In recent trading days, A-shares have remained volatile, but the market trading atmosphere remains active, and the financing balance continues to rise. At the same time, multiple foreign institutions have spoken out, continuing to be bullish on the Chinese stock market.

Goldman Sachs' strategist latest forecast predicts that the Chinese stock market will rise in the 2-3 months after the US presidential election. Peter Milliken, the research director of Deutsche Bank Group's Asia-Pacific region, also stated that the recent rebound in the Chinese stock market is not a flash in the pan, but a sign of the start of a new round of market trends. UBS Securities' Chinese stock strategy analyst Meng Lei stated that a large amount of off-market funds are waiting to enter. If the A-share market experiences a pullback, off-market funds that missed the recent market rebound may take the opportunity to increase their positions.

Of note, today the National Bureau of Statistics also announced unexpectedly positive data, that is, the manufacturing PMI has returned to the expansion range. Bloomberg pointed out that Chinese factory activity unexpectedly expanded after five months of contraction, indicating that recent stimulus measures may have begun to boost growth momentum.

In the secondary market today, the A-share market was active, with strong trading in brokerage and diversified finance sectors. As of the time of publication, Harbin Hatou Investment, First Capital, Tianfeng Securities, and Shaanxi International Trust A were all trading at limit-up, while East Money Information rose by over 7%. Real estate, semiconductor, and other sectors rebounded collectively.

Foreign institutions are bullish.

Data shows that since the low point in September, the Shanghai and Shenzhen 300 Index has risen by about 23%, making it one of the best-performing major indices globally in the past three months.

As the US presidential election approaches, global investors are preparing for volatility, and Chinese investors are no exception. However, on Wednesday, Goldman Sachs' strategist stated in a report that China's economic stimulus measures have created so-called "policy put options" to protect investors in the Chinese stock market from the impact of a decline.

Goldman Sachs pointed out that "during the repricing period of Trump's risks in the past two weeks, the Chinese stock market did not suffer from selling, indicating its resilience. We believe that after the election, the risk sentiment in China may turn bullish." Goldman Sachs stated that Chinese stocks are expected to rise in the two to three months after the US presidential election. However, they also warned that if former President Trump wins, the market may experience a "subconscious reaction."

In the recent market trend since September, Goldman Sachs has expressed optimism towards the Chinese stock market multiple times. On October 5, Goldman Sachs upgraded the rating of Chinese stocks to "overweight" and stated that after the implementation of relevant policy measures, the Chinese stock market is expected to rise by another 15%-20%. At that time, Goldman Sachs strategists stated that the valuation of Chinese stocks is still below historical average levels, earnings may improve, and global investors' positions are still relatively low. Goldman raised the target price of MSCI China from 66 to 84, and the target price of the CSI 300 index from 4000 points to 4600 points. Subsequently, on October 7, Goldman Sachs continued to release research reports bullish on A-shares, listing the top ten reasons to buy Chinese assets, including: the People's Bank of China introducing structural monetary tools to support the capital markets, sending a strong policy signal; the valuation of the Chinese stock market is still far below major global stock markets; slight improvement in corporate profit prospects, etc.

Recently, Peter Milliken, research head of Deutsche Bank Group in the Asia-Pacific region, also stated that the rebound in the Chinese stock market is not temporary but a sign of the start of a new round of market trends. Peter Milliken believes that both Hong Kong stocks and A-shares have been in the doldrums for several years, negative factors affecting the stock market have gradually receded, especially at the current moment when China is implementing comprehensive stimulus policies, factors constraining consumption will also gradually weaken.

In the current market environment, Peter Milliken stated in the report that stocks are more attractive compared to bank deposits. With these funds flowing into the real economy and the stock market, future corporate profit levels and valuation multiples are also expected to increase, potentially adding 10 trillion USD to the market cap of the CSI 300 index and Hang Seng Index. He added: "From a global perspective, Chinese stocks are still underweight, similar to energy stocks a few years ago. Chinese stocks may be excessively underestimated by investors."

Peter Milliken pointed out that market concerns about Chinese growth overlook a fact - China is a major player in GDP growth and manufacturing, with many leading global companies, yet the current size of the stock market remains relatively small. He stated in the report that currently, global market cap is highly concentrated in US stocks, with the market cap share of US stocks in the global stock market being 2.3 times its global GDP share, a level close to the peak of global market concentration. As time goes on, Asian stock markets will undoubtedly benefit.

Peter Milliken expects that with various global funds flowing in, the long-suppressed Hang Seng Index and CSI 300 Index are expected to break new highs in this upward cycle.

UBS Securities China stock strategist Meng Lei stated that in the short term, the market's upward momentum brought about by loose policies still exists, but the upward slope in the market may gradually slow down, and the amplitude of two-way fluctuations may increase. A large amount of off-market funds are waiting to enter. If the A-share market experiences a pullback, off-market funds that missed the recent market rebound may take the opportunity to increase their positions, thereby limiting the potential market downturn.

Meng Lei believes that in the medium term, whether the market can continue its trend of upward movement depends on the strength of fiscal and other related policies and the pace of corporate profit recovery. The loose policies since late September transmitting to the real economy and corporate profits may require some time. If the economic fundamentals gradually improve, with profits on the rise, the upward space of the A-share market may be further opened up. Investors are advised to monitor the daily trading volume, daily margin balance, monthly new investor numbers, and weekly new public fund scale in the A-share market to track short-term changes in market sentiment.

Morgan Stanley's chief economist in Asia, Andy Chen, believes that the series of policies currently introduced by China will have a positive impact on economic development, such as stabilizing real estate prices and boosting market confidence.

Better-than-expected positive data.

This morning, data released by the National Bureau of Statistics showed that in October, the manufacturing Purchasing Managers' Index (PMI) was 50.1%, up 0.3 percentage points from the previous month, indicating a recovery in the manufacturing sector. In October, the non-manufacturing business activity index was 50.2%, up 0.2 percentage points from the previous month, rising above the critical point.

In October, the comprehensive PMI output index was 50.8%, up 0.4 percentage points from the previous month, indicating an accelerated overall expansion of China's business production and operation activities.

Zhao Qinghe, a senior statistician at the National Bureau of Statistics Service Industry Survey Center, stated that in October, with the introduction of a package of incremental policies and the gradual emergence of the effects of existing policies, China's economic sentiment continued to improve.

The manufacturing Purchasing Managers' Index (PMI) exceeded market expectations in October, with Bloomberg's survey of economists forecasting a median of 49.9. Bloomberg pointed out that Chinese factory activity unexpectedly expanded after five months of contraction, indicating that recent stimulus measures may have begun to boost growth momentum. In late September, the People's Bank of China significantly cut interest rates and took measures to boost the real estate market. It is expected that the Chinese government will announce more details of its fiscal policy support at the highly anticipated meeting next week. Stimulus measures may help China achieve its target of around 5% annual economic growth.

Wang Qing, chief macro analyst at Orient Jincheng International Credit Rating Co., Ltd., stated that despite the seasonal downward pressure on manufacturing performance due to the National Day holiday shutdown, market confidence and economic operations have been significantly boosted by strong growth-stabilizing policies. Wang Qing stated that there are still some comprehensive incremental policies "in the pipeline", and there is still room for upward movement in the manufacturing PMI in November and December.

Analyst Zhang Chi from Sinolink Securities stated that with the subsequent implementation of the series of policies, it is expected that the next quarter will see marginal improvements at the macro, meso, and micro levels domestically. Looking at the high-frequency data from October, signs of improvement at the micro level have already appeared, including an increase in passenger vehicle sales growth rate, an increase in domestic flight executions, a year-on-year increase in real estate transactions in first-tier cities, and rising building material prices. Maintaining an optimistic attitude towards this 'rebound' trend.

Analyst Cai Fangyuan from Galaxy Securities stated in her latest research report that the previous two main driving factors of the A-share surge, the policy expectations, have weakened marginally, but still remain the main factors affecting the market. In November, there are several important meetings to pay attention to. The 12th meeting of the 14th NPC Standing Committee will be held in Beijing from November 4th to 8th. It is expected that after November 8th, there will be a large-scale increment policy implemented. In addition, it is necessary to pay attention to the US presidential election in November, but external results will not change our trend.

Cai Fangyuan pointed out that the short-term market volatility will be influenced by multiple resonating factors, while the fundamental factors + expected management are the fundamentals affecting the mid-term trend of A-shares. With the completion of the disclosure of the third-quarter reports of A-shares, the focus will turn to marginal changes in performance. For sectors and companies with poor performance this year, the third-quarter reports have already priced in the negative news. The consumer sector may see a turning point in its predicament, with the possibility of performance improvement next year, driven by policy stimulus to enhance the fundamentals. In the future, with further policy enhancement, the A-share valuation center is expected to continue to rise. The investment strategy for November should focus on growth value stocks benefiting from policy support. It is recommended to focus on value stocks in sectors such as technology, military industry, non-banking, and consumer in November.

Editor/rice