Although there are significant variables in the US election, Chinese assets performed very strongly today. After opening lower this morning, A-shares and H-shares both saw a rally, with the renminbi also strengthening significantly. Within the first hour of trading, the trading volume of the Shanghai and Shenzhen markets exceeded 1 trillion yuan, an increase of nearly 170 billion yuan compared to the same period yesterday.

From a news perspective, Trump trading data is good, but Chinese assets are 'taking the lead' and showing an independent market trend. This seems to indicate that there are larger variables influencing Chinese assets. Analysts believe three major signals are worth noting:

First, the continuous improvement in PMI data clearly signals economic recovery. China's Caixin comprehensive PMI reached 51.9 in October, the service PMI recorded 52.0, up 1.7 percentage points from September, reaching a three-month high, indicating a recovery in the service industry.

Second, the People's Daily published an article titled 'Taking a comprehensive and objective look at the current economic situation,' pointing out that with the continuous effectiveness of existing policies and a package of incremental policies, the vitality and momentum of development will be further unleashed, providing sufficient support for sustained economic recovery in the fourth quarter. There are ample reasons to believe that the stable and upward trend of China's economy will be further consolidated.

Third, local governments continue to make efforts. By the end of October, Hangzhou's Innovation Fund has reached a scale of 100.812 billion yuan, leveraging over 70 billion yuan of social capital.

Across-the-board surge

USA stock market closed slightly lower on Monday after volatility, as investors prepare for a crucial week. The US will elect a new president this week, and the Federal Reserve will also announce its policy statement. The Dow Jones Industrial Average fell by 0.61%, the S&P 500 Index dropped by 0.28%, and the NASDAQ Index declined by 0.33%.E-mini Russell 2000 Index Performed well, benefiting from the decline in bond yields.

In early trading this morning, the Asia-Pacific markets weakened temporarily. However, Chinese assets quickly strengthened after a slight opening dip. Within the first hour of trading, the Shanghai and Shenzhen markets' transaction volume exceeded 1 trillion yuan, an increase of nearly 170 billion yuan compared to the same period yesterday. A-share brokerage stocks surged again, with First Capital hitting the limit up, and Guolian Securities, Harbin Hatou Investment, Northeast Securities, Central China, Chinalin, and others followed suit. The semiconductor sector fluctuated upwards, with Shanghai Bright Power Semiconductor Co., Ltd. rising by over 17%, Tech Semiconductors, Tongfu Microelectronics, Semiconductor Manufacturing International Corporation, Nations Technologies Inc., and Konfoong Materials International all rising by over 5%.

After ten o'clock in the morning, the CHINEXT Price Index rose by over 3%, the Shanghai Composite Index, Shenzhen Component Index rose by over 1%, and the Shenzhen-Hong Kong Stock Connect Index rose by nearly 6%. Over 4200 individual stocks rose in the Shanghai, Shenzhen, and Beijing markets. Shortly after the counterattack in the A-share market, the Hang Seng Index and Hang Seng Tech Index both turned positive. The Hang Seng Index's gain expanded to 1%, and the Hang Seng Tech Index rose by 1.6%. The A50 also surged, and the offshore RMB changed from a decline to a rise.

Significant Signals Emerge

Today, the key feature of Chinese assets is emphasized as "centered on me." The reason for this strength may still be related to signals of the Chinese economy picking up.

In the early morning announcement today, the October Caixin China General Services Business Activity Index (Services PMI) recorded 52.0, an increase of 1.7 percentage points from September, reaching a three-month high, indicating a recovery in service industry sentiment.

Senior economist Wang Zhe from Caixin Think Tank stated that since the end of September, a series of incremental policies have been successively implemented. From various data on Caixin's China Manufacturing and Services PMI, market demand has stabilized after stopping the decline, optimism has somewhat returned, and policy effects have begun to show. However, there still remains significant pressure on the current job market, and price levels are still relatively low. The effects of incremental policies on boosting domestic demand, employment promotion, and livelihood protection are worth close attention.

In addition, the realization of the global economic growth target in 2024 depends on the continuous recovery of residents' consumption demands, with a greater emphasis on increasing residents' disposable income on a broader scale and with greater intensity, which should also be a focal point of incremental policy efforts.

In addition, the People's Daily also published an article stating that with the continued effectiveness of stock policies and a package of incremental policies, the vitality and driving force of development will be further unleashed, providing sufficient support for the continuous improvement of the economy in the fourth quarter. There are ample reasons to believe that the trend of our country's steady economic recovery will be further consolidated. Currently, there are some misreadings and misunderstandings, with some even deviating from the economic operation itself. It is necessary to immediately analyze, refute, and struggle against these erroneous statements, not allowing them to undermine the positive trend of our country's economic recovery.

It is worth noting that, in addition to the gradual progress of local bonds, local investment actions are also accelerating. According to Zhejiang Daily, as of the end of October, the scale of investment funds in Hangzhou has reached 100.812 billion yuan, leveraging over 70 billion yuan of social capital.

Hangzhou Innovation Fund, established in 2021, mainly focuses on five major areas: smart IoT, biomedical, high-end equipment, new materials, and green energy, to serve the development of Hangzhou's industrial ecosystem and the construction of a modern industrial system. Previously, similar funds have been successively launched in Shanghai, Guangdong, Jiangsu, Hunan, and other places, which will provide support for the future economic development.

Editor/ping