The Zhitong Finance App learned that Citigroup's latest Global Stock Market Position Model (EMP) report shows that global investor positions continue to rotate from growth-sensitive exposure to value markets. The report points out that US stock positions have weakened overall, and long positions in the NASDAQ have plummeted from a moderate bullish level in October to close to a bearish range; the European market is favored by incremental capital due to value rotation; while the differentiation in the Asian market intensifies, South Korea's KOSPI and Japan's Nikkei 225 Index short positions are highly concentrated, making it a market with the most asymmetrical global position structure. Once market sentiment stabilizes, it is easy to trigger large-scale short recovery markets.
US stocks: New bears lead the downside, and the NASDAQ's risk-taking momentum is weakening
Citi pointed out that US stock positions deteriorated widely last week, with the most severe weakness concentrated on the NASDAQ. The net outflow from the NASDAQ reached 11.1 billion US dollars, including 6.5 billion US dollars in short positions and 6.8 billion US dollars in closed positions, pushing net long positions closer to a bearish range, which clearly collapsed from last month's moderate bullish level. The S&P 500 capital flow was relatively moderate, but it was also dominated by additional bears of US$15.4 billion, turning positions into a bearish range; Russell 2000 small-cap stocks continued to be deeply bearish.
It is worth noting that although the S&P 500 fell 2.7% and the NASDAQ fell 3.4% last week (a sharp drop of 4.4% and 5.5% in a single day last Thursday), position response was unusually lackluster — standardized S&P 500 positions fell only 0.5 points. Citi believes this shows that investors are “relatively inactive” in the face of one of the worst weekly pullbacks during the year, consistent with the already sluggish level of participation. The high level of uncertainty before the midterm elections inhibited meaningful participation. However, Citi also suggests a reverse risk: Russell 2000 small-cap bears have a high level of profit. If sentiment stabilizes, the possibility of profit settlement and short recovery increases, and the market is vulnerable to phased shortening.
Europe: Value rotation attracts incremental bulls, but concentration risks loom
In stark contrast to the increasingly bearish background of US stocks, European positions have remained constructive but not stretched excessively. The European Stoxx 50 Index attracted a net inflow of about 3.9 billion US dollars, with the addition of 4.2 billion US dollars in longs and 600 million dollars in bears. Citi sees this as “the first time investors have convincingly re-engaged after weeks of declining engagement.” European bank stocks became the brightest improvement point — the $1.1 billion short recovery boosted their positions and recorded the biggest change in the European sector in a week; the German DAX index's capital flow was more cautious, and the FTSE index was basically flat.
However, Citi also warns of the vulnerability of Europe's Stoxx 50: Currently, nearly 90% of the bulls are losing money. If the rotating capital supporting positions is reversed, the market will bear the brunt of it. In contrast, DAX's long and short sides are under pressure but their exposure is limited. FTSE and European bank stock positions are basically neutral, and the risk is generally manageable.
Asia: Technology-sensitive markets slide to bearish extremes, with KOSPI and Nikkei becoming the “most asymmetrical” market
Positional differentiation within Asia has widened markedly. Technology-sensitive markets have further slipped to bearish extremes, while rotating beneficiary markets recorded their biggest improvement over the past few months. Korea's KOSPI recorded the biggest weekly position deterioration in any tracking index, mainly due to the addition of $1.9 billion in new shorts; Nikkei 225 continued to decline for four weeks, and positions approached extreme levels.
Citi said bluntly that the KOSPI and Nikkei Index “present the most asymmetrical position structure in the world, and even if sentiment only moderately improves, it may trigger a shorting response that exceeds expectations.” On the other hand, the addition of bulls drove improvements in China's A50 positions. The Hang Seng Index benefited from bear recovery, while the S&P/ ASX 200 index maintained the healthiest position trajectory in the region.