It's quite incredible. This may be the first time that people hope that the National Day will pass quickly. The arrival of the National Day holiday has pressed the "pause button" on the recent rising market, and investors are itching to watch the A-share market close. Now that the holiday is over, the market focus turns to the first trading day after the holiday. After the 7-day "cooling off period" during the National Day, will A-shares continue their previous strong rebound and usher in a "good start"?
In this regard, Jeffrey Ding, chief analyst of HashKey Group, said that the current rise in A-shares is mainly driven by the continued efforts of policies. In the future, policy-driven will continue to be the main force supporting market rises.
Everything starts on September 24th. After the Federal Reserve announced a 50 basis point interest rate cut on September 19, China's financial regulatory authorities announced the implementation of reserve requirement ratio cuts, interest rate cuts, adjustments to mortgage interest rates, and the creation of new monetary policy tools. A series of measures quickly promoted a strong rebound in the A-share market. Data show that in just five trading days, the Shanghai Composite Index rose from 2,748 points to 3,358 points; the turnover of the Shanghai and Shenzhen stock markets increased by more than 2 trillion yuan.
What is the purpose of a series of policies? Its core is to guide excessive residents' savings funds to flow into the stock market. This is not only a key step to activate the capital market, but also an important measure to introduce "living water" into the market. Residents switching their savings to financial products such as stocks will inject new vitality into the market and increase capital liquidity and market activity. In addition, the policy will restore market confidence and stimulate residents' consumption potential by enhancing investors' confidence in the long-term stable development of the market, thereby effectively expanding domestic demand.
It can be seen that international funds are also gathering here due to the higher growth potential and financial security of the Chinese market. In the short term, this has even caused the outflow of some crypto funds in Hong Kong. Of course, this also means that in the past two years of industry development, encrypted assets have become the mainstream choice in the capital community along with traditional assets, and have shown a more significant "seesaw" effect in different market conditions. Cryptocurrencies have temporarily become less attractive to market capital.
The strong non-farm payroll data released by Powell on October 4 may close the door to a significant interest rate cut this year, delaying the outflow of funds from U.S. stocks. Some market analysts believe that this is a move to compete for funds at the early stage of the Fed's interest rate cut cycle when liquidity is not yet sufficient. It can be seen that China-related stocks in Hong Kong stocks experienced short selling during the National Day holiday trading day, and then fluctuated repeatedly. Because of its advantages as an international financial center, Hong Kong stocks have free entry and exit of funds and no restrictions on their rise and fall. They will be the first to be affected by international funds, thereby amplifying volatility.
It is foreseeable that a series of policies will bring about a "policy bull market." It should be noted that traditional technical analysis may "fail" because the market trend depends more on the promotion of monetary policy. At 10 a.m. on October 8, the State Council Information Office will hold a press conference. Relevant leaders will introduce the situation of "systematically implementing a package of incremental policies to solidly promote the upward structural improvement of the economy and the continuous improvement of the development trend." The press conference is timed on the first day of trading after the holidays, which will continue to have a positive impact on the A-share market.
The introduction of this round of monetary policy tools and the liberalization of supervision have rebuilt the confidence of the capital market and promoted the strong reversal of A shares from the bottom. But for the sustainability of the future bull market, we also need to pay attention to the transformation and logic of fiscal policy, as well as the actual profitability of listed companies.
Alex
Miyuki
Weiliang