Guosen: The European and Japanese central banks will see their first interest rate hike of the year, focusing on the marginal tightening of global liquidity.

Guosen released a research report stating that in June, the European Central Bank and the Bank of Japan will most likely initiate the first interest rate hike of the year. After experiencing relative stability in the first half of the year, global macro liquidity will reach a tightening inflection point. Additionally, the opening of the World Cup on June 11 may bring some negative impact on short-term trading liquidity. Suggestions for industries: 1. Energy, new energy: Uncertainty still exists in the current US-Iran negotiations. As we enter the summer, inventory consumption will accelerate. It is important to closely monitor oil futures prices, midstream inventory replenishment, LNG natural gas prices, in order to prevent unexpected upward pressure on oil prices in the summer. 2. High dividend stocks: Considering the current upward trend in treasury futures, high dividend stocks remain an important investment direction for the year. This includes utilities, telecommunications operators, banks, conglomerates, real estate, and some companies in the consumer sector. 3. Semiconductors and AI hardware: Represented by the Hong Kong stock information technology sector, semiconductors and AI hardware significantly outperformed the index in May, including AI PCs, semiconductors, hardware, electronic components, etc. The logic behind their offensive is the expectation that overseas AI capital expenditures will further increase in Q2. 4. Internet NETDRAGON: Currently, companies under the Hong Kong Hang Seng Internet NETDRAGON umbrella have been releasing AI products continuously. After half a year of adjustment, their market expectations and valuations are relatively low. The focus going forward will be on their performance models. Main points by Guosen: United States: High interest rates may be maintained until 2027 Capital expenditures in AI by leading US technology companies have been revised upward to $800 billion (by 2026) and $1.1 trillion (by 2027). The profit growth rate of the S&P 500 has been revised up to 26% year-on-year, and the quarterly profit growth rate for Q2 2026 to Q1 2027 is at a high level for four quarters. Before the second quarter reports, the market still has strong expectations for investment adjustment. Due to the fluctuating situation in Iran and the increase in inflation in April, the market has accepted that high interest rates will be maintained until 2027. With global oil inventories declining and summer being the peak season for energy consumption, it is important to track spot prices, LNG gas prices, and refinery inventory replenishment. Domestic market: Sectors are showing clear differentiation Due to the rise in PPI and continued improvement in industrial profits in April, it indicates that the profits of leading companies and profitable companies have significantly improved, pulling up the overall market. As we enter the first quarter reporting season, comparing the performance correction range and stock price changes of different style sectors since April, a weak correlation is observed. The biggest change comes from the downward revision but significant rise in growth stocks' performance, while cyclical stocks have seen upward revision but stagnant growth. This differentiation indicates the need for attention, as the sustainability of PPI increase remains to be seen with monetary and output indicators not synchronously rising. Risk warning: Uncertainty in the Middle East situation, uncertainty in US tariff policies, uncertainty in overseas interest rate reduction pace, uncertainty in competition dynamics in some industries.