The 30-year US Treasury yield briefly touched 5.337% overnight, marking its highest level since 2007. This accelerated climb in bond yields has once again become the focal point for global asset pricing, with A-shares experiencing notable declines today as a result. Market participants are increasingly concerned about the potential fallout for equity markets, particularly within the technology sector.
From an objective standpoint, rising US Treasury yields typically exert downward pressure on equity valuations in most periods, yet the primary impact tends to concentrate on the denominator side of valuation metrics. Historical evidence suggests that during major industrial trend-driven rallies, a sufficiently robust earnings outlook on the numerator side can effectively offset the drag from rising risk-free rates, enabling share prices to advance despite the headwinds from higher discount rates.
History provides numerous such precedents. During the tech boom of the 1990s, the Federal Reserve initiated a rate-hiking cycle in the second half of 1999 following the Kosovo conflict, yet this did not terminate the prevailing industrial trend. Notably, the period of consecutive rate increases coincided with the steepest slope of the rally and the most fervent phase of industrial investment sentiment, leaving behind a substantial "tail-end trading opportunity." The core rationale was that the sector's fundamental momentum remained consistently validated throughout this window.
Similarly, in the new energy rally of 2021, the US economic recovery and surging inflation expectations drove a rapid ascent in Treasury yields. Despite these conditions, the new energy sector continued to strengthen against the tightening liquidity backdrop, propelled by robust earnings growth and industrial momentum, ultimately emerging as the dominant market theme for the entire year.
For the current AI-driven rally, the market has largely adapted to a tightening macro liquidity environment following the earlier disruptions of the Wash上台 episode and US-Iran tensions in the first half. The primary pricing driver has now shifted toward earnings, and after the substantial correction in July, the contribution from valuation expansion has become relatively modest.
Our analysis breaks down the earnings and valuation contributions to year-to-date gains across major global technology markets and key A-share tech growth sectors. Whether examining tech markets in the US, Japan, China, or South Korea, or A-share sectors such as computing hardware and advanced manufacturing, valuation is no longer the primary contributor to gains—in many cases, it has actually become a drag. Earnings growth is now the principal force driving the advance in tech growth assets this year.
Consequently, while short-term fluctuations in the denominator side may persist, the shift in the market's primary pricing driver this year means that greater emphasis should be placed on the validation of fundamental momentum and industrial trends on the numerator side. Once the emotional turbulence subsides, the focus must ultimately return to assessing sector fundamentals and the trajectory of industrial developments.
Risk factors include economic data volatility, policy easing falling short of expectations, the Fed's rate cuts underperforming projections, and escalation of geopolitical tensions.