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recently, the a-share market has experienced an exciting rise, making history!the csi 300 index rose by 15.71% in one week, setting the largest weekly increase since november 2008. the gem index rose by about 10% in a single day on september 27, setting the largest single-day increase in history! this round of stock market gains is mainly due to a series of unexpected policy measures implemented since september 24.

these policies have greatly enhanced investors’ confidence in the market!

data source: choice; statistical interval 2024/9/23-2024/9/27; unit %.

historically, bull markets triggered by policy stimulus are not uncommon. for example, the stock market rose rapidly after the southern tour speech in 1992. the shanghai composite index rose from 386.85 points to 1558.95 points, with a maximum increase of 301%!

in 1994, the government introduced policies including suspending the listing of new stocks and controlling the scale of allotments. the shanghai composite index rose from 325.89 points to 1052.94 points, with the highest increase reaching 224.4%! from 2005 to 2007, the dual benefits of split-share reform and rmb appreciation drove the rise of the stock market. the shanghai composite index rose from 998.23 points to 6124.04 points, with a maximum increase of 513%!

faced with the impact of the global financial crisis in 2008, the chinese government launched a 4 trillion investment rescue plan. the shanghai composite index rose from 1664.93 points to 3478.01 points, with a maximum increase of 108%!

from 2014 to 2015, stimulated by monetary policies such as interest rate cuts, the shanghai composite index rose from 2050.44 points to 5178.19 points, with the highest increase reaching 152%! looking back at previous bull markets, it is not difficult to find that the emergence of bull markets is inseparable from the promotion of policies! this round of policy intensity is equally strong, no less than previous bull markets.

[comprehensive review of recent policies]

we have sorted out a series of recent policies and analyzed the meaning behind them for your reference!

source: compiled based on public information.

[the current stock market price/performance ratio is still relatively high]

the stock market has risen so much, can i still get on the train?

let's first look at the current valuation level, which reflects whether the current price is expensive. taking the csi all-share index as an example, as of september 27, the rolling price-to-earnings ratio of the csi all-share index was 16.72, which is about the 36% percentile in the past 10 years and is still in a low range.

data source: choice; statistical interval 2014/9/29-2024/9/27; unit %.

let's look at the current level of the equity risk premium, which reflects the compensation investors expect to receive for taking on the additional risk of investing in stocks.

this sentence seems a bit confusing. for example, if you play a game, you can get candy if you win, but you may also lose candy.because you are afraid of losing, you hope that if you win, you can win enough candies, so much that even if you lose, you won’t feel a loss.。

those extra candies your heart desires,

it is the equity risk premium.

if the equity risk premium is higher, it means the extra candy is more worth buying.although the recent surge in the stock market has led to a relatively rapid decline in the equity risk premium, as of september 27, the equity risk premium of the csi all-share index was 3.81%, which is still at the high level of approximately the 90% quantile in the past decade!

data source: choice; statistical interval 2014/9/29-2024/9/27; unit %; the equity risk premium calculation formula is the reciprocal of the rolling price-to-earnings ratio - the 10-year treasury bond yield to maturity.

taken together, the current valuation level of the stock market is still in the historically low range, and the risk premium level is in the historically high range. combined with the current policy intensity and possible follow-up interpretation directions, the current stock market still has high allocation value!