(Bloomberg) -- Xi Jinping’s speech in Shenzhen comes at a crucial time for Chinese stocks, which are now within 1% of a five year high.

The CSI 300 Index, which has been stuck in a narrow range for about three months, is close to surpassing July’s peak after a strong start to the new quarter. Rising turnover and an increase in margin debt also shows traders are turning more bullish.

The index was down 0.5% as President Xi began his speech. Stocks had rallied in anticipation of his visit to the southern city, where most of the country’s technology giants are based.

“We see more opportunities than risks in the market right now,” said Li Fan, general manager at Shanghai Fan Investment Management Co. “October would make a good entry point for investors who are looking at a two-year or longer horizon for investment.”

October is generally a good month for Chinese stocks, with the CSI 300 rising by an average 3% each year since 2010. The three trading days completed so far this month saw a gain of nearly 6% through Tuesday. Activity is heating up, with average daily turnover rising 9% from September to 808 billion yuan ($120 billion) this month. Offshore investors resumed net purchases after dumping the most Chinese shares since March last month.

Cheaper valuations have also given encouragement. The forward 12-month price to earnings ratio on the CSI 300 gauge has eased from its July high, while the multiples for the consumer staples and health care shares -- among the hottest trades of the year -- have declined by as much as 10% from their recent highs.

To be sure, market sentiment could still swing amid negative news flow on the trade front and authorities would want to ensure stability in markets ahead of the U.S. presidential election in three weeks time. The CSI 300’s current level has also marked top of the market for the past three months, meaning the rally could pause before any further gains.

There is space for further gains however, said Pan Jiang, chief executive officer of Shanghai V-Invest Co. “We don’t see anything that’s particularly negative right now.”

©2020 Bloomberg L.P.