State Street: In June, institutions slightly reduced their holdings in U.S. stocks to take profits, while funds continued to flow into the Taiwan stock market

According to State Street, institutional funds actively bought U.S. stocks at the beginning of June, with the technology sector being particularly favored, despite being in a clearly overweight position. As the market progressed during the period, this positive sentiment gradually cooled, with buying continuing but at a reduced intensity. The risk appetite indicator for institutional investors surged significantly, reaching a high range not seen in the past four years, indicating that they were not disturbed by various short-term negative factors, including inflation. Although institutions slightly reduced their stock holdings and marginally increased cash, this adjustment seemed more like a profit-taking behavior; looking at the internal asset allocation, the market remains very optimistic about U.S. stocks and the technology sector.

"In June, stock holdings decreased by 12 basis points, cash allocation increased by 16 basis points, while fixed income asset allocation remained basically flat." State Street believes this trend further illustrates that increased market volatility has prompted institutional investors to continue dynamic adjustments between cash and stocks; due to uncertainties in interest rate prospects, investors generally hold a cautious attitude towards extending bond durations.

In major Asian markets, State Street noted that investors continued to reduce their overweight positions in South Korean stocks but continued to buy into the significantly overweight Taiwanese market. The Chinese market, which has been underweighted by funds for many years, still deserves close attention—funds continued to flow in net during June, and institutional investors gradually reduced their underweight positions, reflecting ample room for further accumulation.

Regarding the complex factors intertwining and disturbing market trends in the first half of 2026, Daniel Gerard, Senior Multi-Asset Strategist at State Street, stated that institutional investors have been weighing the multiple impacts of geopolitical conflicts, global trade patterns, rising inflation, unprecedented market concentration, and the uncertainties brought about by the new chair of the Federal Reserve, Kevin Warsh.

The stock market fell less than 1% in June, and this seemingly stable performance masked larger fluctuations driven by market concerns during the month. Gerard pointed out that there have been no significant signs of panic selling in the market this year; even in the face of numerous disruptive factors, institutional investors still possess a strong risk appetite. This is specifically reflected in the significant rebound of State Street's investor risk appetite indicator for the month, indicating that asset management institutions can overlook short-term negative disturbances and focus on long-term corporate earnings and interest rate cycle trends.

Daniel Gerard stated that although the stock allocation ratio slightly declined in June, which is basically consistent with the overall market performance, institutional stock holdings remain at a high range not seen in the past 20 years. However, the issue is that there have indeed been marginal changes in institutional behavior during this period.

Gerard continued that the previously pessimistic investment sentiment towards European stock markets reversed in June, with buying funds in the European market mainly concentrated in the financial sector; the Danish market, which has a very high weight in the pharmaceutical industry, also saw a shift in sentiment—institutional funds shifted from underweight to increasing holdings. Germany and France had previously been significantly underweighted, but their trends diverged in June: institutional investors continued to reduce their holdings in German stocks while re-accumulating in the French market