Tuesday amid news that the company would suspend production of the Cybertruck and Model Y car models at its Austin, Texas, factory for a week. It is reported that the production halt for maintenance will begin on June 30, marking the third similar shutdown at the Austin factory in the past year. [Meta to Launch AI Glasses in Collaboration with Prada and Oakley] Market news on Tuesday reported that Meta and its AI glasses partner EssilorLuxottica plan to launch new AI glasses products under the Prada and Oakley brands. Meta had already announced on Monday that it would unveil a new collaboration with Oakley this week, focusing on sports scenarios. [Intel Reportedly to Cut Up to 20% of Employees in Its Foundry Division] An internal memo disclosed by the media on Tuesday revealed that Intel plans to reduce its workforce in the foundry business unit by 15% to 20% starting from July. It remains unclear how many employees will be directly affected by this move. Regulatory filings indicate that as of the end of last year, Intel had a total of 108,900 employees.

Before the "Super Central Bank Week" kicked off, the US stock market temporarily recovered from the risk-averse sentiment of last Friday, with all three major indices closing higher on Monday, while gold and crude oil prices pulled back together. As of Monday's close, the S&P 500 rose 0.94% to 6,033.11 points; the Nasdaq Composite Index rose 1.52% to 19,701.21 points; and the Dow Jones Industrial Average rose 0.75% to 42,515.09 points. Spot gold fell nearly $50 to $3,383.62 per ounce, and international oil prices also fell nearly 2%. (Daily chart of the S&P 500 Index, source: TradingView) According to CCTV News, the conflict between Israel and Iran continued overnight and into the morning. Israeli Prime Minister Benjamin Netanyahu stated in a pre-recorded online press conference that Israel's actions would not stop and that Israel was "systematically and continuously destroying Iran's nuclear targets." On the same day, Hossein Dehghan, a senior advisor to the Commander-in-Chief of the Islamic Revolutionary Guard Corps (IRGC) of Iran, said that the IRGC was prepared for a long-term, full-scale war with Israel. Undoubtedly, the progress of this conflict will continue to directly impact the performance of capital markets. Investors will closely monitor the conditions of energy facilities and key shipping routes. The RBC Capital Markets Strategist Team pointed out that, given recent gains, US stock valuations have become stretched. In the worst-case scenario, if the situation in the Middle East drives up energy prices, leading to "severe" inflation in the US, the S&P 500 could experience a significant correction. Starting from noon Beijing time on Tuesday, multiple central banks will gradually disclose their interest rate decisions. The market will closely monitor the Bank of Japan's statements and actions regarding the "Japanese bond storm," the US Fed's outlook statements, and the Swiss National Bank's move back to zero interest rates (or even the possibility of negative rates). Performance of Popular Stocks US tech giants rebounded collectively on Monday. Apple rose 1%, Microsoft rose 0.88%, Amazon rose 1.89%, NVIDIA rose 1.92%, Alphabet (Google-A) rose 1.20%, Tesla rose 1.17%, Meta rose 2.9%, and Advanced Micro Devices (AMD) rose 8.81%. Chinese concept stocks also showed a broad-based rally, with the Nasdaq Golden Dragon China Index closing up 2.07%. As of the close, Alibaba rose 2.74%, JD.com rose 2.2%, Baidu rose 1.45%, Pinduoduo rose 2.2%, Bilibili rose 5.64%, NIO rose 0.43%, NetEase rose 1.31%, Futu Holdings rose 10.77%, Jinko Solar rose 3.13%, Tuya Smart rose 4.4%, 21Vianet Group rose 4.41%, and GDS Holdings rose 9.5%. Company News [Circle's Share Price Hits New High, CEO Predicts Stablecoin's "iPhone Moment" is Imminent] Cryptocurrency stablecoin company Circle closed up 13.1% on Monday to $151, just shy of quintupling its IPO price ($31). Jeremy Allaire, Circle's co-founder and CEO, said over the weekend that while the "iPhone moment" for cryptocurrency stablecoins has not yet arrived, he expects it to come soon. On the policy front, the US Senate is expected to vote on the GENIUS Act as early as this Tuesday. [Sarepta's Share Price Collapses: Another Patient Dies After Gene Therapy Treatment] Biopharmaceutical company Sarepta Therapeutics plummeted 42.12% on Monday after the second patient treated with its gene therapy, Elevidys, died, raising questions about the therapy's safety. It is understood that Elevidys is the only gene therapy approved by the US Food and Drug Administration (FDA) for the treatment of the rare Duchenne muscular dystrophy (DMD), a disease in which muscles gradually weaken, typically affecting children or adults after the age of 4. [Alibaba's AI Team Launches AI Models Optimized Based on Apple's MLX Framework] Alibaba's Tongyi Qianwen announced on Monday that it has launched all Qwen3-series models deeply optimized based on Apple's MLX framework, enabling Apple devices, including iPhones, to easily deploy the Tongyi Qianwen series models. [Meta Introduces Paid Ads to WhatsApp for the First Time] Meta announced on Monday that businesses can now place so-called "Status Ads" on the messaging app WhatsApp to guide users to interact with advertisers through WhatsApp's messaging feature. [AMD's Share Price Surges, Analysts Predict Rebound in GPU Business] Compute chip supplier AMD's share price closed up 8.81% on Monday, approaching its yearly high from early January. On the news front, analysts at Piper Sandler raised their target price from $125 to $140 in their latest report. Analysts are excited about AMD's new products released last week and expect the company's GPU business to rebound in Q4.

Macro News 1. The spokesperson of the Ministry of Foreign Affairs announced that, at the invitation of President Kassym-Jomart Tokayev of the Republic of Kazakhstan, President Xi Jinping will attend the second China-Central Asia Summit in Astana, Kazakhstan, from June 16 to 18. 2. Li Qiang chaired a State Council executive meeting to deploy the replication and promotion of pilot measures in the China (Shanghai) Pilot Free Trade Zone, hear reports on the construction of a new model for real estate development and the promotion of high-quality housing, and study measures to optimize the centralised procurement of pharmaceuticals and medical consumables. 3. According to data from the People's Bank of China, at the end of May, the balance of broad money (M2) was 325.78 trillion yuan, up 7.9% YoY. The balance of narrow money (M1) was 108.91 trillion yuan, up 2.3% YoY. The balance of currency in circulation (M0) was 13.13 trillion yuan, up 12.1% YoY. Net cash injection in the first five months was 306.4 billion yuan. The increase in aggregate social financing in January-May was 18.63 trillion yuan, 3.83 trillion yuan more than the same period last year. RMB loans increased by 10.68 trillion yuan in the first five months. 4. On June 13, the People's Bank of China announced again that it would conduct 400 billion yuan of outright reverse repo operations on June 16 with a term of six months (182 days), indicating that the central bank would achieve a net injection for the entire month. 5. The World Trade Organization held the second annual meeting of the Council for Trade in Services in Geneva, Switzerland, on June 13. China pointed out the misleading narrative and erroneous logic of the US's "reciprocal tariff" and urged the US to comply with WTO rules, resolve differences through multilateral cooperation rather than unilateral measures, and jointly maintain the stability of the global trading system with all parties. 6. The New Zealand government's official website announced that starting from November 2025, Chinese passport holders entering New Zealand from Australia with valid Australian tourist, work, student, or family visas will be exempt from visa requirements for stays of up to three months. Industry News 1. Eight departments, including the Ministry of Industry and Information Technology, are soliciting public comments on the "Guidelines for the Security of Outbound Automobile Data (2025 Edition)". Automobile data processors shall declare a security assessment for outbound data if they provide automobile data overseas under any of the following circumstances: (1) providing important data overseas; (2) cumulatively providing personal information (excluding sensitive personal information) of more than 1 million individuals overseas since January 1 of the current year; (3) cumulatively providing sensitive personal information of more than 10,000 individuals overseas since January 1 of the current year; (4) operators of critical information infrastructure providing personal information overseas; (5) other circumstances requiring a security assessment for outbound data as specified by relevant state regulations. 2. On the 15th, the official WeChat account of the Shenzhen Municipal Committee of the Revolutionary Committee of the Chinese Kuomintang (RCCCK) published an article by He Jie, Chairman of the Shenzhen Municipal Committee of the RCCCK, discussing Shenzhen's new mission in comprehensive reform. He Jie stated that relevant departments in Shenzhen are currently formulating relevant listing rules, with the expectation of piloting the secondary listing of red-chip stocks, which will provide more convenient and efficient listing channels for science and technology innovation enterprises. He Jie emphasized that the blueprint for comprehensive reform "2.0" has already been drawn up, and the key lies in effective implementation. Many reforms are still framework-based and directional in nature, requiring integration with practical needs, particularly achieving an organic combination of "top-level design and local initiatives." 3. According to statistics from Choice, as of June 14th, 105 public offering products (with multiple share classes combined) have been liquidated since the beginning of this year. In terms of termination reasons, 83 products were terminated due to the net asset value of the fund falling below contractual limits, 21 products were terminated with the consent of the fund holders' meeting, and 1 product was terminated due to contract expiration. Among these, equity liquidations accounted for 70%, with industry-themed funds in sectors such as new energy, pharmaceuticals, and consumption becoming the "hardest-hit areas." 4. The China Securities Regulatory Commission (CSRC) issued an administrative penalty decision. During the period in question, the account group controlled by Tu Wenbin had significant capital advantages, manipulating the prices of multiple stocks through continuous trading, driving up stock prices, large-volume limit-up orders, and false order placements and cancellations. The CSRC decided to impose penalties, with the total amount of fines and confiscations reaching nearly 77 million yuan. 5. On June 15th, a reporter learned from China National Nuclear Corporation (CNNC) that yttrium-90 glass microspheres irradiated by Qinshan Nuclear Power's "Hefu No. 1" reactor were successfully removed from the reactor and passed relevant detections, marking China's successful mastery of the technology for producing yttrium-90 in commercial reactors, enabling mass production. 6. The opening forum of the Golden Goblet Film Forum at the 27th Shanghai International Film Festival was held on June 15th. Participants unanimously agreed that the current film market has reached a moment for a fresh start. Facing industry challenges, chairmen and executives of multiple listed film companies discussed solutions, with directions such as increasing non-ticket revenue, reducing the number of films produced, and lowering production costs emerging as potential solutions. Corporate News 1. Kweichow Moutai announced an adjustment to its 2024 annual profit distribution plan, increasing the dividend per share to 27.673 yuan/share. 2. On June 14th, POP MART Korea issued an announcement stating that due to concerns about potential safety accidents at recent offline sales venues, the company has decided to temporarily suspend offline sales of the entire LABUBU plush toy and LABUBU plush keychain series. 3. GAC Group issued a commitment announcement, stating that it will ensure the fulfillment of dealer rebates within two months from today. 4. Guotai Haitong Securities announced that it has received an administrative licensing decision from the People's Bank of China (PBOC) for the issuance of 15 billion yuan in science and technology innovation bonds. 5. Yong'an Pharmaceutical announced that the company's stock price has risen significantly in the short term, severely deviating from the overall market trend, and there is a high risk of speculation. 6. *ST Tongzhou announced that the company's stock will be suspended for one day on June 16, and starting from June 17, the delisting risk warning and other risk warnings will be revoked, with the stock abbreviation changing to Tongzhou Electronics. 7. Haimo Technologies announced that the controlling shareholder and actual controller are proposed to be changed to Fan Zhonghua, and the stock will resume trading from June 16. 8. *ST Haiyue announced that it will repurchase company shares worth 30 million to 50 million yuan during the delisting consolidation period. 9. Huayang New Materials issued a stock trading risk warning announcement, stating that the company does not possess the attributes of rare earth permanent magnets. 10. Honghui Fruits & Vegetables announced that the controlling shareholder is proposed to be changed to Shenze Ruitai, and the company's stock and convertible bonds will resume trading from the opening of the market on June 16. 11. Ruifeng Gaocai issued an announcement in response to rumors about the board secretary being placed under investigation, stating that the investigation does not involve the company's stock trading and that current production and operations are normal. 12. Haers stated on an interactive platform that its past cooperation with POP MART has been terminated, and the scope of the previous cooperation did not include Labubu. Global Markets 3. According to CCTV News, US President Trump stated on social media in the early hours of the 15th (Eastern Time) that "the United States has nothing to do with tonight's attacks on Iran" and warned that if Iran attacks the US in any form, the US armed forces will "respond with full force on an unprecedented scale." In addition, Trump claimed that the US could "easily facilitate an agreement to end this bloody conflict," but did not elaborate on how the agreement would be reached. 4. On Friday last week, US stocks opened lower and continued to decline, with all three major indices falling more than 1%. The Dow Jones Industrial Average fell 1.32% for the week; the Nasdaq Composite fell 0.63% for the week; and the S&P 500 index fell 0.39% for the week. Most large-cap tech stocks declined, with Intel falling more than 3% and Nvidia falling more than 2%; Tesla rose approximately 2%. The energy sector bucked the trend and surged, with Houston Energy rising more than 119% and US Energy rising more than 55%. Drone manufacturer Airo's US IPO closed up 140% on its first day. Oracle rose more than 7% for the week, nearly 24%, marking its best weekly performance since 2001. Most popular Chinese ADRs closed lower, with the Nasdaq Golden Dragon China Index falling 2.74%. Fangdd Network fell more than 9%, WeRide fell more than 7%, Kingsoft Cloud fell more than 6%, XPeng Motors fell more than 5%, Alibaba, Bilibili, and Li Auto all fell more than 3%, and JD.com, Pinduoduo, and Baidu all fell more than 2%. Investment Opportunities Reference 1. Xiaomi Auto unveils solid-state battery patent; institutions say eVTOL + humanoid robots open up incremental space for solid-state batteries Intellectual property information from Tianyancha shows that recently, Xiaomi Auto Technology Co., Ltd. applied for a patent titled "Solid-state battery composite electrode, preparation method, and solid-state battery comprising the composite electrode," which has been made public. The abstract indicates that the solid-state battery composite electrode disclosed in the patent effectively shortens the transmission path of metal ions in thick electrodes and accelerates the transmission rate of metal ions between electrodes, featuring high electrode loading and C-rate performance. Dongxing Securities stated that with the gradual entry of fields such as eVTOL and humanoid robots into a phase of rapid growth, along with the release of technological solutions and industrialisation application timelines for all-solid-state batteries by various enterprises, driven by sustained new demand, the application and implementation of solid-state battery technology is expected to accelerate, with the industrialisation process already showing an accelerating trend. Battery enterprises with a first-mover advantage in solid-state battery technology and leading application deployment will primarily benefit. Sihan Industry Research Institute believes that AI is empowering industrial transformation, with eVTOL and humanoid robots opening up incremental space for solid-state batteries. 2. AI inference demand is accelerating, and this solution has become a focus for self-development among major cloud providers According to media reports, while GPUs have advantages in general-purpose accelerated computing scenarios, they face challenges such as high costs and power consumption in specific scenarios, prompting buyers to seek alternative types of chips for support. Customised ASIC chips have become a focal point of attention. Recently, NVIDIA introduced NVLink Fusion, directly targeting Broadcom's high-growth market: AI custom chips. This also means there are new entrants in the ASIC chip market. As AI models become increasingly powerful, the demand for AI inference is accelerating, with ASIC customised solutions offering better energy efficiency and cost advantages becoming a focus for self-development among major cloud providers, with upgraded versions typically released every 1-2 years. Guojin Securities believes that compared to GPUs, ASICs can be custom-developed for specific business scenarios, and the substantial demand for inference computing power and cost reduction will effectively drive the growth of ASIC demand. They are optimistic about ASIC design service companies, Ethernet white-box switch producers, Ethernet switching chip producers, AEC producers, and PCB producers. 3. Against the backdrop of strong supply constraints and a concentrated industry structure, these chemicals are currently in a price upcycle Institutions have pointed out that as temperatures rise, the demand for refrigerant maintenance is gradually becoming robust, with genuine sales boosting channel price confidence. Downstream air conditioner production schedules from June to August remain high on a YoY basis, with the demand side continuing to provide positive feedback. The long-term bullish trend for refrigerants remains unchanged. Against the backdrop of equal domestic and international trade quotes for mainstream refrigerants, the performance release certainty of refrigerant-related producers has strengthened. Founder Securities pointed out that refrigerants are one of the largest and most widely applied segments in the fluorochemical industry. The Montreal Protocol has driven the generational transition of refrigerants. Currently, the refrigerant industry is in a phase of accelerated reduction of second-generation refrigerants, quota freezing of third-generation refrigerants, and patent protection for fourth-generation refrigerants. Against the backdrop of strong supply constraints and a concentrated industry structure, second- and third-generation refrigerants are currently in a price upcycle. The downstream air conditioning and automotive industries are expected to maintain growth trends, with third-generation refrigerants expected to see both volume and price increases. In addition, fluorine-containing fine chemicals are a niche but high-quality segment within the fluorine chemical industry, characterized by high product barriers and added value, with significant growth in market demand in recent years. With the development of emerging industries such as new energy and electronics, their market size continues to expand. 4. Institutions Say Defense and Military Demand Expected to Recover, with Long-Term Growth Certainty in Relevant Sectors Research reports from institutions indicate that, as 2025 marks the final year of the "14th Five-Year Plan" and the planning year for the "15th Five-Year Plan," demand in the defense and military sector is expected to recover. Research reports from Northeast Securities point out that, at the current juncture, as the "14th Five-Year Plan" enters its final year, disruptive factors in the military industry have largely been eliminated, and downstream demand is showing restorative growth. Meanwhile, with the impending 2027 construction target, medium and long-term goals also provide clear guidance for the industry's development: to basically achieve the modernization of national defense and the military by 2035, and to comprehensively build the People's Liberation Army into a world-class military by 2050. Along with the recovery in demand and the gradual optimization of capacity structure, the defense and military sector is expected to see significant improvement, with high safety margins and long-term growth certainty.

On Friday (June 13), US stocks opened lower and continued to decline, with all three major indices closing in the red. At the close, the Dow Jones Industrial Average fell 1.79% to 42,197.79 points; the S&P 500 fell 1.13% to 5,976.97 points; and the Nasdaq Composite Index fell 1.3% to 19,406.83 points. For the week, the Dow fell 1.32%, the S&P 500 fell 0.39%, and the Nasdaq fell 0.63%, all ending a two-week winning streak. In the early hours of Friday (June 13) local time, tensions in the Middle East escalated, causing several popular US stocks to decline significantly during the night session. Affected by geopolitical tensions, international crude oil futures settled sharply higher, rising over 7%. WTI July crude oil futures rose 7.26%, and Brent August crude oil futures rose 7.02%. US COMEX gold futures rose 1.47%. Despite the overall decline in US stocks, sectors such as energy and precious metals rallied against the trend. ExxonMobil rose 2.18%, ConocoPhillips rose 2.4%; VanEck Gold Miners ETF rose 1.74%, and Newmont Corporation rose 3.54%. Louis Navellier, Chief Investment Officer at Navellier & Associates, said, "The lasting damage could be to crude oil prices. If oil prices do not pull back soon, it will certainly cause some damage to US inflation data." Performance of Popular Stocks Most large-cap tech stocks declined, with (ranked by market capitalization) Microsoft falling 0.82%, NVIDIA falling 2.09%; Apple falling 1.38%, Amazon falling 0.53%, Alphabet Class C falling 0.62%, Meta falling 1.51%, Broadcom falling 2.88%, and Tesla rising 1.94%. Oracle rose 7.69%, gaining 23.68% for the week, marking its best weekly performance since 2001. Drone manufacturer AIRO Group surged 140% on its first day of trading. Among Chinese stocks listed in the US, the Nasdaq Golden Dragon China Index fell 2.74%, declining 0.77% for the week. Most popular Chinese stocks listed in the US closed lower, with Pony.ai falling 7.24%, XPeng Motors falling 5.46%, Li Auto falling 3.84%, Alibaba falling 3.22%, NIO falling 3.04%, Pinduoduo falling 2.76%, JD.com falling 2.53%, New Oriental falling 2.33%, Tencent Music Entertainment falling 2.13%, and Baidu falling 2.06%. Company News [Amazon Restructures Healthcare Business] To streamline its structure, Amazon is reorganizing its healthcare business into six "pillars." Previously, Amazon had lost several healthcare executives in recent months. After acquiring PillPack and One Medical and launching some of its own services, Amazon has been struggling to find a consistent strategy in the healthcare market. [AMD Unveils Two Generations of Flagship AI Chips to Compete with NVIDIA; Morgan Stanley: MI400 Could Be a Key Inflection Point] At the AMD Advancing AI conference, AMD showcased its strongest lineup of AI products ever, including flagship AI chips for data centers, AI software stacks, AI rack-level infrastructure, AI network cards, and DPUs, fully demonstrating its ambition to compete with NVIDIA. Morgan Stanley stated that AMD has released the MI350 as expected, but the focus remains on the rack-level MI400/450 products to be launched next year. If these products can be delivered on schedule, they could have a greater impact. [US eVTOL Giant Archer Raises $850 Million] Archer Aviation, a well-known US electric vertical takeoff and landing (eVTOL) aircraft company, announced that it has raised $850 million through the sale of shares. Archer stated that it plans to use the $850 million to support new infrastructure construction and launch an AI-based aviation software platform.

A month ago, Caixin reported that as Trump's erratic tariff policies last month triggered a wave of selling of US assets, a new wave of "de-dollarization" was gaining momentum in Asia. Now, an increasing number of market participants are clearly unable to ignore the "rise" of this trend... On May 26, ASEAN committed in its newly released "Strategic Plan for the ASEAN Economic Community 2026-2030" to promoting the use of local currencies in trade and investment, and proposed measures such as expanding the use of local currencies for settlement and strengthening regional payment connectivity to mitigate the impact of exchange rate fluctuations. Lin Li, Head of Asia Global Markets Research at Mitsubishi UFJ Financial Group (MUFG), told the media that as Asian economies seek to reduce their reliance on the US dollar, particularly by using their own currencies as a medium of exchange to reduce foreign exchange risks, the trend of de-dollarization is strengthening. Although de-dollarization itself is not a new phenomenon, recent developments may have undergone a qualitative change. Investors and officials are beginning to recognize that, even if the US dollar has not been openly weaponized in trade negotiations, it can and has been used as a "bargaining chip." Mitul Kotecha, Head of Asia FX and Emerging Markets Macro Strategy at Barclays, said that this has prompted a reevaluation of investment portfolios that were previously heavily overweight in the US dollar. "Countries are focusing on the fact that the US dollar has been and can be used as a weapon in trade, direct sanctions, and other areas... I think this is the real change over the past few months," he said. Two Forces Accelerating the Evolution A recent report by Bank of America pointed out that the trend of ASEAN moving away from the US dollar is intensifying, driven by two main forces: ① Individuals and businesses are gradually starting to convert their US dollar savings back into local currencies; ② Large investors are beginning to hedge foreign investments more actively. Abhay Gupta, Asia Fixed Income and FX Strategist at Bank of America, said, "The de-dollarization process in ASEAN may accelerate, primarily through the conversion of foreign exchange deposits accumulated since 2022." In addition to ASEAN, BRICS countries, including India and China, are also actively developing and promoting their own payment systems to bypass traditional Western payment systems like SWIFT and reduce reliance on the US dollar. China has also been promoting the use of the yuan for bilateral trade settlement. Barclays' Kotecha pointed out that de-dollarization is a "continuous, slow process," but the gradual decline of the US dollar's status can be witnessed in both central bank reserve shares and trade settlement shares. He specifically mentioned the substantial overseas assets held by countries such as Singapore, South Korea, and China, which have significant potential for repatriating foreign exchange earnings. Andy Ji, Asia FX and Rates Analyst at ITC Markets, shares this sentiment. He points out that economies most reliant on trade will experience a more pronounced decline in demand for the US dollar. He specifically mentioned the economies within the 10+3 cooperation mechanism, which includes China, Japan, South Korea, and the 10 ASEAN member states. As of November last year, over 80% of trade in this region was still denominated in US dollars. Nomura Securities has observed a new trend: Asian investors are strengthening their hedging against US dollar exposure. Nomura notes that as Asian investors increasingly hedge against US dollar risks, a trend of de-dollarization is also emerging. Foreign exchange hedging refers to investors protecting themselves from significant currency value fluctuations by locking in exchange rates to avoid losses in the event of unexpected weakening or strengthening of the US dollar. Craig Chan, Global Head of FX Strategy at Nomura Securities, stated, "Some of the currencies that have recently performed strongly include the Japanese yen, South Korean won, and New Taiwan dollar." He observed that a considerable portion of foreign exchange hedging transactions come from institutional investors such as life insurance companies, pension funds, and hedge funds. According to Nomura Securities, the hedging ratio of Japanese life insurance companies was originally around 44%. In April and May, this figure rose to around 48%. Nomura Securities estimates that the hedging ratio of life insurance companies in Taiwan, China, is around 70%. When investors hedge against US dollar risks, they sell US dollars and buy local or other currencies, which increases demand for the US dollar and causes non-US currencies to appreciate against the US dollar. Is a structural shift underway? Clearly, the rise of this de-dollarization trend has once again raised a "perennial" question: Is this merely a phase of temporary reduction in US dollar holdings, or a more drastic structural shift? In fact, although similar shifts are more pronounced in Asia, the world is actually reducing its reliance on the US dollar—the share of the US dollar in global foreign exchange reserves has declined from over 70% in 2000 to 57.8% in 2024. Recently, due to uncertainties surrounding a series of decisions by the Trump administration, the US dollar has experienced a significant decline this year, particularly in April. Since the beginning of this year, the US dollar index has fallen by more than 8%, marking the worst performance in the first five months of the year in history, according to Dow Jones Market Data. However, some industry observers also state that despite many countries reducing their reliance on the US dollar, it remains challenging to replace the US dollar as the primary reserve currency. Cedric Chehab, chief economist at BMI, said that, for now, this may still be merely cyclical. He pointed out that it could only transform into a structural trend if the US implements sanctions more aggressively, prompting central banks to be wary of holding excessive US dollars, or if governments mandate pension funds to increase their holdings of domestic assets. Of course, the first threat mentioned by Chehab may have already occurred to some extent. What undoubtedly concerns many foreign entities the most is undoubtedly "Clause 899" in Trump's latest tax reform bill. If approved by Congress, this clause would allow the US to impose additional taxes on companies and investors from countries it deems to be implementing punitive tax policies. George Saravelos, global head of FX research at Deutsche Bank, said that this would mark the formal incorporation of the weaponization of US capital markets into law. Francesco Pesole, FX strategist at ING, pointed out that "Trump's erratic trade policy decisions and the significant depreciation of the US dollar may be encouraging a faster shift towards other currencies." Peter Kinsella, global head of FX strategy at Union Bancaire Privée, reminded people to distinguish between the weakening of the US dollar and de-dollarization. "The US dollar has gone through multiple cycles of depreciation, yet its hegemony as a reserve currency remains unchanged," he added. Even with reduced exposure, the US dollar's core position in trade invoicing remains solid—over half of global trade was still settled in US dollars in April this year. However, Kinsella also mentioned that, "the long-term declining trend in the US dollar's status as a reserve asset will continue, and I firmly believe that gold will be the biggest beneficiary." According to a report released by the European Central Bank on Wednesday, gold accounted for 20% of global official reserves in 2024, making it the second-largest reserve asset globally, second only to the US dollar at 46%.