domestic
Last week, A-shares were weak, and most of the major stock indexes closed slightly lower, with a poor money-making effect. In terms of market style, growth style and small and mid-cap stocks have performed relatively well. Last week, the market turnover and turnover rate dropped sharply, and the average turnover on Sunday was 735.965 billion yuan, a decrease of 13.59% from the previous week. Northbound funds reversed the direction of capital flows, with a cumulative net outflow of 5.661 billion yuan last week, and southbound funds accelerated to buy the bottom, with a cumulative net purchase of 29.672 billion Hong Kong dollars that week, which has been a net inflow for 15 consecutive weeks.
Overseas
US Q1 GDP and core PCE data both revised downward, but Fed officials maintained hawkish comments, and US stocks adjusted overall last week, but the monthly line closed significantly higher.
The world's major stock indices
Market turnover in the past year (100 million yuan)
Weekly flow of northbound funds since the beginning of this year (100 million yuan, RMB)
Data time: 2024-05-31; Source: Wind Foreign Trade Trust
The domestic manufacturing industry is not booming, domestic demand continues to weaken, and the fundamentals are still facing many challenges. The U.S. released the core PCE index in April, and the data was still sticky, but lower than market expectations, and the Fed's interest rate cut expectations continued to waver, and the pressure on the RMB exchange rate eased. In the context of the lack of obvious catalytic events, the market trading enthusiasm is not high, or it will continue to fluctuate and consolidate the pattern, still with the defensive strategy as the main line.
Liquidity
Last week, the capital side remained loose, and the price of funds rose slightly. The central bank has accumulated a net injection of 604 billion yuan in the open market, and 614 billion yuan of reverse repurchase will expire this week. In terms of market funds, the volatility of northbound funds intensified and ended two consecutive weeks of net buying, with a net outflow of 5.661 billion yuan last week, and the main funds in the A-share market sold 56.954 billion yuan that week, which was the fifth consecutive week of net selling. The net subscription amount of equity ETFs in the market was 5.233 billion yuan that week, which was the second consecutive week of net subscription, and the balance of leveraged funds declined, with a financing balance of 1.488320 billion yuan as of last Friday, and a net sale of 3.767 billion yuan in financing that week.
Margin trading balance in the A-share market
Data time: 2024-05-31; Source: Wind Foreign Trade Trust
In terms of economic recovery
China's manufacturing PMI fell to 49.5 in May, falling back into tight territory and down 0.9pct month-on-month, the largest in nearly a decade. Production and demand weakened, of which the production index was 50.8 percent, down 2.1 percentage points from the previous month, and the new orders index was 49.6 percent, down 1.5 percentage points from the previous month. The non-manufacturing business activity index in May was 51.1%, compared with 51.2 in the previous month, and the non-manufacturing industry continued to expand. In addition, in April, the profits of industrial enterprises above designated size in the country increased by 4.0% from a year-on-year decline of 3.5% in March, and the growth rate rebounded by 7.5 percentage points.
The official manufacturing PMI fell back into tightening territory in May
Data time: 2024-05-31; Source: Wind Foreign Trade Trust
In terms of overseas factors
The U.S. core inflation index remains sticky. The U.S. personal consumption expenditures (PCE) price index rose 2.7% year-on-year in April, unchanged from the previous value, up 0.3 percentage points from the previous month, and the previous value was 0.3%. The Fed's most closely watched inflation gauge – core PCE, which excludes food and energy prices – rose 2.8% year-on-year, also unchanged from the previous reading, lower than expected, but still above the Fed's target; On a month-on-month basis, core PCE rose 0.2% month-on-month in April, in line with expectations, compared with 0.3% in the previous month.
The U.S. core PCE price index remained sticky in April
Data time: 2024-05-31; Source: Wind Foreign Trade Trust
The slope and progress of recovery are the main lines of the domestic economy and capital market in the post-epidemic era.
After the past three years of fundamental friction and the weakening of market expectations, the market is still in the value investment range for a long time, the determination of the party and the government to promote economic recovery and various measures and the gradual migration of residents' allocable assets to equity is to support the medium and long-term optimistic logic, the structural market will continue to become the market norm, and the market as a whole is still in accordance with the long-term slow cattle roadmap construction.
The coexistence of opportunities and challenges brought about by the global economic recession and the reshaping of the relationship between China and the United States are the long-term factors that determine the market performance, the marginal rhythm and intensity of monetary and credit easing and the marginal change of the Fed's policy are the short-term factors affecting market sentiment, while the geopolitical conflict, the deviation between the pace of domestic economic recovery and market expectations amplify the impact of short-term factors. The emergence of the above factors will increase the volatility of the market as a whole, and short-term fluctuations will bring better layout opportunities. Let time be the friend of configuration decisions.
Contributed by: Investment Advisory Team of China Foreign Trade Trust Wealth Management Center