The Mainland has once again launched a crackdown on the cryptocurrency exchange. The three major financial industry associations jointly announced that "Financial institutions, payment institutions and other member units shall not use virtual currency to price products and services and shall not underwrite insurance business related to virtual currency or include virtual currency in insurance. The scope of responsibility is not to directly or indirectly provide customers with other services related to virtual currencies.” At the same time, it cracked down on mining, and several central banks all expressed their opposition to speculation in cryptocurrencies, causing all types of cryptocurrencies to be laundered. Bitcoin fell sharply to the $30,000 mark. Although there was a rebound, it was obvious that it could not return to the previous level in short term. The mainland has long purchased cryptocurrencies and transferred them to foreign countries, which obviously was challenging China’s capital control system. Moreover, in the summer, the demand for power supply increases. The power shortage will become more serious (up to 75% of Bitcoin in China Mining) if no control applied, not only directly jeopardizing production but also driving up commodity prices and the producer price index (PPI), which is obviously detrimental to the mainland economy. Instead, the mainland government has promoted digital RMB to replace cash circulation attempt to reverse the situation of strong external demand and weak domestic demand. The recent cryptocurrency speculation has also attracted the attention of financial regulators in many countries, simply to reduce the risk of related products to the financial system. 

For the U.S. stock market, as I expected, the major indexes "will enter a consolidation period." Based on "Sell in May and go away", especially the Nasdaq, which rose too rapidly, then fell after hitting 14,211.57 on April 29. Once it is close to the mark on 13,000 point, only reported 13,470.99 at the time of writing, down 5.2%. As for the S&P 500 index, it peaked a little later on May 7 (4,238.04), and it was also 0.7% lower than the previous month at the time of writing. The traditional Dow peaked on May 10, up 1% comparing to the previous month. Among them, the most important factor affecting the market sentiment is their worries about inflationary pressures. Due to the economic recovery, the prices of various commodities rose sharply, driving the US consumer price index (CPI) to rise by 0.8% monthly in April, and the producer price index also rose by 0.6% monthly, both of which were much higher than forecasts.

In response to inflationary pressures, the United States is discussing tightening monetary policy, indicating that it intends to discuss adjustments to the pace of asset purchases. However, this month the governors of the major Federal Reserve banks have publicly stated that they need to guard against inflation risks. Therefore, I believe that the CPI data of May will make the situation clearer. I personally think that the chances of the Federal Open Market Committee (FOMC) officially tightening the purchase of assets in June are quite high. In particular, the European Central Bank is considering a partial “exit” of easing policies. The central banks of the United Kingdom and Canada have also taken actions because the United States Fiscal policy expansion is higher than in Europe, making inflationary pressures more obvious. The $2.25 trillion infrastructure construction plan mentioned last month, as it was titled: "Trillion Plan Effectiveness be doubtful", faced opposition from Congressional Republicans and some Democrats. As a result, President Biden shrank the infrastructure plan by a quarter to 1.7 trillion US dollars. Biden's governance policy is facing a crisis, so it is recommended that US stock investors beware of shocks. For investors who are worried about inflation risks, the best choice is to buy traditional luxury goods such as gold and famous watches. The spot gold price rose from US$1,684.87 at the end of March to US$1,883.45 at the time of writing. Virtual currency is not bad as a speculative tool, but it is obvious that under the prerequisite of cracking down on related investment tools in the Mainland, the chance of speculation is relatively reduced. 

About Hong Kong stocks whose valuation is far more reasonable than that of US stocks, the performance in May was as expected: "the chance of Hong Kong stocks rise sharply in short term is not high". Although the trend goes weak, it succeeded in making a bottom at 27,715, reaching 28,412 at the time of writing, and a close of 28,724 is not far off compared to last month. It is expected that the market sentiment may improve in June. However, this is the basic consumption for the 30% drop of tech-net stocks from the high level during the year, which has caused heavy losses to many speculators. This column has repeatedly mentioned that it is not appropriate to touch it -"Holders can consider reducing their positions and wait and see or transfer their package to more traditional stocks." It is expected that the trend of related valuation rationalization will continue next month, and the trend of traditional stocks will be further improved, so the value-based strategy investment is still on the plan. 

The China Kepei (1890), which the author recommended last month, due to the market conditions in May, which first fell and then rebounded. The highest reach 6.28 yuan, and the time of writing was 6 yuan. Compared with the closing price of 5.9 yuan at the end of last month, it is called a marginal outperform. If you have stock and sufficient funds, you should be patient. Wait for the full year performance until the end of August. Otherwise, it is better to change the code and find a short-term investment target – here is the introduction of Kingboard Laminate (1888), which will be driven by the chip shortage in the technology industry this year. The copper-clad laminate business of Kingboard Laminates increased its net profit in the first quarter by more than 130% (that is, at least HK$1.685 billion) over the six months ended June 30 last year and exceeded half of the net profit of 2.803 billion last year. Due to the company’s "upstream raw materials-copper clad laminate-PCB" model, it enjoys the advantage of vertical integration. The prices of raw materials such as copper foil, glass cloth and epoxy resins have risen sharply due to tight supply. The increase in interest rates, coupled with the increase in the price of copper-clad laminates, has further increased the net interest rate of Kingboard laminates. In the future, the company will continue to focus on the development of the electronics and automotive PCB market. Under the current trend of electric vehicle research and development, the mid-line trend will remain strong. Recently, the stock price bottomed out at 17.04 yuan. Although still subject to market conditions, the market is still optimistic, looking forward to the Bollinger Channel's central axis at 18.5 yuan, raise the bet after confirming its breakthrough, and it may reach its historical high of 19.76 yuan.

Kay Ho (CE No.: ANV293)

Acer King Capital Hong Kong Limited

Statement: The author is a licensee of the 1st, 4th, and 9th types of licenses of Securities and Futures Commission, SFC. Acer King securities Limited and Acer King Capital Hong Kong Limited are affiliated companies of Hantec Group and were invited to contribute articles in Hantec Group's monthly newsletter. The writing does not represent the position of Hantec Group. As the author does not personally hold the above-mentioned shares, investors should exercise caution when buying or selling relevant securities and investment instruments.