Is Institutional Quarterly Rebalancing Triggering Persistent Weakness in US AI Stocks? A Quick Look at the Breakdown of $165 Billion in Sell-Off Pressure

Multiple analysts have recently warned that US equities will face $165 billion in selling pressure from large institutions by the end of June, driven by quarterly rebalancing requirements. According to JPMorgan’s analysis, the selling pressure mainly comes from five major institutional pools: - US fixed-income pension funds, which manage roughly $9.6 trillion in assets, are expected to contribute around $55 billion in stock sales, as their rebalancing discipline is relatively loose and typically only partial rebalancing is implemented. - Japan’s Government Pension Investment Fund (GPIF), with approximately $1.9 trillion in assets under management, is projected to sell around $60 billion in global stocks while buying bonds. - Norway’s sovereign wealth fund, managing about $2.1 trillion in assets, is expected to sell roughly $40 billion in stocks to align with its target allocation by the end of 2025. - The Swiss National Bank (SNB), whose equity weighting has risen, is expected to sell around $25 billion, a figure that could decrease if it raises its target equity weighting. - Balanced mutual funds, with around $4 trillion in assets, due to their stricter monthly rebalancing rules, may post small net stock purchases (about $15 billion) this month, partially offsetting the aforementioned selling pressure. Per past public records, institutional selling pressure is likely concentrated in the final days of the quarter, with some funds executing trades ahead of market close, leading to notable selling pressure at the end of trading sessions. BlockBeats Note: Quarterly rebalancing is primarily driven by institutions’ clear policy asset allocation targets, such as 60% stocks and 40% bonds. After a sharp rally in stocks during the quarter, the equity weighting will exceed the target, triggering a rebalancing signal. Therefore, recently surging AI-related US equities will be the first to face divestment from these institutions.