Daily Market Perspective The three major A-share indices saw a correction today, with the ChiNext Index falling over 2%. Trading volume across the two markets expanded to 3.34 trillion yuan. The current domestic market can be assessed from two perspectives. On one hand, amid concerns over US re-inflation expectations and hawkish policies from figures like Kevin Warsh, markets are pricing in the probability of further Federal Reserve rate hikes. These re-inflation expectations are not only driven by high oil prices stemming from Middle Eastern conflicts but are also influenced by longer-term inflation expectations fueled by the recovery in the US real estate sector, which is spurring credit expansion and pushing up inflation. This market sentiment is impacting major asset classes through three channels: exchange rates, capital flows, and risk appetite, leading to a general increase in volatility for global equity assets. On the other hand, structural bright spots in China's exports and high-tech manufacturing are providing the market with expectations of robust growth, while weaker financial and consumption data indicate that the economic recovery remains uneven. Overseas re-inflation expectations and a strengthening US dollar are putting pressure on valuations, while the earnings narrative in high-growth sectors of the A-share market is countering valuation compression. The interplay of these forces is resulting in high-level volatility within the domestic equity market. Under these circumstances, a more balanced portfolio allocation is recommended, potentially adopting a strategy combining "dividend yield + growth opportunities."
Key Developments China's first national-level urban renewal development plan has been released. The State Council issued the "Urban Renewal '15th Five-Year' Plan," outlining key indicators for the period. These include renovating 500,000 units of dilapidated urban housing, launching renovation projects for 115,000 old urban residential communities, transforming 4,000 urban villages, and upgrading 365,000 kilometers of underground urban pipelines. The plan outlines six key tasks, such as fostering new drivers for urban development, and proposes seven policy measures, including improving the implementation mechanism for urban renewal. Brief Analysis: The quantitative targets set by the plan provide clear demand support for industries such as construction materials, engineering machinery, and pipeline equipment. Sectors within the industrial chain, including engineering services, cement, pipes, and waterproof materials, are expected to benefit in the medium to long term. The plan's emphasis on smart upgrades is also set to generate incremental demand in areas like smart cities, underground pipeline monitoring, and smart meters. As a key component of infrastructure development under the "six-network" initiative, urban renewal investments will synergize with the previously announced 5 trillion yuan investment in new power grids during the "15th Five-Year" period, with the stabilizing effect of infrastructure investment expected to continue.
On May 28 local time, the US Bureau of Economic Analysis released data showing that the US PCE price index rose 3.8% year-on-year in April, reaching its highest level since May 2023. The core PCE price index increased by 3.3%, marking a new high since November 2023, with the Iran conflict driving up energy prices as a primary factor. Real consumer spending grew only 0.1% month-on-month. The first-quarter US real GDP growth rate was revised down to 1.6%, below the market expectation of 2%. Brief Analysis: The April PCE data, which "met expectations but hit multi-year highs," has further strengthened market expectations for a prolonged Federal Reserve tightening cycle. A 5.5% surge in gasoline prices, combined with persistent housing inflation, indicates that geopolitical energy premiums are accelerating the pass-through to domestic consumer prices. Expectations of external liquidity tightening may temporarily pressure valuation levels in high-growth sectors with elevated valuations, potentially slowing the pace of foreign capital inflows. However, the fundamental principle of China's monetary policy maintaining its independence remains unchanged. Coupled with the liquidity support provided by the central bank's substantial net injections at the end of the month, the overall market retains a degree of resilience.
On May 28, the State Administration for Market Regulation and the National Development and Reform Commission jointly issued the "Guidelines for the Artificial Intelligence Metrology System and Capacity Building (2026 Edition)." The guidelines provide a systematic framework across six major areas, including foundational support, general technologies, and core technologies, aiming to address prominent issues in the AI field such as unclear measurement parameters, inconsistent measurement methods, and difficulties in tracing measurement results. Brief Analysis: The release of these guidelines represents a strategic move at the standardization and metrology level to implement the "AI Plus" initiative outlined in the "15th Five-Year Plan." The transition of AI from being "usable" to "trustworthy" hinges on standardized measurement capabilities as critical infrastructure. Measures proposed in the guidelines, such as embedding standards in 14 key sectors, establishing national metrology centers, and developing proprietary standard equipment, are expected to provide an institutional foundation for the governance and secure, trustworthy development of the entire AI value chain.
Market Recap On May 29, the three major A-share indices declined. At the close, the Shanghai Composite Index was at 4068.57 points, down 0.73%. The Shenzhen Component Index closed at 15575.13 points, down 1.81%. The ChiNext Index ended at 4037.95 points, down 2.11%. The STAR 100 Index closed at 1893.22 points, down 4.07%. Among Shenwan primary industries, Food & Beverage, Coal, and Utilities led the gains, rising 3.02%, 2.41%, and 2.34% respectively. Conglomerates, National Defense & Military Industry, and Electronics were among the top decliners, falling 5.39%, 4.79%, and 4.44% respectively. 1,543 stocks advanced, while 3,886 declined.
Capital Flows Total market turnover was 3,341.251 billion yuan, higher than the previous trading day. The balance of margin trading and securities lending stood at 2,942.403 billion yuan as of the last close, showing an increase from the prior day.
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