Equity Market Review and Outlook - In May, global markets rebounded, with significant gains in major stock indices, particularly in the US, where the Nasdaq rose by 9.56% due to strong corporate earnings and improved market sentiment following the Geneva agreement between China and the US [4] - The Hong Kong market also benefited from the US-China talks and domestic growth policies, with the Hang Seng Index increasing by over 5% and net inflows from southbound funds reaching 45.617 billion HKD [4] - The A-share market showed a weaker rebound influenced by the easing of US-China tensions and monetary policy adjustments, but credit growth remains sluggish, indicating a need for time to support economic recovery [4] Bond Market Review and Outlook - The bond market experienced slight fluctuations in May, with the China Bond Index declining by 0.06%, as long-term rates increased while short-term rates decreased [7] - The central bank's monetary policy measures, including interest rate cuts, have maintained liquidity expectations in the bond market, with government bond net financing reaching a small peak [7] - Future market performance will depend on external demand and domestic economic recovery, with a focus on upcoming economic data [7] Macro Indicators Review - The manufacturing PMI in May rose by 0.5 percentage points, indicating a marginal improvement in economic conditions, although it remains below the expansion threshold [13] - Electricity generation in April 2025 was 7,111 GWh, a year-on-year increase of 0.90%, while online retail sales reached 1,117.67 billion CNY, up 1.34% year-on-year [13] - M1 and M2 growth rates for April were recorded at 1.50% and 8.00%, respectively, with M2 showing a strong upward trend due to supportive growth policies [13] Market Style Rotation - As of May 30, 25 out of 31 A-share sectors saw gains, with notable increases in defense, pharmaceuticals, and banking, while sectors like electronics and real estate faced declines [15] - The market's focus on export opportunities and military strength due to geopolitical tensions has driven interest in related sectors [15] Research Interest Trends - Research sentiment has gradually improved, with a focus on machinery, electronics, and pharmaceuticals, as indicated by the number of due diligence visits by major private equity firms [17][18] - Notable companies receiving attention include Huichuan Technology and Tianzhun Technology in the machinery sector, and Zhongan Technology in the electronics sector [18] Summary - The overall market performance in May was positively influenced by US-China relations, with expectations for cautious asset allocation strategies focusing on bonds and selective equity investments in technology and consumer sectors [19]