01Review of basic Market situation and Market Dynamics
Stock market: market sentiment picks up. Half of the industries outperform the market.
With the end of the A-share annual report and quarterly report at the end of April, the market ushered in a red May. A shares first suppressed the market and then rose throughout the month, and the main stock index rebounded across the board. Market sentiment gradually picked up in May, with the average daily turnover of 839.6 billion yuan in the two cities in May, up 12% from the previous month. In addition, against the backdrop of the strengthening RMB, the trend of foreign capital inflows has been strengthened, with the net inflow of northward capital reaching 55.776 billion yuan in May, the highest level so far this year. The Shanghai Composite Index successfully recovered 3600 points at the end of the month, with a cumulative increase of 4.89% during the month. The Shenzhen Composite Index and the gem Index rose 5.26% and 7.04% respectively over the same period, and the gem Index also broke through the 3300-point mark. The broad blue chip index, represented by the CSI 300 and the Shanghai 50, rose 4.06% and 4.56% respectively in April, while the CSI 500 index closed up 3.75% in that month.
Most of Shenwan's 28 first-tier industry indexes rose in May, and nearly half outperformed the CSI 300 index. Only agriculture, forestry, animal husbandry and fishing, household appliances and iron and steel closed down. Among them, the defense and military industry, food and beverage and non-ferrous metals sectors showed the strongest performance, with monthly increases of 13.07%, 9.22% and 8.42% respectively in May. The defense industry sector, which is oversold, bottomed out and rebounded in May, leading 28 application-level industry indices higher under the logic of improved industry sentiment and valuation repair. The food and beverage sector continued to stabilize and rebound in May. From a fundamental point of view, the overall performance in 2020 and the first quarter of 2021 has achieved stable and sustained accelerated growth, and the better performance has formed a strong support for the rise of the sector this month. Driven by rising global inflation expectations, global resource prices rose sharply, driving the non-ferrous metals sector higher in May. On the other hand, affected by the downward pig cycle, pig prices continued to fluctuate downwards. The agriculture, forestry, animal husbandry and fishing sector fell 4.72% in May, making it the worst performing industry among the 28 application-level industry indices in May. In addition, affected by the poor performance of the retail end, the household appliances sector as a whole performed poorly, recording a 1.39% decline in May.
Bond market: the capital surface is stable and loose. The yield of 10-year treasury bonds fell to the low of the year.
The stable funding side and the positive attitude of the central bank dispelled the uncertainty in the early days of the market, and the bond market continued to strengthen in May. The bond market in May is mainly driven by the capital side. On the one hand, the market shocks after the Spring Festival have led to the flow of funds to money funds, a sharp decline in government deposits and other factors provide support for inter-bank liquidity. On the other hand, the central bank's attitude of not tightening liquidity also makes the market have the expectation that the central bank will hedge financial contributions and protect the capital side. Since late May, driven by a combination of factors such as capital easing and fears of monetary policy tightening, the downward pace of interest rates on 10-year government bonds has accelerated and exceeded 3.1 per cent at the end of the month, setting a low for the year.
Overall, the decline in long-end interest rates was the most pronounced compared with the previous month, with 10-year bonds falling 11.9bps to 3.045% in May to 3.045%. Interest rates on five-year bonds fell 3.7bps to 2.9254%, while interest rates on 1-year bonds rose slightly to 2.4113% from the previous month. In terms of credit bond interest rates, the 1-year and 10-year yields of AAA corporate bonds fell by 2.82bps and 4.05bps to 2.8965% and 3.9595% respectively by 4.83bps and 2.05bps to 3.4259% and 4.7794% respectively. In terms of credit spreads, the short-end spreads of AAA and AA were narrowed compared with the previous month, respectively, while the long-end spreads of 8.04bps and 10.05 BPs were loosened by 7.85bps and 9.85bps respectively compared with the previous month.
The central bank's open market operation in May continued the steady situation of last month. During the month, there were 200 billion yuan of reverse repurchase, 100 billion yuan of MLF withdrawal, and 70 billion yuan of treasury cash deposit maturity. in the same period, the central bank continued to make 100 billion yuan of MLF and put 190 billion yuan of reverse repurchase, and the treasury cash deposit issued 70 billion yuan, with a net withdrawal of 10 billion yuan for the whole month. The cost of capital rose slightly from the previous month, with interbank pledge repo rates R001 and R007 rising to 2.5069 per cent and 2.7026 per cent respectively from last month's 19.39bps and 32.57bps, while the interest rate hubs of R001 and R007 rose to 2.0306 per cent and 2.1794 per cent respectively in May from the previous month.
The main index of the bond market rose satisfactorily in May, while the CSI all-bond index rose 0.62 per cent. Among them, in May, both stocks and bonds rose, the CSI convertible bond index recorded a monthly increase of 3.18%. Interest rate bonds performed slightly better than credit bonds, with the CSB government bond index rising 0.76% in May, while CSB corporate bonds and CSB rose 0.64% and 0.65% respectively in April, while short-term AA, short-term AA+ and short-term AAA also rose 0.48%, 0.38% and 0.29%, respectively.
02 Open-end fund performance review: public offering funds as a whole recorded an increase in medicine-themed funds leading the way
Public funds as a whole continued to rise in May, with the Morningstar open-end fund index rising 3.43%. Among them, the Morningstar equity fund index and the Morningstar allocation fund index rose 4.74% and 3.78% respectively in May, while the Morningstar bond fund index rose 1.1% in May, better than the 0.62% of the China Securities Index over the same period.
In terms of partial stock funds, excluding the sub-new funds that have been established for less than 6 months by the end of May, 3095 funds are included in the statistics (different shares are calculated separately. General equity funds, Shanghai, Hong Kong and Shenzhen equity funds, industry stock funds-medicine, industry equity funds-technology, media and communications, industry stock funds-financial real estate, active allocation funds, Shanghai, Hong Kong and Shenzhen active allocation funds, standard mixed funds, industry mixed funds-pharmaceutical and industry mixed funds-technology, media and communications rose by an average of 4.46% in May. The overall performance is slightly better than the 4.06% of the CSI 300 index in the same period. Among them, 223 partial stock funds recorded a monthly net worth increase of more than 10% in May, and most of the top performing funds took heavy positions in the new energy and military industrial sectors in the first quarter of 2021. Their relatively concentrated positions in Yiwei LiNeng, Tianzhi Materials, Huayou Cobalt and Enjie all rose more than 25% in May.
By category, industry equity funds, the other best-performing Morningstar fund category in May, rose an average of 7.94% in May. Most of the passively managed index funds in this category, which track defense, non-ferrous metals and commodities indices, performed well in May, driven by the strength of the tracking sector.
Financial real estate and technology industry funds generally performed well in May. Industry stock funds-financial real estate, industry equity funds-technology, media and communications and industry mixed funds-technology, media and communications rose an average of 6.45%, 5.04% and 4.41% respectively in May. In addition, Pharma, an industry mixed fund dominated by active funds, also performed relatively well in May, with an average net worth up 5.34%, while Pharma, an industry equity fund dominated by passive index funds, performed slightly poorly, rising an average of 3.97% in May. In addition, high-position actively managed funds, represented by actively allocated funds, also outperformed the CSI 300 index in May, with an average net worth up 4.7%. On the other hand, affected by the weak performance of Hong Kong stocks, the overall performance of Shanghai, Hong Kong and Shenzhen funds was slightly weaker in May. Shanghai, Hong Kong and Shenzhen active allocation funds and Shanghai, Hong Kong and Shenzhen equity funds outperformed only A-share active allocation funds and common equity funds in May.
Fixed-income funds performed well in May, excluding sub-new funds that had been established for less than six months by the end of May. of the 2509 active bond funds, ordinary bond funds, interest rate bond funds, credit bond funds, pure debt funds, short-term debt funds and convertible bond funds, 97 per cent recorded positive returns in May. Among them, supported by the strengthening of both stocks and bonds in May, the overall performance of convertible bond funds, active bond funds and ordinary bond funds was remarkable, recording monthly average net worth increases of 3.96%, 1.36% and 0.84%, respectively. The goods-based yield center continued to fall in May, with the average and median seven-day annualized income at 2.14% and 2.2% respectively as of May 31, 2021, down from 2.23% and 2.3% at the end of last month.
