Tonight, against the backdrop of weak and volatile U.S. stock market, Chinese assets surged against the trend. Among them,$NASDAQ Golden Dragon China (.HXC.US)$and$FTSE China A50 Index (.FTXIN9.CN)$N/A.$Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$Across the board climbed, with nasdaq china gold dragon index surging over 2% at one point.

China concept stocks are all rising, among which$PDD Holdings (PDD.US)$the stock price skyrocketed, surging more than 8% intraday. On the news front, global asset management giant BlackRock aggressively increased its holding of PDD, with the number of shares held increasing significantly to approximately 0.132 billion shares (equivalent to 9.5% of the total outstanding shares).

For the future outlook of assets in China, the expectations of foreign financial giants are becoming more and more optimistic. Among them, Deutsche Bank stated in its latest research report that the current rebound in the Chinese stock market is not just a short-term short covering, but a change in trend. Deutsche Bank analyst Peter Milliken believes that with the inflow of global funds and the recovery of investor confidence, combined with lower valuations, the Hong Kong stock market is expected to usher in a strong bull market.

Rapidly rising

After the U.S. stock market opened on the evening of October 22 Beijing time, the three major indices fluctuated narrowly. As of 23:00 Beijing time, $Dow Jones Industrial Average (.DJI.US)$ down 0.44%, $Nasdaq Composite Index (.IXIC.US)$ Slightly down by 0.04%,$S&P 500 Index (.SPX.US)$Dropped by 0.35%.

Among them, Chinese assets performed well, with the Nasdaq China Golden Dragon Index skyrocketing.

Hot Chinese concept stocks all rose.$Dada Nexus (DADA.US)$,$iQIYI (IQ.US)$,$LexinFintech (LX.US)$Surged more than 11%.$Li Auto (LI.US)$,$GDS Holdings (GDS.US)$,$JinkoSolar (JKS.US)$,$Daqo New Energy (DQ.US)$Up more than 7%,$XPeng (XPEV.US)$,$ZEEKR (ZK.US)$,$MINISO (MNSO.US)$,$Qudian (QD.US)$rose more than 5%.$Bilibili (BILI.US)$,$Niu Technologies (NIU.US)$Up more than 4%, jd.com, $NIO Inc (NIO.US)$and$KE Holdings (BEKE.US)$ Up more than 3%.

Boosted by bullish news, the stock price of PDD Holdings surged wildly, soaring by over 8% at the highest point during trading, and as of the time of writing, the increase still exceeds 4%. On the news front, according to the documents disclosed by the U.S. Securities and Exchange Commission (SEC) on October 21, BlackRock significantly increased its shareholding in PDD Holdings, with the number of shares held rising to around 0.132 billion shares (equivalent to 9.5% of the total share capital).

Analysts said that the main reason for the significant increase in holdings by foreign institutional giants is their bullish outlook on the growth potential of PDD Holdings. According to previously released financial reports, PDD Holdings' second-quarter commission income increased by 2.3 times year-on-year, driving a revenue growth of 86% year-on-year, getting even closer to breaking the one trillion mark, and net income increased significantly by 1.4 times year-on-year.

Despite PDD Holdings' warning that the company is prepared to sacrifice short-term profits and will not distribute dividends or engage in share buybacks in the coming years, Goldman Sachs remains optimistic about PDD Holdings. In a research report at the end of August, Goldman Sachs gave a 'buy' rating to PDD Holdings, with a target price of $184 in the next 12 months.

The latest statement from foreign institutional giants.

Regarding the future outlook of Chinese assets, the expectations of foreign fund giants are becoming increasingly optimistic. Among them, Deutsche Bank stated in its latest research report that the current rebound in the Chinese stock market is not just a short-term short-covering, but a change in trend.

Deutsche Bank analyst Peter Milliken believes in the report on the 21st that with the inflow of global funds and the recovery of investor confidence, coupled with relatively low valuations, Hong Kong stocks are expected to usher in a strong bull market.

Deutsche Bank pointed out that since 2020, Chinese households have accumulated $6.5 trillion in deposits. In the future, these huge funds are expected to enter the market, whether through consumption or investment, will bring tremendous liquidity support to the stock market. As more funds shift to the stock market, especially with deposit rates remaining around 1%, the possibility of funds moving from banks to the stock market is higher.

Deutsche Bank also emphasized that the global capital's holdings in the Chinese stock market are still relatively low, indicating the huge growth potential due to China's low ownership rate in the market.

Furthermore, further policy easing will promote the improvement of corporate profitability. Deutsche Bank pointed out that many listed companies in the current Chinese market have ample cash reserves, especially$CSI 300 Index (399300.SZ)$And.$Hang Seng Index (800000.HK)$This means that these companies have the ability to conduct share buybacks when the market is volatile, thereby providing further support to the market.

Deutsche Bank stated that the outflow of US capital also helps the continued rise of Hong Kong stocks. It is expected that the highly concentrated state of the US market will gradually change, and capital will flow to other regions, especially in Asia. This will bring new development opportunities to the Hong Kong market.

The three major themes of the US stock market

In the upcoming November, the US stock market will face a series of heavyweight events such as the US election, the interest rate decision in Europe and the US, and the US stock earnings season. Market funds seem to have started positioning early.

Some analysts pointed out that although the VIX volatility index and other indicators measuring the cost of options are at high levels, the actual volatility of the S&P 500 index options for the one-month period has dropped by more than half since mid-August, approaching a low point in three months. This may attract funds to re-enter the market.

Furthermore, the third-quarter earnings season of US stocks started well, with performances shining from US banking giants; considering that US companies will initiate buybacks in less than 2 weeks, it is expected to inject liquidity into the market.

In addition, historical data shows that in US election years, the median return rate of the S&P 500 index can exceed 7%, higher than the average of 5.2%.

Nomura Securities cross-asset strategist Charlie McElligott commented: Due to multiple events occurring simultaneously, buyers are forced to hedge risk management excessively. Global investors are extremely focused on the "worst-case scenario" in the left tail risk. From statistical data, when the market is overly hedged, the performance is usually good, with the median stock market increase exceeding 13% a year later.

But one thing to be cautious about is that the variable of the Fed's rate cut may become one of the biggest risk points in the market.

The strong performance of the US economy, the increasing possibility of Trump's re-election, and the cautious comments from Fed officials on the rate cut path have made the prospect of a Fed rate cut increasingly complex. Blackrock expects that US inflation and interest rates will remain at a high level in the medium term, and investors' expectations for the Fed to slow down its rate cut pace are rising.

Alternative investment fund company$Apollo Global Management (APO.US)$Chief Economist Torsten Slok believes that the Fed will not cut rates at the November interest rate meeting. Slok stated in his latest analysis article that the US economy is performing well, still showing good expansion momentum, and the Fed has every reason not to cut rates.

However, the interest rate futures data still show that traders expect a probability of over 90% for the Fed to cut rates by 25 basis points in November, with less than 10% chance of no rate cut.

Editor/Somer