Chinese stocks ends highs in May

Last week, the Shanghai Composite Index recorded its best weekly performance since the beginning of the year, closed up 4.9% in May, setting its best monthly performance since November last year. With the appreciation of CNY, CNY assets are favored. Last week, net purchases by foreign investors through the mainland-stock connect hit a single-day high, pushing the net purchases in the first five months to be close to whole purchases of last year. The enthusiasm for leveraged trading was ignited, and the balance of financing between the two cities continued to hit a high since January 27 on Friday.

The issuance of mutual funds also swept away the deserted scene of the downturn in the market. The scene of selling out in half a day reappeared, leveraged trading heated up, and foreign investors supported the market. This round of market seems to have reappeared in July last year. At that time, the CSI 300 index rose 18% within within half month. However, despite the recent outstanding performance, fund managers believe that the current market environment is different from last July. The recent trend is not a prelude of a general rise, and the next thing is more likely to be a structural rise in the market.

In view of the Chinese government's continued suppression of speculation in commodity prices, while maintaining a firm monetary policy, actions to ease inflation and tighten expectations have been launched one after another. Recently, many investment banks have continued to be bullish on A-shares.