"3 Positives Boost A-Shares; Goldman Sachs Raises China GDP Forecast"

Following the press conference held by the Ministry of Finance last Saturday, in contrast to the skepticism and pessimism of the majority, I directly stated my conclusion: We must not be fixated on the notion of "several trillion"; the most critical issue is whether the central finance can leverage up, bet on its own balance sheet, and personally get involved to break the vicious cycle of impaired balance sheets and deflation. It is quite clear that the fiscal tone has shifted from a previous passive contraction (with some local governments at a standstill) to an active expansion, opening the door to a 3% deficit rate. Therefore, at that time, I believed that the A-share market would transition from a fast bull to a slow bull, moving upwards with policy reinforcement and economic recovery.

Many people complain that this debt restructuring takes up a large share, mainly to save local governments, without policies targeting residents, such as the highly anticipated fertility subsidies. The Politburo meeting on September 26 mentioned that "support and standardize the development of elderly care and child care industries by social forces, and urgently improve the fertility support policy system," and if not this time, it will come.

First, use debt restructuring to revitalize local finances, which is equivalent to underpinning the risks of the economy. Naturally, the stock market will also be underpinned, which can to some extent boost market risk appetite. If it can't fall, it will always rise.

Looking back at a series of recent judgments, after the Politburo meeting on September 26, I believed this was an epic bull market. Subsequently, the A-share market began a crazy rise. On the first trading day after the holiday, I thought the A-share market was significantly overheated and would face the first round of massive selling pressure, peaking in the short term. Then the A-share market began a significant correction, and the rhythm was well grasped.

After boasting, let's look at today's positive signals:

Last week, the market fell for three consecutive days, and today's morning session was another high dive. The ChiNext Index adjusted by nearly 20 points at most. How could new investors bear it? Those who bought at high levels after the holiday have sold almost all they should sell, and the chips have been fully exchanged. There is a technical need for a rebound.

This morning, the Ministry of Industry and Information Technology and three other departments delivered a policy gift package, including the promotion of new energy vehicles to rural areas and the development of humanoid robots, which is very beneficial.After the National Day holiday, the real estate market saw a significant rebound in sales. According to statistics from a certain platform, from October 1st to 13th, the sales of new homes in Beijing increased by approximately 240-250% compared to the same period last year; in Shanghai, the increase was about 170-180%. The sluggish real estate market is the biggest knot in the economy and A-shares, and a recovery in the real estate market naturally brings a rebound in confidence.

After the Ministry of Finance's meeting, Goldman Sachs raised its forecast for China's real GDP in 2024 to 4.9%, and foreign capital is expected to continue to increase its allocation to Chinese assets.

At the 3rd OpenHarmony Technology Conference, the open-source HarmonyOS OpenHarmony 5.0 Release version was officially pre-released. In addition, 32 OpenHarmony Technology Clubs made their debut, and the first batch of 30 OpenHarmony Developer Associations was launched. Today, the HarmonyOS concept in A-shares triggered a surge in trading limits.

According to a report by Caixin, the China Photovoltaic Industry Association organized a "Symposium on Preventing Inward-Looking Malicious Competition within the Industry" in Shanghai on October 14th, to discuss measures for orderly resolution of supply and demand imbalances and the elimination of excess capacity.

Today's A-share trend can be considered a positive response to the Ministry of Finance's meeting. After a morning rush and wash, the market continued to rise, with the ChiNext index soaring by 2.6%, more than 5,000 stocks rising, and trading volume also slightly increasing to 1.64 trillion. The fact that institutions were able to buy against the trend today indicates that they generally recognize the stance of the Ministry of Finance.Breaking down by industry, the computer, defense, electronics, building materials, and environmental protection sectors are leading the gains. Besides Hongmeng, AI computing power and restructuring concepts are relatively strong. AI is the most prosperous sector, with Goldman Sachs stating that Nvidia's orders for the next year have already been sold out. Restructuring is the strongest concept, and if a company is involved in both, it becomes even stronger, such as RoboTech.

In conclusion, I must remind everyone that there is still disagreement in the market regarding economic recovery and whether deflation can be reversed in the medium to long term. Today's main gains were in debt restructuring and technology, while consumption was quite average. Therefore, although the A-share market rose significantly today, I believe it is more of a rebound after consecutive adjustments and does not imply the start of a new round of increases. Personally, I lean more towards a consolidation phase, waiting for new expectations. However, as I have mentioned before, even during a period of consolidation and divergence, there are opportunities to be found, with over a trillion in transactions providing numerous chances.

In the short term, policy-driven debt restructuring and restructuring concepts, which are more thematic, will be strong. In the medium to long term, I personally believe that this bull market is accompanied by the reversal of deflation and is a revaluation of core assets. Therefore, consumption and growth potential are the greatest. The market has short-term disagreements, and these disagreements are points for medium to long-term allocation.

Next, pay attention to several important milestones: the GDP data for the third quarter will be announced on Friday, which is likely to be not very good, but this will further strengthen policy expectations; the National People's Congress at the end of the month, to see if there will be an increase in the issuance of government bonds; the U.S. election in November may bring uncertainty to the export chain, and it is appropriate to avoid it. If Trump is elected, it is likely to be unfriendly to our exports, and domestic demand policies will be further intensified.

Risk Warning:

The stock market is risky, and investment should be approached with caution. This article does not constitute investment advice, and readers need to think independently.