China: An Equity Strategist’s Diary: Weekly wrap (18-22 May): AI-driven rally tested by regulatory signals

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China: An Equity Strategist’s Diary: Weekly wrap (18-22 May): AI-driven rally tested by regulatory signals

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China: An Equity Strategist’s Diary

Weekly wrap (18-22 May): AI-driven rally

tested by regulatory signals

Equity Strategy

Weekly index performance 25 May 2026

HSCEI -1.6%/CSI 300 -0.3%: Tech/AI-related themes led Thursday’s broad-based Equity Strategy

correction, likely reflecting profit-taking and sensitivity to regulatory uncertainty amid China

crowded AI trades – effectively the market’s most concentrated risk area amid a narrow

rally. After Friday’s close, eight top regulators unveiled a joint crackdown on three online Table of Contents

brokers for facilitating illegal cross-border trading by mainland investors. Meanwhile,

Indices vs RRR cut 2

Shanghai and Shenzhen exchanges reportedly have scrutinized companies and funds

Key themes update 3

after recent AI-driven price actions, asking listed companies to clarify the extent of their

genuine AI exposure and querying ETF managers with heavy AI allocations on their Market movements and capital flows 4

valuation methodologies. A state media editorial from Economic Information Daily also China Positioning 6

cautioned on hidden risks in AI investment earlier this week. IT, industrials, and Earnings revisions 7

healthcare outperformed the most while real estate, staples and discretionary Recovery trends 8

underperformed the most. Looking ahead, Hang Seng Index rebalancing (effective Jun 5 Key events 9

after close) looks to draw attention esp. with Zhipu and MiniMax inclusion into HSTECH. Key news 10

Macro: top weekly headlines & upcoming highlights China Coverage Universe 21

Week of May 25: Wed, Apr industrial profits; Sun, May mfg & non-mfg PMI;