China's economy is at a critical juncture, and A-shares are seen as an important means and tool to boost confidence and reverse economic expectations. After experiencing sharp rises and falls, the market is looking forward to the stabilization and continuous improvement of A-shares.

In just over half a month, Chinese assets have experienced a sudden surge, followed by an adjustment.

Since September 24th, A-shares, Hong Kong stocks, and Chinese concept stocks have all experienced rare surges. A-shares once saw a rare phenomenon of stock index opening with a surge of more than 10% and a single-day transaction volume of 3.45 trillion yuan. The sharp rise of Hong Kong stocks during the National Day period also attracted global attention.

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However, after the National Day, Chinese assets have experienced fluctuations one after another: on October 8th, the Hang Seng Index fell by 9.41% in a single day; on October 9th, the Shanghai Composite Index fell by 6.62% in a single day; the NASDAQ China Golden Dragon Index also fell back from the rebound high point during the National Day period, with the highest drop exceeding 9% after the holiday.

Despite a round of sharp rises and falls, compared with the start of this round of the market, the major stock indices still have a significant increase.

The starting point of this round of stock market rebound can be traced back to a previous press conference. On the morning of September 24th, the heads of the central bank and other three departments attended a press conference of the State Council Information Office, announcing a series of unexpected financial policies such as lowering reserves, interest rates, and creating new monetary policy tools to support the stock market, which led to a surge in the stock market.

Incremental policies continue to take over. On September 26th, the Political Bureau of the CPC Central Committee held a meeting, and many arrangements and statements exceeded expectations. The market interpreted it as an important turning point for stable growth and looked forward to more fiscal policy in the future.

"China's economy is at a very critical juncture," Dong Yu, the executive vice president of the China Development Planning Research Institute of Tsinghua University, wrote in an article, "A series of meetings are just the beginning, and it is the overall signal issued by the central government in economic work."

"The policy combination introduced in this round aims to stabilize market expectations, enhance economic vitality, promote stable economic growth, and reflect the management's accurate judgment and active response to the economic situation in China," Tian Xuan, the dean of the National Institute of Finance at Tsinghua University, told Caijing.Experts believe that employing a series of policies to boost the stock market has a positive effect on stimulating China's economy. Shen Jianguang, Chief Economist at JD Group, believes that this positive effect has already begun to manifest. First, a significant increase in stock prices brings a notable wealth effect, which is conducive to stimulating consumer spending and economic growth; second, a substantial rise in the stock market also helps to boost inflation expectations, alleviating the risks of price deflation and demand decline that the current economy faces; finally, an upward stock market trend is equally beneficial for all sectors of society to improve their expectations for the economy and for other asset prices, including real estate prices.

The sudden surge exceeded the expectations of both new and experienced investors. Those who held on saw hope for recovery, while those outside the market felt the anxiety of missing out, and young people rushed to open accounts and enter the market.

During the rapid and significant rise, there are still many rational voices in the market.

Dan Bin, Chairman of Shenzhen Oriental Harbor Investment, expressed his concern about the craze of residents' funds entering the market in his Weibo post, warning ordinary investors not to use their savings to participate in the frenzy of the market.

"Do not blindly chase gains, do not buy indiscriminately, and do not use leverage," Chen Guo, Chief Strategy Officer at CITIC Construction Investment, emphasized multiple times during a live broadcast.

Looking ahead, will incremental policies follow? How will they be implemented subsequently? Can the reversed expectations be supported by a fundamental market recovery? These questions have become the focus of concern for market participants.

Xing Ziqiang, Chief Economist for China at Morgan Stanley, stated that whether the subsequent risks of breaking the negative feedback loop of low prices and high debt can be resolved, allowing the economy and corporate profits to stabilize and rebound, depends on the implementation of policies.

Dong Yu believes that subsequent policies that are conducive to the economic recovery and improvement will definitely be introduced by various departments in accordance with their responsibilities. There is reason to anticipate the strength and continuity of the subsequent policies.

After experiencing sharp rises and falls, the market is looking forward to the stabilization of A-shares and even more to a slow bull market. "In the face of a crazy bull or a rapid bull, rationality must be maintained. A healthy bull market should be a stable slow bull, a long bull," Tian Xuan believes."A-shares themselves are an important means and tool for boosting confidence and reversing economic expectations. As a tool, A-shares should return to the level proposed at the July 2023 Politburo meeting to invigorate the capital market, which is 3,400 points; it should continue to create a profit effect, boost income expectations, stimulate consumption, and A-shares are a very important help and means; it should always maintain a certain level of activity, with trading volume not falling below 1 trillion yuan; it should serve high-quality economic growth and economic transformation." Dongwu Securities' Chief Economist Chen Li believes.

Professor Liu Jipeng from China University of Political Science and Law recently said in a live broadcast, "The rise of the stock market is not solely driven by monetary or fiscal policy, but also requires regulatory policies to plug loopholes. Chinese enterprises are generally dominated by a single share, and the reduction of major shareholders undoubtedly increases the cost of our efforts to reverse the stock market's downturn. Therefore, while injecting new funds, we must also block the old loopholes."

On October 12, the State Council Information Office held a press conference, where Finance Minister Lan Fo'an and others introduced the situation related to "increasing the counter-cyclical adjustment of fiscal policy and promoting high-quality economic development," and answered questions from journalists. On October 14, A-shares stabilized and rebounded, with the three major indices all rising by more than 2%, more than 5,000 stocks rising, and the total transaction volume of Shanghai and Shenzhen stock markets for the day was 1.65 trillion yuan.

The market fluctuates sharply

Before September 18, the A-shares of 2024 were depressing. Especially after May 24, A-shares fell continuously, and investors felt very disappointed.

The decline that began at the end of 2021 not only reflected the fundamentals, valuation, liquidity, and sentiment of the capital market but also mixed with pessimistic emotions and expectations about economic recovery, macro policy, changes in overseas markets, and adjustments in industrial policies.

The reversal came in the last few trading days of September. On September 24, A-shares turned red, the Shanghai Composite Index surged by 4.15%, and the ChiNext Index rose by 5.54%, instantly igniting market sentiment. On September 26, the Shanghai Composite Index returned to 3,000 points, and on September 30, it broke through 3,300 points.

The sudden outbreak of A-shares excited investors who had been suppressed for a long time, but also left them somewhat confused. For a while, it seemed that the atmosphere of a big bull market was everywhere. As a result, investors in the market actively increased their positions, and investors outside the market accelerated their entry, with "post-2000s" and "post-1990s" entering the market one after another.

Xiao Wang, who just graduated from university this year and is waiting for the spring semester of overseas graduate school, has become a new "post-2000s" investor who is running into the market. "It seems that making money in the stock market is not so difficult, so why have my parents been losing for so long?"

"What else is a bull market if not such a rapid rise and huge transactions?" said a "post-1990s" investor. The stocks of the securities and semiconductor industries he heavily invested in have risen significantly, which also made his goal change from doubling to quadrupling by the end of October.The number of A-share account openings on multiple securities platforms has surged. During the "Eleventh" holiday, securities firms worked overtime to provide account opening services for investors. "It's too hot, we can't keep up, investors have finally seen hope," said the head of a securities brokerage branch.

While the A-share market was closed for the National Day holiday, the global stock market's "C-position" undoubtedly belonged to the Hong Kong stock market. Due to different trading hours compared to A-shares and greater sensitivity to international capital, the Hong Kong stock market showed a more dramatic performance in this wave of the market.

During the National Day holiday, the Hang Seng Index continued to rise, increasing by 9.30% from October 1st to 7th. This also made the three main indices of the Hong Kong stock market rank among the top of the global main indices for the year, far ahead of U.S. stocks, Japanese stocks, etc. As of the close on October 7th, the Hang Seng China Enterprises Index had risen by 44.42% for the year, leading the global main market indices, the Hang Seng Technology Index increased by 43.09%, and the Hang Seng Index rose by 35.5%.

In addition, the NASDAQ China Golden Dragon Index rose from 5,862.9 points on September 23rd to 8,226.9 points on October 7th, an increase of 40.3%.

"The sharp rise in Hong Kong stocks during the National Day period perfectly reflects the characteristics of foreign capital and local Hong Kong funds entering the market one after another due to fear of missing out, everyone doesn't want to miss this feast," said Yan Zhaojun, a strategy analyst at Zhongtai International.

During the National Day holiday when A-shares were closed, investors who didn't want to miss the opportunity quickly turned their attention to Hong Kong stocks. The chairman of a listed securities company in Hong Kong once said that to cope with the account opening demand during the National Day holiday, the company's logistics staff canceled their leave and worked in shifts around the clock. The person in charge of the Hong Kong and U.S. stock software of a Chinese-funded securities firm also said that during the National Day holiday, the software's daily downloads were twice as much as usual, the number of account opening applications received was double the usual, and the weekly transaction volume was nearly four times the average level of the year.

On October 8th, the first trading day after the "Eleventh" holiday, with the reference of Hong Kong stocks, the mood of A-shares was even more excited to the extreme. The Shanghai and Shenzhen markets opened up more than 10%. Within 42 minutes after the opening, the transaction volume of the Shanghai and Shenzhen markets exceeded 2 trillion yuan. The transaction volume on that day reached 3.45 trillion yuan, setting a new record for A-share transactions. After the high opening on that day, the Shanghai Composite Index fell to a 4.59% increase, and the ChiNext Index still rose by 17.25%.

Hong Kong stocks, however, experienced a rapid and sharp pullback after the opening of A-shares. On October 8th, the Hang Seng Index fell more than 2,300 points in the morning, not only erasing the holiday gains but also setting the largest decline in 16 years; the Hang Seng Technology Index fell by a maximum of 14.39%; the Hang Seng China Enterprises Index saw the largest decline of 10.92% during the session, the largest since October 27, 2008.

"It's not surprising that Hong Kong stocks pulled back after the opening of A-shares, but the extent of the pullback at the time was still astonishing," said a Hong Kong stock investor. "Many people bet on A-share ETFs in advance during the Golden Week, causing these ETFs to have a very high premium, with a market value far higher than the net asset value of all the shares in the ETF portfolio, which triggered the short selling of ETFs on October 8th."

It is worth noting that after a day of game-playing, the transaction volume of Hong Kong stocks on October 8th reached 620.438 billion Hong Kong dollars, a record high. The southbound funds finally turned from net selling in the morning to net buying at the end of the day, with a net purchase amount of 2.066 billion Hong Kong dollars. Yan Zhaojun said that the sharp decline of Hong Kong stocks under a huge transaction volume is not a positive signal, highlighting the great selling pressure behind it.The retreat in A-shares followed closely behind. On October 9th, A-shares experienced a significant correction, with the Shanghai Composite Index falling by 6.62%, the Shenzhen Component Index by 8.15%, and the ChiNext Index by 10.59%. On October 11th, the stock indices回调ed again, with the Shanghai index closing down by 2.55%, barely holding above 3200 points. "Post-00s" investor Xiao Wang, who had rushed into the market before the National Day holiday, saw his account register a paper loss for the first time.

The battle between bulls and bears in the Hong Kong stock market remains intense. Amid high trading volumes, the Hang Seng Index continued to decline by 1.38% on October 9th, and then rebounded by 2.98% on October 10th. The NASDAQ Golden Dragon China Index also plummeted by 9.2% from its peak on October 7th, closing at 7469.78 points on October 10th.

"Although the number of new accounts is still increasing, the growth rate has slowed as sentiment has cooled," said a staff member at a Shanghai brokerage firm. "The recent adjustments have made those preparing to enter the market more cautious. There's a veteran investor who had suffered significant losses and stopped trading, even closing his account. He came to us to open a new account the other day, but with the recent market fluctuations, he's getting scared again."

Despite the rebound in stock indices, some investors who entered the market during the last bull run are still far from breaking even.

Ms. Li, who started buying funds at the end of 2020, said, "After the funds I added to in the middle were unwound, I liquidated them. But there are still some that are too deeply entangled, so I need to wait a bit longer, hoping to recover my principal."

New policies have shifted expectations.

The rapid rise in the stock market before the National Day holiday demonstrated investors' shift in expectations for the future, and the force that reversed these expectations came from a series of policies that exceeded expectations.

On the morning of September 24th, before the opening of A-shares, People's Bank of China Governor Pan Gongsheng, National Financial Regulatory Authority Director Li Yunze, and China Securities Regulatory Commission Chairman Wu Qing jointly attended a press conference held by the State Council Information Office, announcing important measures including reserve requirement ratio cuts, interest rate reductions, reduction of existing mortgage loan interest rates, replenishment of bank capital, reduction of down payment ratios, and the creation of new monetary policy tools to support the stable development of the stock market. At the same time, Pan Gongsheng stated that they are studying the establishment of a stabilization fund.

The policy "gift package" from "one bank, one bureau, and one commission" exceeded market expectations, with incremental policies injecting confidence into the weak market, and strong incremental policies continue to follow.

On September 26th, the Central Political Bureau held a meeting, once again sending an unusual signal of stability and growth. The meeting emphasized the need to increase the counter-cyclical adjustment intensity of fiscal and monetary policies, promote the real estate market to stop falling and stabilize, and strive to boost the capital market. The meeting's many expressions regarding fiscal policy, real estate, and the capital market all exceeded market expectations.It is noteworthy that the conference proposed to effectively implement existing policies, intensify the introduction of incremental policies, and strive to achieve the annual economic and social development goals and tasks. Regarding the annual economic and social development goals, the phrase "unswervingly" from the July Politburo meeting was adjusted to "strive to complete," which is consistent with the tone set at the comprehensive promotion of ecological protection and high-quality development of the Yellow River Basin held on September 12. At the same time, the meeting also emphasized "to view the current economic situation comprehensively, objectively, and calmly, and face difficulties head-on."

In addition, the timing of this Politburo meeting on economic themes exceeded market expectations. "According to past practices, the September Politburo meeting would not discuss the economy. The unexpected discussion this time indicates a significant increase in the high-level attention to the economy," said Huang Cendong, Chief Analyst of Wealth Management Strategy at Guojin Securities.

"Since the 18th National Congress, there have only been four times when the Politburo meeting on economic themes was held in non-routine months, corresponding to the supply-side reform in 2016, the Sino-American trade friction in 2018, the pandemic impact in 2020, and this time's weaker economic recovery. Among them, the September Politburo meeting on economic themes is the first since the 18th National Congress," said Dai Zhifeng, Director of the Research Institute of Zhongtai Securities.

"The recent policy shifts have exceeded our expectations, including strong monetary easing, unprecedented liquidity tools to boost the stock market, and the rare statement on 'stopping the decline and stabilizing' the real estate market," said Xing Ziqiang.

"This policy combination has reversed pessimistic expectations," said Zhang Hao, Head of Macro Research at Debon Securities. "Previously, the market was under a very extreme pessimistic expectation. The phased rebounds of A-shares over the past two or three years all ended with declines, reflecting the results of investors' policy expectations and the eventual policy outcomes. Before mid-September, the global capital allocation to A-shares reached the lowest level in nearly a decade, and shorting A-shares became the second-largest global trading consensus. This round of positive policies has reversed such pessimistic expectations."

Various arrangements and statements beyond expectations have brought positive signals to the market and also made the market more eager for the continuous impact of more incremental policies. On September 29, the State Council held an executive meeting to study and deploy the implementation of a package of incremental policies.

At 10 a.m. on October 8, the first trading day after the National Day holiday, the market's attention focused on the press conference held by the State Council Information Office, where Zheng Shanjie, Director of the National Development and Reform Commission, and Deputy Directors Liu Sushe, Zhao Chenxin, Li Chunlin, and Zheng Bei attended together to introduce the "systematic implementation of a package of incremental policies, and solidly promote the economy to move upward in structure and development momentum to continue to improve" related situation. The press conference was announced during the National Day holiday on October 6, filling A-share investors with anticipation for the post-holiday market.

The press conference introduced the five aspects of the incremental policy package previously deployed at important meetings and did not introduce new incremental policies and large-scale stimulus policies. The current market's main disagreement lies in the strength of fiscal policy and its role in economic growth. Therefore, the market has responded quickly to every move of policy. On that day, A-share turnover reached 3.45 trillion yuan, and the market also experienced a pullback afterward.

"The Development and Reform Commission emphasized that this 'package of incremental policies' is a comprehensive and systematic policy, which means that policies in all aspects need to continue to exert force and be more effective. In addition to the previously announced monetary, real estate, capital market, and other policies, more incremental policies will continue to be introduced," said Zhang Jun, Chief Economist at Galaxy Securities. "The fiscal policy that the market is looking forward to is not within the jurisdiction of the National Development and Reform Commission. In a comprehensive and systematic package of policies, fiscal policy is an indispensable part."Fiscal policy has long been a common expectation of the market, and experts and scholars have put forward their respective views. On September 21, Liu Shijin, former deputy director of the Development Research Center of the State Council, suggested at the China Macroeconomic Forum that a package of stimulus and reform economic revitalization plans should be launched to bring the economy back to an expansionary growth track. He also suggested, "funds should be raised mainly by issuing ultra-long-term special government bonds, and within one to two years, an economic stimulus scale of no less than 10 trillion yuan should be formed."

Li Xunlei, Chief Economist of Zhongtai Securities, previously stated that in the face of the current economic situation, it is recommended that the government increase leverage, especially the central government, by issuing 5 trillion yuan annually and 50 trillion yuan in ultra-long-term special government bonds over 10 years.

Wang Tao, Head of Asian Economic Research and Chief China Economist at UBS, believes that a more reasonable expectation is that the government will introduce a relatively moderate fiscal stimulus policy of 1.5 trillion to 2 trillion yuan in the short term; at the same time, the broad fiscal policy support may expand by 2 trillion to 3 trillion yuan by 2025.

On October 9, the People's Bank of China announced that the joint working group of the People's Bank of China and the Ministry of Finance held its first official meeting.

Another highly anticipated press conference held on October 12 by the State Council Information Office saw Finance Minister Lan Fo'an introduce the situation related to "increasing the counter-cyclical adjustment of fiscal policy and promoting high-quality economic development," and answer questions from journalists.

Lan Fo'an introduced a package of targeted incremental policy measures that will be introduced in the near future, mainly including four aspects: First, significantly increasing the debt quota to support local governments in resolving implicit debt, allowing local governments to free up more energy and financial space to promote development and ensure people's livelihoods; Second, issuing special government bonds to support large state-owned commercial banks in replenishing core tier-one capital, enhancing the risk resistance and credit distribution capabilities of these banks, and better serving the development of the real economy; Third, using local government special bonds, special funds, tax policies, and other tools in conjunction to support and promote the real estate market to stop falling and stabilize; Fourth, increasing support and protection for key groups, and the next step will also increase the support for student groups, enhancing overall consumption capacity.

"Counter-cyclical adjustment is by no means limited to the above four points. These four points are policies that have already entered the decision-making process, and we are still studying other policy tools. For example, the central finance still has a large space for debt issuance and deficit expansion," Lan Fo'an emphasized.

Funds are playing games

A-share transaction volume continues to set new highs in a hot trading atmosphere. Data shows that from September 24, 2024, to October 10, all A-share transaction volumes for eight trading days were 15.98 trillion yuan, and all Hong Kong stock transaction volumes were 3.2 trillion yuan, totaling about 19.18 trillion yuan.

With the booming market, ETF net inflows have accelerated. Wind (Wang De) data shows that in September, net subscriptions for stock-type ETFs were 7.5 billion shares. As of October 10, the net subscription shares for the month reached 127.8 billion shares, with a net asset value of 2.93 trillion yuan. The largest Hua Tai Bo Rui Shanghai-Shenzhen 300 ETF even broke through the 400 billion yuan mark.In the midst of a sharp market rally, foreign capital has also begun to flow back into the Chinese market. According to weekly data released by EPFR, a global fund flow tracking agency, in the week ending October 2nd, the emerging market equity funds tracked by EPFR recorded the second-largest weekly capital inflow this year, marking the 18th consecutive week of net inflows, with nearly all of these funds pouring into the Chinese market. Specifically, overseas funds recorded a net inflow into Chinese equity funds exceeding 13 billion US dollars in the week ending October 2nd, setting a record for the highest weekly inflow in history.

"We have observed since July that global foreign capital is seeking 'asset rebalancing'. Over the past two years, US tech stocks, as well as some emerging markets including India and Vietnam, have already risen significantly, and capital needs to find new markets to seek balance," Zhang Hao told Caijing, stating that after China began implementing large-scale counter-cyclical policy stimulus, the pessimistic expectations were unanimously reversed, and the cost-effectiveness of Chinese assets became significantly evident. Therefore, increasing exposure to Chinese assets has become an important direction for foreign capital to enhance the stability of their portfolios.

However, after several consecutive days of gains in the A-share market, market sentiment has shown significant divergence. Some profit-taking funds have started to cash in their gains.

The first to call a halt were foreign investors. On October 8th, Morgan Stanley released a research report, downgrading the target prices for major Chinese stock indices, and believing that the current market valuation levels have fully reflected expectations for reflationary measures and asset allocation expectations, thus not anticipating more widespread index-level re-rating opportunities.

According to media reports, a trading report from Goldman Sachs Group showed that hedge funds sold a record number of Chinese stocks on October 8th. Hedge funds not only closed their long positions but also increased their short positions, with the long positions sold being twice that of the short positions.

Domestically, as the market rises, some important shareholders of listed companies have also begun to reduce their holdings and exit. In just the two trading days after the National Day holiday, nearly a hundred listed companies on the A-share market disclosed plans and results for share reduction. If we extend the timeline, from the start of this rally on September 24th to October 10th, according to Wind data, 158 listed companies with 263 shareholders disclosed plans for share reduction, and 221 shareholders implemented share reduction.

"The significant increase in stock prices has given some shareholders, especially those who entered early and have lower costs, the motivation to take profits. Additionally, some shareholders are concerned that subsequent share reduction policies will gradually tighten, and they prefer to cash out as soon as possible to avoid potential policy restrictions that could adversely affect their share reduction activities," said Tian Lihui, Dean of the Institute of Financial Development at Nankai University.

Furthermore, it is understood from the public fund industry that the investment enthusiasm of fund investors is far from as high as that of stock market investors. In this round of the market, index funds represented by ETFs have become the battleground for novice investors, but for public fund practitioners outside of index funds, what they feel more is "busywork."

"As active equity funds gradually recover, there are more redemptions than additions to positions. Bond funds have already started to see redemptions, and if the stock market continues to rise sharply, the volume of redemptions will only be greater," admitted a marketing department member of a large public fund.

On October 10th, the swap facility was officially launched. "Many institutions have assets on hand, but their liquidity is relatively poor. By swapping with the central bank, they can obtain higher quality, more liquid assets, which will greatly enhance the fund-raising ability and stock增持 ability of the relevant institutions," Pan Gongsheng previously introduced.Li Zhan, Chief Economist of the Research Department at China Merchants Fund, believes that the implementation of the swap facility is seen by the market as a positive policy signal, demonstrating the central bank's firm determination to maintain market stability and support the development of the capital market. "This move can provide ample liquidity, promoting a sustained improvement in market conditions. It will also improve risk appetite and strengthen market confidence. In terms of the bond market, it will balance the supply and demand of bonds and promote an upward movement in bond market interest rates."

Li Xunlei, on the other hand, suggests that no market rescue tool is omnipotent and has a "double-edged sword" effect. The most significant issue is that it may exacerbate the market's "amplification of gains and losses" effect. When market sentiment is exuberant, institutions may take the opportunity to significantly increase leverage, leading to excessive market gains; and when the market is falling, institutions may be unwilling to use this policy to increase their positions due to pessimistic sentiment, failing to achieve the goal of stabilizing the market. Such frequent and significant fluctuations may not be conducive to the long-term stable growth of the market and are not favorable for forming an ideal "slow bull" market trend.

"Furthermore, if misused, it could also lead to the transfer of financial institutions' risks to the banking system, increasing the overall risk of the financial system. Therefore, while these short-term policies play the role of a 'fire extinguisher,' they also require strict supporting mechanisms to prevent the spillover of risks," Li Xunlei wrote.

"From a deeper perspective, the frequent introduction of market rescue policies reflects that the capital market ecosystem is not yet healthy, and the internal stability mechanism is not yet perfect. Faced with a complex and changing external environment and arduous reform and development tasks, relying solely on short-term policy 'transfusions' is difficult to fundamentally resolve the market's structural contradictions," Li Xunlei believes that the most important thing is to improve the multi-level market system, especially to vigorously develop a professional and market-oriented institutional investor team. Among them, nurturing and strengthening the long-term capital forces such as pension funds and insurance funds is a crucial part.

Data shows that the proportion of equity investments in China's pension funds and insurance funds is only 10% to 20%, far below the international level of about 50%, and also significantly lower compared to the policy-specified limits of 40% for social security funds and 45% for insurance funds.

In response to the insufficient willingness of long-term funds to enter the market, on September 26, the Central Financial Office and the China Securities Regulatory Commission jointly issued the "Guiding Opinions on Promoting Long-term Funds to Enter the Market," focusing on three aspects: vigorously developing equity-oriented public funds, improving the institutional environment for "long money for long-term investment," and continuously improving the capital market ecosystem.

The market is looking forward to a long bull market.

Amid market divisions, the sharp rise in A-shares has come to a pause, returning to a state of fluctuation. Novice investors are also experiencing their first decline in anxiety about missing out. Investors begin to wonder, is the logic of the bull market still there?

"The bull market has three most important indicators: First, expectations for future profits, which must be better next year than this year; second, liquidity, which is currently very abundant, with both domestic and global liquidity surpluses; third, risk appetite, where confidence has been restored to some extent, so this is a standard bull market trend," Chen Guo said, noting that the rise in the past period was indeed too fast, and it is inevitable to have a technical correction in the short term. However, he believes that the improvement in profits has not truly begun, the abundance of liquidity will continue, and the restoration of confidence will be strengthened, so the bull market is still on the way.

Chen Guo believes that the specific policy combinations and their effects will require a longer period of follow-up observation and verification, and this process is likely to involve a gradual intensification based on the differences in effects and goals. Sometimes, it is normal to see that the policy strength and some data may not be strong at the beginning, so the verification of the fundamentals requires patience.Dong Yu emphasized in his article that a series of meetings are just the beginning, representing the central signal in economic work. Subsequently, various policies beneficial to the economic recovery and improvement will definitely be introduced by various departments in conjunction with their own responsibilities. Therefore, there is reason to anticipate the strength and continuity of subsequent policies.

"We believe that the increment will definitely include new investments, and 'X trillion' will definitely be there, but some may still need to go through legal procedures, so everyone needs to be a bit patient and not be easily swayed by the rhythm," said Dong Yu.

"The rise of the stock market does not rely solely on monetary or fiscal policies; it also requires regulatory policies to plug loopholes. Chinese companies are generally dominated by a single share, and the reduction of major shareholders undoubtedly increases the cost of reversing the stock market's downturn. Therefore, while injecting new funds, we must also block the old loopholes," Liu Jipeng believes.

However, Dan Bin expressed his concern about residents' funds crazily entering the market on Weibo: If (the current market situation) is defined as a rebound, the more it goes up, the more trapped positions there will be, requiring larger funds to support. If it is a big bull market, there will be more people holding stocks and waiting for the rise, and the amount of funds needed will be relatively smaller. But a big bull market requires continuous growth or even high growth in the economy and corporate fundamentals. In the current macro environment, a big bull market will face challenges.

"If it is a rebound market, unless the support force continues to grow from 2.5 trillion yuan to 5 trillion yuan and then to 10 trillion yuan, it will only be a game of hot potato passing. This kind of market will only be a stage for capital speculators. Ordinary people must not use the hard-earned money for pensions, medical treatment, raising children, and supporting houses for stock market speculation and gambling in a crazy situation, as this is unlikely to have a good outcome," said Dan Bin.

"A healthy bull market should be one where the fundamentals grow, and valuations also grow together," Tian Xuan reminded investors to remain rational in the face of "crazy bull" and "urgent bull." "A healthy bull market should be a stable slow bull, long bull."

From the perspective of sectors, where will funds focus on allocation?

"Under the catalysis of emotions, high beta sectors may become the first choice for funds to increase their positions. This round of incremental funds comes from low-position private equity and speculative funds, overseas funds, and individual investors. Directions with more adjustments and greater elasticity will become the first choice for related funds," Penghua Fund's General Manager of Quantitative and Derivatives Investment Department, Su Junjie, analyzed that in previous bull markets, the broad-based indices with the highest returns and best performance were all high-beta varieties.

Regarding the phenomenon of foreign capital increasing its positions in insurance, banks, and other industry leaders in the Hong Kong stock market, an insurance asset management person said that the core characteristics of insurance, banks, and some leading companies in A-shares are all leading white-horse stocks. "These types of assets are not only weight stocks of passive funds but also have small financial and other risks, making them the first choice for asset allocation after foreign capital flows back."

The introduction of swap facilities provides opportunities for "China-headed" companies to implement operations, and the market's demand for high and low position switching has spawned a wave of central enterprise and dividend stock trends. "Central enterprises, as the backbone of the market, have an important impact on the stability and development of the entire stock market," Caithong Fund's research team believes that with the development of the market, the difficulty coefficient also gradually increases. In the future, it is highly likely to usher in a rotation style and thematic investment.Guofu Fund's seasoned investor Zhao Xiaodong maintains a relatively cautious view and is currently keeping his existing portfolio structure. "The original portfolio is dominated by industries such as consumer goods and real estate, which are highly related to economic recovery, and I do not plan to make significant adjustments for the time being. We are still in the early stages of economic recovery, or even the expectation phase, and the implementation of policies and the actual recovery of the economy still need to be observed."