After enduring a prolonged period of fluctuations and adjustments, the A-share market in China appears to be poised at a new junctureVarious institutions are echoing the sentiment that a series of favorable policies introduced recently is fostering renewed market optimism, signaling an impending second wave of increases in the stock market.

From a policy perspective, the government is intensifying its support for the capital marketA slew of measures aimed at revitalizing market momentum and optimizing resource allocation has been put in placeThese measures include reducing transaction costs and incentivizing long-term capital to enter the market, serving as a significant boost for stock tradingAs the Chinese economy steadily recovers and corporate profitability improves, this also provides solid foundational support for a strengthening stock market.

On October 25, the A-share market exhibited a widespread surge, with the three major indices experiencing collective gains

By market close, the Shanghai Composite Index stood at 3,299.70 points, marking a 0.59% increase; the Shenzhen Component Index reached 10,619.85 points, up by 1.71%; while the ChiNext Index, which focuses on innovative startups, climbed 2.93% to close at 2,238.90 points.

Reflecting on the previous week, the three indices had noticeably stabilized compared to the volatility observed from late September to early October, with the Shanghai Composite Index primarily peaking around the 3,300 points markAnalysts suggest that the health of various industries will be pivotal in determining excess returns in the upcoming phase, advocating capital allocation towards companies with promising performance and those poised for fundamental recovery.

During the Global Wealth Management Forum held in Shanghai on October 26, Chairman Liu Jian noted that cyclical factors responsible for the relatively lackluster A-share market are showing signs of marginal improvement

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With positive elements accumulating, there seems to be budding potential for long-term institutional investors to increase their holdings in renminbi assets.

As China continues to roll out an array of macro-control policies, both its economy and capital markets have captured the global investors' attentionStock transactions across Shanghai, Shenzhen, and Hong Kong remained robust, although some foreign investors maintain a cautious stance toward Chinese economic prospects and asset investmentsLiu Jian remarks that this cautiousness relates both to the investment philosophies of these institutions and their understanding of the complexities facing the current economy in China.

Looking towards the long term, Liu emphasizes that sustainable economic development is the foundation for the growth of Chinese assets and capital marketsFollowing a phase of rapid development, China still possesses significant potential for urbanization and citizen integration, with regional disparities offering vast growth opportunities and market demand.

Moreover, Liu highlighted that the evolution of new productive forces would drive continued advancements in technological innovation, regulatory reforms, and innovative development models among listed companies

These changes are expected to uplift their profit center, which, under the leadership of high-quality, pioneering technology enterprises, would enhance the investment value return capacity of the capital marketsRecent structural changes in A-share investment trends reflect a shift towards technology and sustainability, as industries adapt to favorable cycles allowing capital to flow more freely.

On a macro level, Liu indicated that a package of monetary, fiscal, and financial policies would create a synergistic effectOver the past three years, A-shares have faced persistent sluggishness due to a confluence of factors, including the downturn of the real estate market, disalignment of interest rates between China and the U.S., and declining corporate earningsHowever, since the third quarter of this year, many of these cyclical factors have begun to show signs of marginal improvement.

According to Industrial Securities, reviewing previous bull markets reveals that the initial rapid growth phase prioritizes individual stock elasticity, while subsequent oscillatory periods tend to highlight the health of specific industries

Following a prior period of swift increases in stock prices, it is anticipated that the market will likely experience significant fluctuations and divergenceCoupled with the disclosure window for third-quarter reports, market focus may shift towards sectors demonstrating advantages in prosperity.

After analyzing the performance across various industries in the third quarter, Industrial Securities identified three key themes warranting notice: the electronics and communication sectors, benefiting from the AI industry cycle and a recovery in consumer electronics demand; the automotive and home appliance sectors, driven by the "trade-in" model and outbound logic; and the renewable energy and pharmaceutical sectors, poised to showcase recovery following their respective third-quarter results.

According to Everbright Securities, there is still room for upward movement in A-share indices, but the market structure is gradually shifting from systemic opportunities to the pursuit of excess returns in specific sectors or individual stocks