Massive Rebound

The introduction of positive policies across various fields in a short period has greatly enhanced market confidence and investor confidence, and the market rebound after a general rise is still expected to continue. At present, A-shares also show more obvious bottom characteristics at various technical indicators, making them more investment-worthy.

On September 26, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and deploy the next economic work. The policies involved include finance, currency, capital market, employment, private economy, and other fields.

In the afternoon of that day, the market rose across the board. The Shanghai Stock Index broke through 3000 points from more than 2700 points, and in just three trading days, the transaction amount of A-shares rose to about 1.17 trillion yuan, setting a new high for this stage. As of that day, the main A-share index this week has increased by more than 6%, among which the Shanghai 50 Index has increased by 11.86% this week.

Under the general rise, is the big rebound coming, and how will the market perform in the future?

Good news continues to arrive

Recently, policies to boost the capital market have been released one after another. Prior to this, on September 24, the People's Bank of China Governor Pan Gongsheng announced at the State Council Information Office press conference that he would create two structural monetary policy tools: securities, funds, and insurance company swap convenience and stock repurchase and increase special re-lending. Among them, the first phase of the stock repurchase and increase special re-lending is 300 billion yuan, and the first phase of the operation scale of securities, funds, and insurance company swap convenience is 500 billion yuan. The funds obtained can only be used to invest in the stock market, and the scale can be expanded in the future according to the use situation. If the first phase is done well in the future, the second phase or even the third phase can be added.

China Securities Regulatory Commission Chairman Wu Qing said at the State Council Information Office press conference that he would formulate guidelines to promote medium and long-term funds into the market, deploy a series of arrangements to support medium and long-term funds into the market, and promote medium and long-term funds into the market. He will work with relevant parties to further support the Central Huijin Investment Company to increase its holdings and expand the scope of investment, and also promote various medium and long-term funds including the Central Huijin Investment Company to enter the market. Further optimize the registration of equity fund products, and vigorously promote the innovation of broad-based fund products, etc. The Securities Regulatory Commission also issued the "Opinions on Deepening the Reform of the Mergers and Acquisitions Market of Listed Companies" to support listed companies to transform and upgrade in the direction of new quality production forces, encourage listed companies to strengthen industrial integration, and further improve regulatory tolerance.

Hua Jin Securities believes that the central bank will create securities, funds, and insurance company swap convenience, support the above-mentioned non-bank financial institutions that meet the conditions to obtain high-liquidity assets such as national debt and central bank bills from the central bank through asset pledge, thereby enhancing their stock increase ability, which will become an important supplementary source of long-term capital. It further echoes the new "Nine Articles" clearly proposed "vigorously promote medium and long-term funds into the market, and continue to strengthen the long-term investment strength" requirements. Against the background of the deep adjustment of the real estate market, it drives the optimization and upgrading of residents' asset allocation structure through active stock market and guides the healthy development of the capital market.

Debon Securities believes that from the "active capital market" of the Political Bureau meeting in July 2023 to the "efforts to boost the capital market" in September 2024, this reflects the increased attention of the decision-making layer to the capital market, and the short-term market expectations may stabilize and valuation repair may be higher.

In conjunction with the "Guiding Opinions on Promoting Medium and Long-term Funds into the Market" mentioned at the September 24 press conference of the State Council Information Office, Kaiyuan Securities stated that the new direction of improving the capital market ecosystem is becoming increasingly clear.Great Wall Securities believes that since 2024, the reform of the capital market system has been continuously intensified. The focus of this Politburo meeting is on the advancement of the "long money long investment" system, which calls for the removal of obstacles to long-term capital entering the market. The "stabilization fund" system, which was re-mentioned on September 24, is expected to be implemented, and its system may guide and assist long-term capital such as social security, insurance, and financial management to enter the market. In combination with the creation of structural monetary policy tools to support the capital market, the determination and strength of subsequent capital market policies are guaranteed. With the support of institutional and policy innovation, and the market itself has spontaneously entered the bottom-building phase, the capital side is expected to see a continuous improvement.

The trend can continue.

Guo Yuan Securities stated that the previous sluggishness of A-shares was mainly affected by economic and financial data, and this policy adjustment is undoubtedly a timely rain, significantly reversing the market's expectations for liquidity. In the short term, the trend of policy-led index-wide gains has formed; in the medium to long term, the phenomenon of the market and policy bottoming out is becoming more and more formed, and expectations for domestic fundamentals and liquidity will also improve accordingly.

The current rebound trend has been determined, and the subsequent reversal still needs to continuously pay attention to the effectiveness of policies. Kaiyuan Securities, based on the market reference of policy reversals during historical bottom periods, initially judged that the rebound amplitude of this round may be higher than expected, but the transition from rebound to reversal still requires the release of more winning factors. Looking forward, the confirmation of the reversal still needs to track the subsequent policy advancement: first, the magnitude of fiscal expansion; second, the improvement measures on the people's income side. In terms of direction, in the short term, the repair of valuations during the rebound period will be the biggest beneficiary direction; in the medium to long term, after the rebound ends, the main line of the market will fall on the varieties with the most significant "credit expansion". Looking forward, it is necessary to pay attention to the main direction of subsequent policy implementation, as well as the credit expansion advantage industries that may emerge after policy implementation.

CICC believes that after the turbulent回调 in late May, the current A-share market sentiment has rebounded significantly. After a sharp short-term rise, the market performance may have twists and turns, but the rebound trend is still expected to continue. Active policies help to enhance investor confidence, and the current A-shares also show a more obvious bottom bias at the technical level of trading volume, turnover rate, capital side, and valuation. In terms of allocation, it is recommended to pay attention to the relative performance of超跌 and net-breaking quality companies in combination with market value management requirements.

Great Wall Securities believes that the new regulations on mergers and acquisitions and market value management have been introduced, and there are still opportunities for related themes to continue. The marginal improvement of liquidity has led to an overall increase in A-share trading volume, and the market's phased valuation repair is still expected to continue. Hong Kong stocks may gain more flexibility in the global interest rate reduction cycle, coupled with the net inflow of funds from the south, which has reached a new high in the past three years, and the rebound strength of Hong Kong stocks may be greater. It is recommended to continue to focus on the Hong Kong Internet sector, which benefits from domestic policy stimulus and improved consumption expectations.

Shenwan Hongyuan believes that this policy change is very likely to be the "policy bottom" of the medium-term trend. The visibility of the "performance bottom" in 2025 has increased, injecting confidence into the medium cycle. It is recommended to focus on directions that can be expected to turn at the inflection point in 2025. Both cyclical and technology growth will have performances, real estate chain, real estate stocks, core consumer assets, white wine valuation repair elasticity is larger, non-ferrous metals, coal, technology focus on the Science and Innovation 50 and Entrepreneurship 50, continue to recommend Hong Kong Internet, Hong Kong high dividend.

Huaxin Securities stated that a package of policy combinations are exerting force, and A-shares continue to rebound, first as a general rise trend, with the previously超跌 institutional tickets rebounding first, followed by the rebound of targets with expectations of fundamental improvement that have better sustainability. It is recommended to focus on the three major directions of finance, consumption, and technology driven by policy and liquidity, as well as two major themes of mergers and acquisitions (six articles on mergers and acquisitions) and net-breaking undervaluation (market value management).