Welcome to Daily Stock's Global Market Analysis Lounge.
Core Summary
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As global stock markets enter a phase of extreme volatility, the possibility is being raised that the People's Bank of China (PBOC)'s accommodative monetary policy will act as a new downward support level for the Shanghai Composite Index.
While fundamentals in the US and Europe show signs of slowing, China is attempting an independent macroeconomic decoupling cycle through liquidity provision and domestic demand stimulus.
Current Situation Summary
As of intraday trading on April 5, 2026 (provisional), the NASDAQ index recorded 21,879.18, freezing investor sentiment, and the KRW/USD exchange rate soared to 1,510.10 won, strongly reflecting macro instability.
At the same time, the KOSPI and KOSDAQ point to 5,377.30 and 1,063.75, respectively, experiencing concurrent volatility.
According to Daily Stock's proprietary Fear & Greed Index, the NASDAQ is currently in a state of Extreme Fear (19.3), and the KOSPI has also entered the Fear (25.4) zone.
In detail, the NASDAQ Fear & Greed recorded Extreme Fear (14.5) 1 week ago, Fear (31.6) 1 month ago, and Extreme Fear (12.1) 3 months ago. The KOSPI Fear & Greed showed Extreme Fear (17) 1 week ago, Extreme Fear (19.4) 1 month ago, and Greed (61.3) 3 months ago.
On the other hand, while the Shanghai Composite Index's current day quote is unconfirmed (based on the latest available data), relative relief is building as the PBOC recently announced it would maintain an "appropriately accommodative monetary policy" throughout 2026.
In contrast to the US, where the March 2026 S&P Global Composite PMI slowed significantly to 50.3, stimulating recession fears, China appears focused on defending market liquidity through proactive government bond purchases and reserve requirement ratio (RRR) cuts.
Financial Analysis
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Despite macroeconomic uncertainties, earnings forecasts for mainland China-listed companies are gradually being revised upward, driven by the government's AI infrastructure investments and localization policies.
In particular, high-tech companies centered around the STAR Market and ChiNext are expected to see stable earnings recovery based on funding support through the central bank's structural policy tools.
Conversely, Europe is experiencing pressure on corporate profit margins due to sticky inflation and sluggish regional consumption, while US companies are also conservatively lowering future earnings guidance in the aftermath of a prolonged high-interest-rate environment.
This tripolar fundamental decoupling phenomenon across the US, Europe, and Asia could provide a rationale for global capital to shift toward high-quality Asian stocks with enhanced valuation appeal and the Chinese market, which has clear policy beneficiaries.
Valuation
Currently, the central bank policy stances and stock market valuations of the three major economic blocs show very distinct differentiation.
While the European Central Bank (ECB) remains cautious about inflation control despite gradual easing, and the Bank of Japan (BOJ) faces accumulated fatigue from interest rate normalization, only the People's Bank of China (PBOC) has secured explicit room for rate cuts.
| Category | Monetary Policy Stance (As of 2026) | Fundamental Core Issues | Index Relative Valuation Appeal |
|---|---|---|---|
| **US (Fed)** | Limited cuts amid prolonged high rates | Composite PMI slowdown & services contraction | Overvaluation burden & extreme fear sentiment |
| **Europe (ECB)** | Gradual easing amid hawkish tone | Stagnant growth & sluggish regional consumption | Undervalued but lacking earnings momentum |
| **China (PBOC)** | Appropriate easing & RRR/rate cuts | AIoT investment & domestic stimulus policy | High valuation appeal (policy premium) |
| **Japan (BOJ)** | Easing reduction & seeking rate normalization | Governance reform & yen volatility | Accumulated fatigue from short-term rally |
The price-to-earnings ratio (PER) of the Shanghai Composite Index remains relatively low compared to major global indices, suggesting ample room for multiple expansion if policy momentum translates into corporate fundamentals.
Notably, as global liquidity responds to the price volatility of raw materials such as copper and oil, the Chinese stock market, backed by continuous infrastructure investment, could emerge as a structural alternative for portfolios.
Expert & Institutional Analysis
Major domestic and foreign research institutes and global investment banks (IBs) are issuing positive outlooks for the Shanghai Composite Index and China's macroeconomic direction in 2026.
For instance, KB Securities Research has presented a high 2026 target of 4,530 points for the Shanghai Composite Index, citing the expansion of AI infrastructure and the preference for tech stocks in China.
Furthermore, global IBs anticipate that the PBOC will implement up to a 20bp policy rate cut and up to a 100bp RRR cut to stimulate the economy this year.
Such aggressive monetary easing measures can expand the lending capacity of commercial banks and stabilize the yuan exchange rate, ultimately acting as a catalyst to simultaneously promote real economic recovery and foreign capital inflows into the stock market.
Risk Factors
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The most significant potential risk is the possibility of trade friction and deepening economic decoupling between the European Union (EU) and China.
The EU plans to activate practical trade defense measures against low-cost Chinese imports, such as imposing fixed tariffs on small-value parcels starting in July 2026, making a blow to related export companies inevitable.
Additionally, global supply chain disruptions caused by prolonged geopolitical instability in the Middle East could fuel a surge in international oil prices, acting as upward pressure on import prices.
Internally, if the slow recovery of the real estate market and sluggish household consumption persist in China, monetary policy alone may face limitations in achieving the economic growth target of 4.5% to 5%.
Investment Perspective Summary
Currently, the global stock market is suffering from the double whammy of extreme fear sentiment and slowing macroeconomic indicators, but the Chinese stock market has secured relative downward rigidity thanks to the government's firm will to stimulate the economy.
If the US high-interest-rate environment and strong dollar pressure subside to some extent, it is necessary to examine a scenario where the Shanghai Composite Index shows distinct relative strength amid capital shifts toward emerging market (EM) assets.
Therefore, rather than feeling anxious about short-term global index volatility, a selective approach to observing AI value chain and advanced infrastructure-related stocks linked to China's long-term growth plans may be effective.
In an era of tripolar decoupling where the fundamentals of the US, Europe, and Asia are heading in different directions, a diversification strategy that actively utilizes the differences in each country's policy stance is required.
Investment Checklist
- **PBOC Monetary Policy Direction:** Are you regularly checking the timing of the PBOC's additional reserve requirement ratio (RRR) and policy rate cuts?
- **Global PMI Spread:** Are you objectively comparing the recovery strength of China's manufacturing indicators against the extent of the composite PMI slowdown in the US and Europe?
- **Realization of EU Trade Regulations:** Have you examined the ripple effects that Europe's tariff policy on China, scheduled to take effect in July 2026, will have on related export stocks and supply chains?
- **Raw Material Cycle Linkage:** Are you closely tracking the margin changes of beneficiaries of China's infrastructure policies during surges in global copper and Brent crude oil prices?
- **Foreign Capital Inflow Trends:** Are you consistently monitoring the inflow of funds into the mainland China stock market through emerging market funds during periods of yuan exchange rate stabilization?