CITIC: Global Markets Enter Consolidation Phase as Q3 Financing Pressures Mount

According to CITIC's research report, since June, as semiconductor stocks began adjusting, global markets have entered a "mid-season break" consolidation phase following a steep rally. The firm expects continued market adjustments in Q3, driven by monetary policy uncertainty, surging financing pressure, and contagion risks from Japan and South Korea.

Key Q3 financing headwinds include U.S. Treasury net issuance of $671 billion (versus $189 billion in Q2), corporate bond net issuance exceeding $460 billion, and elevated leverage in Korean equities amid a 28% pullback in SK Hynix and 22% decline in Samsung from recent highs. CITIC warned of potential yen carry trade reversal risks as USD/JPY surged past 160, alongside vulnerable Korean market structure that could transmit shocks to U.S. semiconductors. However, the firm reiterates that underlying structural support from AI investment cycles remains intact, and expects market action to rotate toward AI applications, industrial, and commodities sectors following consolidation.