High Frequency Monitor: Valuation rethink

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High Frequency Monitor: Valuation rethink

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High Frequency Monitor

Valuation rethink

Increasing AI competition prompts valuation rethink 20 July 2026

Global equities fell -1.6% last week as AI stocks and escalating Middle East tensions Quant Strategy

weighed on performance. Japan was the worst performing region (-4.1%) and the US Global

fell -1.5%, while Europe posted a small gain (+0.1%). By global sector, Energy jumped

+4.4% as oil prices increased 15.5%, while the Semis sector fell -8.1% on disruption

potential from new large language models from China. Indicators of the global cycle and

earnings revisions for the Semis sector remain strong, suggesting the recent weakness

may be a valuation rethink rather than the beginning of a sustained downturn in AI- Nigel Tupper >>

Quant Strategist

related stocks and the broader market. Merrill Lynch (Australia)

+61 2 9226 5735

Reversal in investment theme performance nigel.tupper@bofa.com Amar Vashi >>

Last week, the two best performing global themes year-to-date were among the worst Quant Strategist

performers last week, including AI Compute (-11.0%) and Photonics (-10.2%). Merrill Lynch (Australia) amar.vashi@bofa.com

Symmetrically, the best performing global themes last week were the YTD laggards, Sumuhan Shanmugalingam >>

including SaaS (+2.6%), Consulting (+1.9%), and Luxury Lifestyle (+1.6%). Quant Strategist

Merrill Lynch (Australia)

Highest ranked global sectors: Semis, Tech Hardware sumuhan.shanmugalingam@bofa.com

Despite the price dip, Triple Momentum remains strongest for Semis and Tech

Hardware. Among large and liquid stocks globally (min $20bn market cap and $20mn

ADTV), the Triple Momentum Rank is highest for King Slide, Yageo, Yuanta Financial,