Global Market Correction: Causes, Perspectives, and Investment Strategies

According to a report by CITIC Securities Wealth Management (Hong Kong) [1], global stock markets showed a divergent trend in 2025, with a significant recent decline and correction. The main reasons include concerns about overvalued AI, changes in Fed rate cut expectations, geopolitical risks, and profit-taking. The U.S. Nasdaq Index fell 7%, the A-share ChiNext Index dropped 4.02%, and the Hong Kong Hang Seng Tech Index plummeted 7.2%. Huatai Strategy pointed out [2] that current market valuations are close to a reasonable central level, and an overcorrection would provide an allocation opportunity. Experts recommend focusing on safe-haven assets such as gold and short-term U.S. bonds, while seizing value investment opportunities in tech growth stocks like AI, domestic computing power, and innovative drugs, and maintaining a balanced stock-bond allocation [3].

Reddit users believe [4] that the global stock market correction has commonalities, with the core reason being high valuations due to large previous gains, and the catalysts being expectations of no Fed rate cut in December and concerns about the AI+ bubble. The U.S. Nasdaq Index rebounded 63% earlier, with valuations higher than in 2020; historically, after a sharp rise, the correction幅度 is often over 15%, so they plan to deploy after the Nasdaq falls more than 15%. The main line of A-share technology is significantly affected by U.S. stock technology, so the probability of an independent market is low; there may be a rebound after a sharp drop, but it needs U.S. stocks to stabilize.
Snowball user “Nunu’s Big Tree” mentioned in a post [5] that this correction is global and not unique to A-shares. After the U.S. Nasdaq Index rebounded 63%, it has recently corrected nearly 9%, with valuations higher than in 2020; we need to be alert to a deep correction triggered by the AI bubble. The A-share technology sector is divergent, and Hong Kong stock technology has reached the annual line position. It is recommended to buy on dips in sharply falling hard technology, Hong Kong stock technology, innovative drugs, and military industry, and reduce positions after a rebound; long-term layout of bottoming consumption, with an overall cautious position, waiting for the spring plowing market after full adjustment.

Both research and social media perspectives agree that the core drivers of the global market correction are overvalued AI and changes in Fed policy. The difference is: research institutions believe that current valuations are close to a reasonable central level and can increase positions during overcorrection; while social media users are more cautious, tending to wait for a deeper correction (such as Nasdaq falling 15%+) before deploying. In terms of investment impact: conservative investors should allocate low-risk assets (treasury bonds, money market funds); steady investors adopt a balanced stock-bond strategy; active investors can selectively layout tech growth stocks, but need to use derivatives to hedge risks. Diversified investment and dynamic adjustment are key strategies to cope with current market volatility.