Weekly update

Crypto Funds Launch at Fastest Pace Since 2021 as ETFs Fuel Hype

In a move considered unlikely last week, the SEC approved a proposal from Cboe Global Markets Inc., Nasdaq, and the New York Stock Exchange to list products tied to Ether, the second largest digital asset according to Bloomberg . Fund managers still need additional SEC approval to launch these products, with no clear timeline. If approved, it remains uncertain if Ether portfolios will generate the same demand as U.S. spot-Bitcoin ETFs, which have amassed $57 billion. Issuers like VanEck, ARK Investment Management, BlackRock Inc., and Fidelity Investments are vying to launch Ether vehicles first.

Ether slid 3% to $3,640, reducing its weekly gain on ETF anticipation to 18%, still its best weekly performance since early 2023. The broader crypto market, including Bitcoin, also retreated. Alex Kuptsikevich of FxPro noted this selloff is a typical "buy the rumour, sell-the-fact" reaction. Last week, companies expected the SEC to reject the Cboe plan by the Thursday deadline. Additional approval is still needed. Backers hope eventual listings will attract retail and institutional investors reassured by the ETF framework.

Japanese stocks shine at Hong Kong’s Sohn conference

Japanese stocks were the highlight at the annual Sohn Hong Kong Investment Leaders Conference, alongside notable interest in South Korean stocks and Rio Tinto Group, the world’s second-largest metals and mining company. Reuters reported that the conference, featuring pitches from 14 prominent funds, showed a strong preference for Japanese companies, especially in outsourcing, robotics, and pharmaceuticals. In contrast, only two funds pitched Chinese stocks, down from seven last year.

South Korea also garnered attention, with Eashwar Krishnan of Tybourne Capital Management predicting that Samsung Electronics’ share price could more than double in three years, driven by the adoption of AI. Chris Wang, founding partner of CloudAlpha Capital Management, chose HD Hyundai Electric, believing it will benefit from the AI boom. Darren Kang, co-founder of Life Asset Management, highlighted DN Automotive, arguing its share price could double.

Hedge funds sell US stocks at fastest rate since January

Hedge funds sold U.S. equities at a rate not seen since early January, marking a significant shift after five consecutive weeks of net buying. A report by Goldman Sachs' prime brokerage highlighted this change, noting that the sell-off coincides with positive economic growth indicators and the Federal Reserve's firm stance on maintaining elevated interest rates for an extended period. The report indicated net selling across both macro products, such as indexes and ETFs, and single stocks. This past week marked the first net selling of macro products in six weeks, while single stocks saw their third consecutive week of net sales, with the highest notional net selling recorded this year.

The selling was widespread across all 11 U.S. sectors for the week ending May 24, with industrials, information technology, financials, energy, materials, and real estate leading the downturn. Cyclical sectors, in particular, experienced the most significant notional net selling since December. The industrial sector was notably impacted, with net selling for 11 consecutive sessions. This sector, including machinery, ground transportation, professional services, and passenger airlines, saw the most substantial net selling over any two-week period in more than a decade.