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author: huang jiaxiang and he xiulan

text | reporters huang jiaxiang and he xiulan

the bull market is coming.

on september 30, the three major a-share indexes rose strongly. as of the close, the shanghai composite index rose 8.06%, standing above 3,300 points; the shenzhen component index rose 10.67%, the gem index rose 15.36%, the beixin 50 index rose 22.84%, and the shanghai composite index rose 10.67%. the turnover of the three cities of shenzhen and beijing exceeded 2.6 trillion yuan, setting multiple historical records.

some investors made a profit of 520,000 yuan in the morning, an online author made 3 million yuan in the stock market and immediately stopped updating, a-share transactions exceeded 2.6 trillion yuan in the whole day, setting a record, and investors born in the 1990s and 2000s entered the market... in one day during the period, nearly 20 a-share related topics were on weibo hot searches.

chen guo, chief strategy officer of citic securities, believes that this market is a rare market that combines the three factors of upward revision of profit expectations, falling risk-free interest rates and rising risk appetite, so it is not a simple oversold rebound. in fact, the increase in the hong kong stock index can be considered to have established a bull market in a general sense, and the a-share market under similar background and logic can be considered to be a bull market. taken together, there is still some room for growth in china's stock market.

this round of a-share rally started on september 24, and it has been exactly one week.

since september 24, a series of unexpected policies have been introduced, which has given the a-share market a boost. the three major a-share stock indexes have all risen by more than 20% in the past five days. the total market value of a-shares has also risen. data from the three major exchanges in shanghai, shenzhen and beijing show that as of september 30, the total market value of a-shares was 84.67 trillion yuan, a surge of 16.61 trillion yuan in 5 trading days.

under the strong money-making effect, funds from all walks of life are rushing into the market.

image source: tu chong creative

investors come running

some investors made 520,000 yuan early in the morning, and some online writers made 3 million yuan in the stock market and immediately stopped updating... on september 30, a-shares once again experienced a surge. the turnover exceeded one trillion yuan in the first 35 minutes of the opening, setting a new record and breaking the fastest record in history. trillions of records. on the same day, many brokerage systems experienced "downtime".

many investors have reported on social media platforms such as guosen securities that guosen securities, citic securities, china merchants securities, huatai securities and other securities firms have experienced system lags and inability to trade. some users also reported that the bank transfer certificate function has lags and cannot provide services. account top-up. an investor called guosen securities customer service for consultation. the customer service said that the trading software crashed because the order was too large.

this is the second time the trading system has gone down in the week since the bull market started. on september 27, because the influx of buying orders after the market opened was too concentrated, the shanghai stock exchange's stock bidding transactions were abnormally slow in transaction confirmation, and the apps of individual brokerage firms once encountered system failures. this shows the popularity of investor transactions.

there are more investors rushing to enter the market, and investors born in the 1990s and 2000s are also accelerating their entry into the market, setting off a wave of a-share account openings.

"since september 24, the number of people opening accounts online has been overwhelming, showing a several-fold increase. there have also been more investors coming to the offline sales department to open accounts, and they can't even be reviewed." a securities broker from the sales department of a leading securities firm said. a reporter from times weekly said that among the new investors who opened accounts, the post-90s and post-00s generation accounted for the majority. they have a strong willingness to enter the market and are rushing to enter the market. the atmosphere of the bull market is strong.

ping an securities told times weekly reporters that all business front lines have been busy recently. overall, as market sentiment has warmed since last week, customers' willingness to open accounts has increased significantly, the average daily number of account openings has surged, and there have been queues for online account openings. at the same time, the independent activity of dormant customers has increased significantly compared with the previous period of this month, and individual and institutional customers have the willingness of funds to enter the market is strong, and judging from the trading volume, customers' trading sentiment is enthusiastic.

a reporter from times weekly learned that in order to ensure that investors can enter and trade in a timely manner, securities firms and other relevant institutions are working overtime to process investors' account opening applications.

amid the surge in a-shares, large-denomination certificates of deposit, which were hard to find in the past, have "cooled down" and many banks have launched a wave of transfers of large-denomination certificates of deposit. times weekly reporters found on multiple bank apps that many investors have recently transferred large-denomination certificates of deposit, including many large-denomination certificates of deposit with interest starting in late september. some investors are also willing to transfer part of the interest to the receiver.

dan bin, a well-known private equity manager, recently posted a picture on weibo, in which the dialogue showed: "in more than ten days, the three-month time deposit will expire. don't give up the regular interest and join the stock market."

"when the bull market starts, the most fearful thing is to go short." a senior investor told a reporter from times weekly, but he did not dare to add too much after the sharp rise.

cicc pointed out in a research report that fomo also caused sentiment to be taken into account very quickly, and even many technical indicators were "overdrawn" in the short term. the shanghai composite index also reached 94.1, indicating that it was "overbought" in the short term.

according to data from the industrial and commercial bank of china, the bank's bank-securities transfer net value index soared to 7.04 on september 27, setting a new high in three and a half years since 2021.

there are multiple signs that money is coming in.

industry insiders remind investors that they should not only see the opportunities brought by the surge in a-shares, but also need to stay calm, pay close attention to policy trends and market changes, and make rational investment decisions.

"bull market" starts this week

it only took 5 trading days for a-shares to go from 2,700 points to 3,200 points. the shanghai composite index and the csi 300 recorded their largest weekly gains since 2008.

a-shares have a saying that "one positive line changes your mood, two positive lines change your views, and three positive lines change your beliefs." this return of market confidence stems from a press conference on september 24 and a series of subsequent policy packages that exceeded expectations.

on september 24, the state council information office held a press conference. pan gongsheng, governor of the people's bank of china, li yunze, director of the state administration of financial supervision, and wu qing, chairman of the china securities regulatory commission, jointly launched the "one bank, one bureau, one meeting" including the first creation support monetary policy tools for the stock market and a package of policies to promote medium- and long-term capital entry into the market.

in this round of policy "combinations", the two newly created tools by the central bank to support the stock market have exceeded market expectations. the first item is to create swap facilities for securities, funds, and insurance companies to support qualified securities, funds, and insurance companies to obtain liquidity from the central bank to invest in the stock market through asset pledges such as bonds, stock etfs, and csi 300 constituent stocks. the second item is to create a special re-loan for stock repurchase and increase in holdings to guide banks to provide loans to listed companies and major shareholders to support repurchases and increase in stock holdings.

"we plan to scale the first phase of the swap facility to 500 billion yuan, and expand the scale in the future depending on the situation. as long as this thing is done well, the first phase will be 500 billion yuan, and another 500 billion yuan can be added, and even the third phase can be launched 500 billion yuan, i think it is acceptable, and our attitude is open," pan gongsheng said.

li zhan, chief economist of the research department of china merchants fund, told a reporter from times weekly that the swap facility will significantly improve the ability of institutions to acquire funds and increase stock holdings, and better play the role of stabilizer in the capital market of securities, funds, and insurance companies. for the current situation improving a-share liquidity has great benefits. the effect of the policy may be compared to the term securities lending facility launched by the federal reserve in 2008. the federal reserve allows primary dealers to use less liquid securities as collateral to borrow more liquid treasury bonds from the federal reserve, which facilitates financing in the market and plays a role in improving the effect of stimulating the market.

regarding stock buybacks, holdings and refinancing, pan gongsheng said that this is a very frequent transaction in the international capital market. he revealed that the central bank will issue re-loans to commercial banks, with a funding support ratio of 100% and a re-loan interest rate of 1.75%; the interest rate for re-loans provided by commercial banks to customers is around 2.25%, with an initial quota of 300 billion yuan.

li zhan believes that since july 2024, the repurchase and holding activities in the a-share market have increased significantly, with the repurchase amount more than double that of the same period last year. the launch of special refinancing at this time is precisely in the hope of further increasing liquidity by enhancing liquidity. boost capital market confidence.

favorable policies are coming one after another. on september 26, the political bureau of the central committee held a meeting to analyze and study the current economic situation. the meeting affirmed the economic work this year and pointed out that the fundamentals of our country's economy and favorable conditions such as a vast market, strong economic resilience, and great potential have not changed. it also pointed out that there are some new situations and problems in the current economic operation, which must be comprehensive and objective. we should look at the current economic situation calmly, face up to difficulties, strengthen confidence, and make policy arrangements in finance, currency, real estate, capital markets, corporate bailouts, consumption promotion, people's livelihood, and employment protection.

cicc believes that the core of this round of policy changes is also the reason for the positive market response: first, it directly encourages the private sector to increase leverage (stock market and real estate) through many financial policies; second, it puts more emphasis on people's livelihood and consumption, conveying the same message as in the past. not exactly the same signals and ideas.

"after the shanghai composite index returns to above the integer mark, a phased bottom may be basically formed." cicc's latest research report said that from the perspective of investors, the more urgent question may be whether a shares can reverse the situation since the beginning of 2021. the adjustment cycle has lasted for more than three years, forming historic "big bottoms" similar to those in mid-2005, the end of 2008, mid-2014, and early 2019.

china europe fund told a reporter from times weekly that after several consecutive days of gains, the stock market is returning to a reasonable value, showing the market's positive attitude towards policy responses. it is expected that in the coming period, with the gradual implementation of policies and the advancement of incremental policies, the a-share market is expected to get out of the downturn of the past three years and enter a new stage of development.

attract medium and long-term funds to enter the market

to boost the capital market, medium and long-term funds are particularly important. at present, problems such as insufficient total medium and long-term funds in the capital market, poor structure, and insufficient leadership are still prominent, and the institutional environment for "long-term money and long-term investment" has not yet been fully formed.

"long-term money is indeed very important." wu qing said that the investment operation of medium and long-term funds is highly professional and stable, which is of great significance for overcoming short-term market fluctuations and playing the role of stabilizer and ballast stone in the capital market. .

after the political bureau meeting of the cpc central committee on september 26, with the consent of the central financial commission, the central financial office and the china securities regulatory commission jointly issued the "guiding opinions on promoting the entry of medium and long-term funds into the market", aiming to vigorously guide the entry of medium- and long-term funds into the market and open up social security and insurance. , financial management and other funds entering the market, and strive to boost the capital market.

wu qing introduced that as of the end of august 2024, the total circulating market value of a-shares held by equity public funds, insurance funds, various pension funds and other professional institutional investors is close to 15 trillion yuan, which has more than doubled from the beginning of 2019, accounting for the proportion of a-share market value in circulation increased from 17% to 22.2%. next, the china securities regulatory commission will continue to vigorously develop equity public funds, mainly promoting the innovation of index products such as broad-based etfs.

at present, insurance funds have become the second largest institutional investor in my country's stock market and public fund market. since 2024, the scale of my country’s insurance funds entering the market has continued to grow and has become an important incremental financial force this year.

ping an securities’ research report shows that insurance fund equity positions have stabilized at 12%-14% since 2017. although the policy upper limit is 30%, it is subject to greater constraints such as capital costs, terms, and liquidity.

wu qing said that to improve the supporting policies and systems for the entry of various types of medium and long-term funds into the market, the focus is to improve the inclusiveness of supervision of medium- and long-term capital equity investments and to fully implement long-term assessments of more than three years. break through the institutional obstacles that affect the long-term investment of insurance funds, promote insurance institutions to become firm value investors, and provide stable long-term investment for the capital market.

zhu junsheng, a member of the expert committee of the china insurance and social security research center of peking university, told a reporter from times weekly that risk tolerance should be appropriately increased to increase the enthusiasm of insurance funds to support the capital market and serve the real economy. regulatory authorities can guide insurance institutions to extend the assessment period, optimize the performance assessment system, and advocate long-term investment concepts. at the same time, insurance institutions must improve their investment capabilities and improve the economic incentives and liability matching mechanisms for risk-taking.

zhu junsheng also suggested optimizing solvency rules to support insurance funds in improving equity asset allocation. regulatory rules can be further optimized to reduce the risk factors of equity assets such as equity and stocks, reduce the occupation of capital by long-term equity investments, reduce the sensitivity of equity capital to fluctuations in solvency, and provide conditions for insurance companies to increase the proportion of equity asset allocation.

"insurance funds, with their long term, large scale and stable sources, have an advantage among many long-term funds." long ge, deputy director of the innovation and risk management research center of the university of international business and economics, told a reporter from times weekly that the state administration of financial supervision continues to optimize insurance supervisory policies on the use of funds will help promote insurance funds to serve the real economy and major national strategies at a higher level, and promote the steady development of the capital market.

the influx of foreign capital is accelerating

foreign capital is also accelerating its entry into the market, and global funds are buying chinese assets in large quantities.

on september 24, goldman sachs’ prime brokerage business prime (pb) collectively recorded the largest single-day net buying volume of chinese stocks since march 2021, and the second largest single-day net buying volume in the past decade, almost completely driven by long buying. goldman sachs said that as of september 26, chinese stocks had been bought in goldman sachs' pb business (macro managers, quantitative and multiple managers, that is, short-term traders) for eight consecutive days.

david tepper, the legendary american wall street investor, publicly stated that he is now particularly optimistic about chinese assets and is willing to put all in.

landlord ming, china head of ubs global financial markets, told times weekly that the three major financial management departments and the politburo meeting issued a series of favorable policies, both in form and content, which greatly exceeded market expectations, and the market responded immediately. positive feedback. overall, last week did mark a clear turning point for the entire china a-share market.

judging from the transaction volume of northbound funds, since september 24, the transaction volume of northbound funds has increased significantly. wind data shows that on september 24, 25, 26, 27, and 30, the transaction amounts of northbound funds were 165.315 billion yuan, 188.167 billion yuan, 190.278 billion yuan, 182.572 billion yuan, and 356.932 billion yuan respectively.

a research report released by cicc on september 30 pointed out that based on data from various calibers (global capital flow monitoring agency epfr, shanghai-hong kong stock connect, etc.) and customer communication, it was found that long-term foreign capital has not yet flowed in significantly, that is, long-term foreign capital is more reduce underweighting to prevent significant underperformance, and have not increased positions aggressively yet. trading and passive funds may be dominant. among them, the surge in epfr passive fund inflows may be more reflected in the behavior of non-institutional investors and also explains the surge in heavyweight stocks in the index.

"looking at the market outlook, usually after a 20% rebound from the bottom, there will be a certain stalemate between long and short, some will take profits, and there will also be sector rotation." landlord ming told a reporter from times weekly that in the recent period of strong policy signals, driven by this, market expectations have changed relatively clearly, and investor confidence has also recovered significantly.

landlord ming believes that the next key is to follow up on fundamentals. in addition to the stable implementation of existing policies, it is important to further launch new policies and continue to effectively deliver positive signals. if more policies are introduced later, not only in terms of content, but also in form, they should send a firm and confident signal to the market in a language that the market can understand. at the same time, we look forward to the follow-up of fiscal policies and substantial support and care for private enterprises and entrepreneurs.