Fresh data shows that private Chinese equity funds had renewed confidence in the stock markets in June. That came as the funds allocated nearly 75 percent of their new investment in stocks during the month. It was the highest monthly amount in the first half of the year.

The preference private funds had for the stock markets in June followed a two-month drop in their allocations to A-shares in April and May. The proportion of stock investments by private funds fell over 10 percentage points monthly to around 62 percent in May. One fund manager said market confidence in A-shares is rebounding, and that they are looking at stronger performance in the second half. 

"Overall market sentiments were pretty poor in April and May due to uncertainties like the trade disputes. However, the latest positive signals from that issue made the June performance rebound. So far the average profit rate from stock investments is over 15 percent, which is quite promising. I think stocks relating to 5G, and hi-tech will perform robustly in the second half," said Feng Meiyun, general manager of Shanghai Jinrong Information Technology.

The market has also noticed that 64 new companies were listed on the A-shares in the first half of the year, an IPO approval rate of 88 percent and 39 percentage points higher than that over the same period last year. Experts said this is a positive signal for investors, given that they are looking for companies with bright growth prospects.

"The regulatory commission is tightening scrutiny over companies seeking public investments, resulting in an increasing number of high quality companies being reviewed. Most of the companies that went public in the first half were from the materials, TMT (technology, media, telecom), and industrial sectors, which reflects the effect of supply-side reform as well as capital support for the real economy," said Tang Zhehui, assurance partner of EY.

Sectors such as food, beverages, materials and insurance received the most investment from private funds in the first six months. The Shanghai Composite rose nearly 19.5 percent and the Shenzhen Component jumped almost 27 percent during the same period, with the market cap of the A-shares climbing by more than 10 trillion yuan. 

Market insiders are betting on a further positive outlook for A-shares, driven by the expected inflow of overseas capital from the second and third phases of the MSCI index inclusion which are planned to take place in August and November respectively.