New Global Liquidity Landscape

1. Core Situation: The World Enters the Era of "Great Liquidity" 2.0
The global narrow money supply (M1) is currently at a historic turning point. With the continuous "water release" from the two major engines, China and the United States, global monetary expansion is not just a numerical increase, but a systematic dilution of currency purchasing power.
* Global total: Set a historical record of 45 trillion dollars, meaning that the "liquidity" within the global financial system has reached an unprecedented thickness.
* China Engine: China's M1 supply has risen to 16.5 trillion USD (approximately 112.8 trillion RMB), accounting for about 37% of the global share. Since 2025, the People's Bank of China has revised the M1 statistical caliber (including personal demand deposits), which is not only an improvement in statistics but also reveals the astonishing liquidity potential of the Chinese private sector.
* Current Situation in the United States: Although the M1 in the United States has experienced fluctuations after the balance sheet reduction, it remains at a high level of around 8 trillion dollars (approximately 18% of the global total). The combined contributions of China and the United States account for over 55% of the global narrow money supply.
2. Why now? (Driving factors)
* Resonance of the interest rate reduction cycle: As global inflationary pressures ease, the monetary policies of China and the United States begin to shift toward easing or maintaining high Liquidity, aiming to stimulate the recovery of the real economy.
* Monetization of fiscal stimulus: This growth reflects the efforts of governments to offset economic slowdowns through debt expansion, with money ultimately flowing into the banking system and asset markets.
In-depth analysis: Which assets benefit greatly from liquidity excess?
When M1 (narrow money) surges, it means that "liquid money" in the market is very abundant. This capital is unwilling to settle for low-yield deposits and will inevitably seek high beta or anti-inflation assets:
✅ First Tier: Scarce Assets (Hard Currency)
Gold (Gold): The ultimate counter to currency overproduction. When the global money supply inflates, the value of gold corresponding to each unit of currency must inevitably rise.
Bitcoin (Bitcoin): The so-called "digital gold". Against the backdrop of extreme liquidity proliferation, as a scarce asset with an algorithmic cap, it is the preferred destination for global speculative liquidity.
✅ Second echelon: high prosperity equity assets
China's core assets (A50/Hang Seng Index): Considering that China contributed 37% of the global M1 increment, the domestic Liquidity spillover effect first benefits the undervalued core assets of China, especially dividend targets with monopolistic status and stable cash flows.
US Stock Market AI Leader: Liquidity in the US remains concentrated in the field of technological innovation. Excess funds will continue to drive up the valuations of tech giants with moats in the AI chain.
✅ Third Tier: Anti-Inflation Commodities
Industrial metals (copper/aluminum): An increase in M1 typically indicates a potential rebound in industrial activity. As "Dr. Copper," it is very sensitive to liquidity expansion and economic recovery.
Core real estate in first-tier city prime locations: Although the real estate cycle is declining, "core assets" globally remain a safe haven for vast amounts of capital.
⚠️ Risk Warning
Liquidity is a "double-edged sword." Although it can temporarily drive up asset prices, if the real economy cannot sustain this money (i.e., the velocity of money V is too low), it may trigger vicious inflation or asset bubbles. Once the central bank is forced to "hit the brakes" due to inflationary pressures, highly leveraged assets will face significant risk of collapse.