The primary A-share indices experienced a collective decline during the week of June 1 to June 5, 2026. The STAR 50 index was notably weak, falling over 4%. Market activity saw a reduction, with the average daily trading volume for the two markets dropping by 269.51 billion yuan to 2.93 trillion yuan. Financing balances also decreased.

Among industry sectors, coal, communications, and machinery equipment led the gains, while power equipment, building materials, and diversified holdings were among the biggest decliners.

The Tencent Ji'an Index, a value-oriented benchmark designed to identify undervalued stocks, edged down 0.01% for the week.

Market Financing Overview

Amid the downward market trend, the total margin financing and securities lending balance for the Shanghai and Shenzhen exchanges decreased by 5.78 billion yuan, standing at 28.98 trillion yuan as of June 5.

Bond Market Recap

Liquidity conditions tightened slightly last week. The central bank's open market operations resulted in a net withdrawal of 982.7 billion yuan. Interbank funding rates moved higher.

The bond market trended upward. In the interest rate bond segment, yields for key-maturity government and policy bank bonds mostly rose, with term spreads narrowing. For credit bonds, yields also mostly increased, leading to a widening of credit spreads.

Fund Market Activity

A total of 13.58 billion units were raised by newly launched funds last week, with closed-end funds accounting for over 30% of the total. Eight fund products were liquidated.

Performance Across Fund Categories

Equity-Oriented Funds

The weak equity market, despite strength in sectors like coal, meant less than 30% of mainstream equity and mixed funds posted positive returns. In contrast, nearly 60% of Fund of Funds (FOF) achieved gains.

Fixed-Income Funds

Money market fund yields rose slightly from the prior week, tracking the increase in interbank rates. Most products maintained stable, low returns, serving as effective cash management tools.

Buoyed by the bond market's performance, over 70% of pure bond funds and over 60% of bond index funds recorded positive returns. However, only about half of primary bond funds (which can hold some equity) and less than 20% of secondary bond funds (with higher equity exposure) were in positive territory.

QDII Funds

Global equity markets were mixed. U.S. stocks fell collectively due to sticky inflation and reduced expectations for Fed rate cuts. European markets were uneven, influenced by Eurozone inflation trends, consumer sector resilience, and weak German manufacturing data. Asia-Pacific markets also showed divergent performances. Consequently, QDII fund performance was subdued, with only half of the products seeing net asset value appreciation.