Against the backdrop of a downturn in the Asia-Pacific stock market, the A-share market has just experienced a major rebound. As of the midday close, the Shanghai Composite Index rose by 1.59%, the Chinext Price Index increased by 3.83%, and the Shenzhen Component Index grew by 2.41%. The biggest gains were seen in sectors such as food consumption, large financial, and siasun robot&automation. Over 4500 stocks rose in the Shanghai, Shenzhen, and north markets. At the same time, Hong Kong stocks also showed improvement. The Hang Seng Tech Index rose nearly 3%. The MSCI China A50 Connectivity Index futures and the ftse china a50 index futures increased by over 2%.

Analysts believe that the market rebound is partly related to the falling dollar and reflects expectations for the upcoming important year-end meeting. Guosheng Financial Holding Inc. suggests closely monitoring the Central Economic Work Conference in December for its orientation for next year and paying attention to possible measures for 'stabilizing prices'. Previously, Citic Sec also anticipated that the conference would maintain a positive attitude toward next year's macroeconomic policies, and subsequent new rounds of policy deployment will significantly boost market confidence.

Collective outbreak.

In today's early session, after slight fluctuations, the A-shares suddenly surged. The Chinext Price Index rose over 4% at one point. Individual stocks showed a widespread upward trend, with over 4500 stocks in the Shanghai, Shenzhen, and north markets in the green, and the morning's turnover reached 992.8 billion yuan. At midday close, the Shanghai Composite Index rose by 1.59%, the Shenzhen Component Index increased by 2.41%, and the Chinext Price Index grew by 3.83%. However, the number of stocks hitting the daily limit did not significantly increase, suggesting that the morning's market may not have been driven by speculative funds, but rather initiated by institutions, with heavyweight in fund indices rising over 2%.

Food consumption, large financial, and siasun robot&automation sectors were among the top gainers, with nearly 4500 stocks rising in the Shanghai, Shenzhen, and Beijing markets. Financial stocks, including brokerages and banks, fluctuated and strengthened, with Guangdong Golden Dragon Development Inc. hitting four consecutive limits, and Guosheng Financial Holding Inc. reaching the daily limit, while Hua Xia Bank, zheshang, East Money Information, and the Pacific also saw significant gains. Stocks related to trading software concepts were active, with Shanghai DZH Limited hitting the daily limit and Hithink Royalflush Information Network rising over 8%.

The A50 surged significantly. The MSCI China A50 Connectivity Index futures and the ftse china a50 index futures rose over 2%.

The Hong Kong stock market is also making progress. In the morning, the Hong Kong stocks weakened due to external influences. However, as A-shares rose, the market significantly improved. By midday, both the Hang Seng China Enterprises Index and the Hang Seng Index rose over 1%, while the Hang Seng Tech Index increased nearly 3%.

Government bond futures had a mediocre performance in the morning close, with the 30-year main contract down by 0.02%, the 10-year main contract down by 0.13%, the 5-year main contract down by 0.06%, and the 2-year main contract up by 0.01%. This pattern is quite similar to the scenario when the A-shares experienced a substantial rebound the day before.

What happened?

Analysts believe that the market surge may be related to the recent sharp decline in the external dollar and U.S. Treasury yields. On the other hand, it may also be linked to market expectations regarding significant meetings.

Citic sec released a research report indicating that the Central Economic Work Conference in 2024 is expected to be held in mid-December, where the current economic situation will be analyzed, and the economic work targets for 2025 will be set. The conference is expected to maintain a positive stance towards next year's macro policies, and the subsequent new round of policy deployment will significantly boost market confidence.

Guosheng Financial Holding Inc. believes that the industrial enterprises' profits in October have both positive and negative aspects, but positives outweigh the negatives: the positive aspect is that the year-on-year decline has narrowed to -10% (previous value -27.1%), with a month-on-month increase of 11.2%, reaching nearly a ten-year high for the same period; the main reason is the low base in September and the visible effects of incremental policies. The concern lies in the fact that the year-on-year figures and absolute values are still at weak levels, and weak PP is a major drag. Looking ahead, corporate profits in November and December are expected to continue to recover, but the difficulty of turning positive is relatively high; the short term will closely watch the Central Economic Work Conference in December for guidance on next year, and attention also needs to be paid to possible measures to "stabilize prices," especially the potential production restrictions on mid-to-upper stream raw materials.

Wanlian Securities states that the current investor sentiment in the A-share market is in a recovery phase, and the resurgence of trading activity needs market confidence to be strengthened and for mid-to-long term funds to be attracted into the market, with policy effects further materializing. From a valuation perspective, most industries' price-earnings ratios are still below historical average levels, indicating recovery potential. It is recommended to pay attention to the continuous expansion of passive index funds and the investment opportunities; as the Central Economic Work Conference is about to be held, large cap blue chips may benefit relatively; and the acceleration of the development of new productivity, with sub-sectors having technical breakthroughs and expanding demand expectations within the technology growth sector.

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