Before the National Day holiday, the A-share market experienced a rare consecutive rebound, and how the market will perform after the holiday has become the focus of investors.

Choice data shows that from October 1st to 7th, the Hang Seng Technology Index soared by 13.36%, and the Hang Seng Index rose by 9.3%; from October 1st to 4th, the NASDAQ Golden Dragon China Index, which represents the performance of Chinese concept stocks, surged by 11.35%.

For the A-share market after the holiday, both domestic and foreign institutions unanimously expressed optimism, believing that the stock market's profitability is still strong. "In the past week, foreign capital's position in Chinese assets has significantly increased, and the A-share strategy can follow the performance of the Hong Kong stock market during the National Day holiday," said some market participants.

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To cope with the potential hot market, some securities firms have expanded their systems, some have advanced the acceptance time for bank-broker transfers, and others have arranged for staff to return to work early and work overtime during the National Day holiday to fully prepare for the market opening after the holiday.

Domestic and foreign institutions unanimously看好 the A-share market.

Before the National Day holiday, the A-share market continued to rise; after the holiday, how the market will perform has become the focus of investors.

For the trend of the A-share market after the holiday, domestic and foreign institutions have significantly strengthened their consensus: foreign institutions such as Goldman Sachs, BlackRock, UBS, and Bank of America Securities have intensively raised their ratings on Chinese stocks to "overweight" and have tactically shifted from H-shares to A-shares; domestic securities analyst teams generally agree that the market trend after the holiday will continue, and the stock market's profitability is still strong, with some securities firms believing that the market trend will "rise first and then differentiate".

Foreign institutions: Intensive upgrade of Chinese stocks to "overweight"

During the National Day holiday, as Chinese assets represented by Chinese concept stocks and Hong Kong stocks soared, foreign institutions intensively issued reports to upgrade their ratings on Chinese stocks.Goldman Sachs' Equity Strategy team has upgraded its rating on Chinese stocks to "overweight" in its latest report, raising its target prices for the MSCI China Index and the CSI 300 Index. Liao Jingjin, Goldman Sachs' Chief China Equity Strategist, stated that there is a current preference for A-shares.

Goldman Sachs believes that the coordinated and robust policy measures in China have triggered a significant rebound in the stock market. The MSCI China Index has risen by 34% from its low point in mid-September, with a year-to-date gain of 31%, making it one of the best-performing indices globally. In Goldman Sachs' view, the exceptional gains in the Chinese market are catalyzed by a combination of decisive policy actions, an oversold situation in capital flows over the past period, a valuation repair in the Chinese stock market, and the underweight position of hedge funds and other capital in the Chinese market.

Goldman Sachs indicates that there is still room for further increases in Chinese stocks. The firm has raised its target levels for the MSCI China Index and the CSI 300 Index over the next 12 months from 66 points and 4000 points to 84 points and 4600 points, respectively. This implies that there is still a potential for a total return increase of 15% to 18%.

BlackRock Investment Institute, in its weekly market commentary, has upgraded its rating on Chinese stocks from "neutral" to "moderately overweight" in the short term. The institution believes that even after the significant rise before the holiday, the discount of Chinese stocks relative to developed market stocks remains close to historical levels. Moreover, there may be significant fiscal policies to be introduced subsequently, prompting investors to re-enter the market, and there is still room for a moderate increase in Chinese stocks in the short term.

Wang Zonghao, Head of UBS China Equity Strategy Research, stated that the target price for the MSCI China Index has been raised, and there has been a tactical shift from H-shares to A-shares. "Our conclusion is that the market may have greater upside potential, especially in the short term." Wang Zonghao believes that in the short term, the performance of A-shares may exceed that of H-shares.

According to Bank of America Securities' platform fund data analysis, the global funds' position in China appears to be "full." Over the past two weeks, data from Bank of America's platform shows that long funds have net purchased about $3.4 billion worth of Chinese stocks. Bank of America Securities believes that global funds are trying to get in ahead of schedule before October 8th, buying Hong Kong stocks, U.S. stocks listed depository receipts, and ETFs linked to overseas A-share indices.

Domestic Brokers: The Market Trend is Expected to Continue

From the perspective of domestic brokers' October strategy views, most sell-side research analysts agree that the market trend after the holiday will continue, and the stock market's money-making effect remains strong. Some brokers believe that the market trend will be "first a general rise, then differentiation."

CITIC Securities Research Department released a report on October 7th, judging that there has been a significant change in the current domestic policy signals, and market expectations have undergone a major reversal. The continuous intensification of domestic demand policies in the future may drive the price signal to arrive earlier, and the A-share market trend is expected to迎来 a major turning point.

Guosen Securities, in its October strategy view, analyzed that the current A-share market repair process is relatively fast, the absolute valuation is not high, and the market sentiment is somewhat excited but still has a large space from the historical top. Moreover, the Hong Kong stock market also performs outstandingly, with a rapid short covering momentum, and the consensus between domestic and foreign capital is strengthened. The continuity of the overbought trend after the holiday may become an important observation indicator.CITIC Securities' Chief Strategy Officer, Chen Guo, stated: "We believe that this round of market movement is a rare opportunity where three factors are all present: upward revision of earnings expectations, decline in risk-free interest rates, and an increase in risk appetite. Therefore, it is not a simple oversold rebound but a reversal." Chen Guo remains optimistic about the medium-term trend of the market. However, he also cautions that due to the rapid short-term rise, the market may experience a technical correction at any time after the holiday.

In the view of Shenwan Hongyuan Securities, currently, foreign capital, transactional funds, and positions of small and medium investors are all relatively low, and in the short term, capital from all sources is pricing in optimistic expectations. During the National Day holiday, the progress of the Hang Seng Index has already taken the lead over the A-share market, so it is possible that A-shares may experience a concentrated rise after the holiday to repair the price ratio.

Hang Seng Index

Transaction volume continues to increase, Hang Seng Index rises nearly 10% in 4 days

During the National Day holiday when A-shares are closed, the Hang Seng Index still has 4 trading days. During this period, the Hang Seng Index has shown a significant increase, with multiple indicators showing that Hang Seng Index investors are in a fervent mood, and foreign capital also shows a significant trend of increasing allocation to the Hang Seng market.

Data shows that within 4 trading days, the Hang Seng Index increased by 9.3%, the Hang Seng China Enterprises Index increased by 10.93%, and the Hang Seng Technology Index increased by 13.36%, all exceeding the same period in 2015, making it the best performance of the Hang Seng Index during the National Day holiday in at least 10 years.

Transaction volume continues to increase

During the National Day holiday, despite the absence of Southbound Trading funds, the transaction volume of the Hang Seng market continues to increase. On October 2nd, the transaction volume of the Hang Seng market was 433 billion Hong Kong dollars, comparable to the transaction volume of 445.7 billion Hong Kong dollars on September 27th. The FTSE China A50 Index futures also continued to rise, with a cumulative increase of more than 14% from October 1st to 7th.

ETFs with a high correlation with A-shares all rose sharply. The STAR Market 50 ETF listed on the Hong Kong Stock Exchange - the Southern STAR Market 50 ETF - accumulated a nearly 49% increase during the 4 trading days of the National Day holiday. The Bocom STAR Market 50 ETF accumulated an increase of more than 124% during the same period. Industry insiders believe that the significant increase in these ETFs may be a preview of the related indices after the A-share market opens.

Zhongtai International Strategy Analyst, Yan Zhaojun, stated that despite the closure of the Southbound Trading and A-shares during the National Day holiday, the Hang Seng market has seen a comprehensive surge, and transactions continue to rise, reflecting the characteristics of funds entering the market one after another. Compared with the historical average positions of foreign capital giants, the positions of global investors are still very light, and there is still a large amount of incremental capital to come.Recently, many hedge funds have accelerated the allocation of Chinese assets, with the purchase speed reaching a new high.

On October 4th, data disclosed by the Hong Kong Stock Exchange showed that JPMorgan Chase bought several Hong Kong stocks on September 27th, adding at least 4.1 billion Hong Kong dollars to its Chinese asset portfolio in one day. On September 27th, JPMorgan Chase bought 267 million Hong Kong dollars worth of China Pacific H shares, 1.791 billion Hong Kong dollars worth of BYD H shares, 242 million Hong Kong dollars worth of Tsingtao Beer H shares, and 1.813 billion Hong Kong dollars worth of Hong Kong Stock Exchange H shares.

Data disclosed by the Hong Kong Stock Exchange on the evening of October 2nd showed that JPMorgan Chase increased its holdings of China Ping An H shares by 1.771 billion Hong Kong dollars on September 26th, and increased its holdings of China Merchants Bank H shares by 895 million Hong Kong dollars on September 25th.

JPMorgan Chase is one of the largest brokers in the United States. In addition to using its own funds for increases and decreases, it also operates a significant amount of funds for its foreign clients. Even earlier, JPMorgan Chase had bet on a strong rise in Chinese assets.

In September of this year, JPMorgan Chase released an A-share research report stating that strong policy stimulus would promote a strong rebound in A-shares, with three major drivers of this rebound: a decrease in short selling ratios in Hong Kong stocks, an increase in the balance of two-way financing in A-shares, and the excitement of investors.

On October 2nd, the macro research team of Huafu Securities released a research report stating that from the latest marginal changes, since September, overseas funds in Hong Kong stocks have begun to net inflow, and since the middle and late months, the net inflow scale of funds from international intermediary agencies has reached 39.6 billion Hong Kong dollars, exceeding the net inflow of 20.5 billion Hong Kong dollars from southbound funds.

Hong Kong stock account opening is hot

Driven by the hot market of Hong Kong stocks, the number of investor account openings and margin trading has increased to a certain extent.

According to reporters, in the past week, the daily download volume of Huatai International's Zeng Le Global Pass has been twice as much as usual; the number of daily account opening applications has doubled compared to ordinary days; the total margin trading has increased by 20% compared to the previous week, and the daily active users have doubled compared to usual times.

Many mainland securities brokers have said that the number of Hong Kong stock connection permissions has increased significantly. During the National Day holiday, mainland securities firms have also seized the opportunity to promote Hong Kong stock connection business, with many front-line employees of securities firms working overtime to cope with the expected significant increase in Hong Kong stock connection business after the holiday.The AH premium index continued to decline during the National Day holiday. As of the close on October 7th, the index had fallen by 13.39% over the holiday, closing at 128.49 points. This closing level also set a new low since the end of June 2020.

Shenwan Hongyuan stated that, looking at the price relationship between Hong Kong stocks and A-shares, the progress of Hong Kong stock increases has taken the lead over A-shares. As of October 4th, the AH premium has retreated to the 3.7th percentile of the past 20 years. In terms of industries, the AH premiums in non-bank finance, home appliances, machinery equipment, commercial retail, power equipment, environmental protection, and other sectors have retreated to an absolute low not seen in the past 20 years.

"In the past week, foreign capital's position in Chinese assets has been significantly increased, and A-share strategies can follow the performance of Hong Kong stocks during the National Day holiday. This is because Hong Kong investors have already chosen the targets and priced them in advance for A-share investors. It can be said that Hong Kong stocks have actually become the 'futures' of A-shares. After the holiday, A-share investors will buy A-share companies that have seen a significant increase in H-shares until the pricing of A-shares and H-shares is revalued to a new balance point," said a Hong Kong stock market participant.

Huafu Securities stated that the recent outstanding performance of Chinese assets, represented by Hong Kong stocks, is the result of multiple factors working together: on one hand, various favorable policies have been frequently introduced, significantly boosting market confidence; on the other hand, the Federal Reserve's interest rate cut in September has led to a marginal relaxation of the global liquidity environment. Overall, the current Hong Kong stock market trend is still ongoing, and there is still room for further increases.

Securities firms

Early opening, early return to work, system upgrades, all business lines are fully preparing for the post-holiday market opening

In this round of market activity, due to the heated trading, the number of people handling bank-broker transfers has surged. On September 30th, many investors reported slow and sluggish bank-broker transfer systems. To cope with investors entering the market after the holiday, the reporter learned that some leading securities firms plan to advance the acceptance time for bank-broker transfers.

Huatai Securities issued a notice to customers stating that the company has contacted and confirmed with some banks that the ordinary third-party transfer time on October 8th can be temporarily advanced: Bank of Communications, Bank of China, China Merchants Bank, China Minsheng Bank, Everbright Bank, Ping An Bank have been advanced from the original 8:30 to 7:30; Agricultural Bank of China, Ningbo Bank have been advanced from the original 8:30 to 8:00; China Construction Bank has been advanced from the original 8:30 to 8:12.

CITIC Securities issued a system announcement stating that according to the arrangements of some custodian banks, on October 8th, Bank of China, CITIC Bank, China Merchants Bank, and Shanghai Pudong Development Bank will start supporting third-party transfers (excluding credit) at 7:30; Agricultural Bank of China will start supporting third-party transfers (excluding credit) at 8:00.

At present, the bank-broker transfer business in the A-share market has not yet achieved all-weather service, but some securities firms can achieve 24-hour bank-broker transfer services for some periods or channels through cooperation with specific banks.In response to the demand for account opening and the potential trading peak that may occur after the holiday market opens, securities firms' various business departments are actively preparing. Reporters from Shanghai Securities News learned that starting from October 6th, some securities firms have internally issued notices to return to work in advance, requiring all employees in wealth management and brokerage business lines, including branch institutions, to end their holidays and return to work, and to hold business command meetings for wealth business lines. The securities firms' information technology, operations, customer service, online finance, and other back-end operation and support departments are also working overtime to fully prepare for the post-holiday market opening.

During the National Day holiday, most securities firm business departments and branch personnel did not rest. On the one hand, they arranged for personnel to be on duty to assist new customers in opening accounts online; on the other hand, they actively organized offline investor education and account opening consultation activities.

"The number of customer inquiries at the branch has significantly increased compared to the past, and the number of account openings has increased by more than 200%. Front-line personnel are conducting service activities both online and offline to seize market opportunities," said Huang Huanjie, General Manager of Hubei Branch of Huajin Securities. During the holiday, the branch did not close, management personnel were on duty on site, encouraging marketing personnel to actively invite customers to discuss business on-site, providing strong service support for the front-line.

A person related to GF Securities introduced that during the holiday, personnel were arranged to be on duty throughout the process to ensure that more than 300 business outlets "account opening and service are not closed". Reporters learned from Minsheng Securities that during the National Day holiday, the customer service center, in response to the surge in business handling volume, ensured that witnessing, callback, consultation and other work were carried out in an orderly manner, gave up holidays and timely increased the number of on-duty personnel, worked overtime to ensure the smooth completion of work, and provided 7*24 hour service for investors.

Reporters learned that in this round of market, the activity of securities firm trading software has greatly increased. A person related to GF Securities introduced that the activity of Yitaojin App has significantly increased, increased by 50% compared to the previous low market period, and the activity of some first-level channels is even more than twice that of the previous period.

In response to the potential hot market after the holiday trading day, some securities firms have expanded their systems, mainly including system and line upgrades.

It is reported that GF Securities has started system performance capacity evaluation and expansion work. On the one hand, in the evaluation process, historical transaction data are deeply analyzed, all systems involving trading and customer service are reviewed for performance indicators, resources that need expansion are identified, including server resources, network bandwidth, etc., to make expansion decisions more effectively. For the Internet line bandwidth that undertakes customer access and the access to the main station throughout the country, more than 2 times expansion has been implemented to improve customer experience. On the other hand, for key trading and customer service systems, in conjunction with the exchange arrangement, targeted special stress tests have been carried out to simulate extreme trading scenarios to ensure that the system can still run stably under high load.

ETF

In the first three quarters, nearly 800 billion yuan of funds poured into ETFs

ETF has become a strong path for capital layout. In the first three quarters of this year, nearly 800 billion yuan of funds entered the market through ETFs, and "giant" ETFs emerged in large numbers. The latest scale of Huatai BaiRui Shanghai and Shenzhen 300 ETF approached 400 billion yuan, and Nanfang Zhongzheng 500 ETF became the sixth ETF with a scale exceeding 100 billion yuan. In the recent lifting market, ETFs have continued to increase in volume, with Huatai BaiRui Shanghai and Shenzhen 300 ETF's daily transaction volume reaching 25.8 billion yuan, setting a historical high.In the volatile market this year, ETFs have become a tool for capital to layout against the trend. Choice data shows that in the first three quarters of this year, 790 stock ETFs invested in the A-share market had a total net inflow of 783.938 billion yuan, which has far exceeded the 510.677 billion yuan for the whole of last year.

Looking at the intervals of capital inflow, it is mainly concentrated in two stages: the first stage is the first two months of this year. In the market's volatile adjustment, institutions such as Central Huijin made a big move and entered the market in a big way by increasing their holdings of broad-based ETFs. Statistics show that in the first two months of this year, the net inflow of capital into stock ETFs was about 326 billion yuan; the second stage is the third quarter of this year, with the net inflow of capital into stock ETFs being about 360.9 billion yuan.

With the continuous influx of capital, giant ETFs are continuously born. Data shows that as of the end of September, the scale of Huatai BaiRui Shanghai and Shenzhen 300 ETF was 397.5 billion yuan, Yifangda Shanghai and Shenzhen 300 ETF was 262 billion yuan, Huaxia Shanghai and Shenzhen 300 ETF and Huaxia Shanghai Stock Exchange 50 ETF both exceeded 160 billion yuan, Jia Shi Shanghai and Shenzhen 300 ETF was close to 150 billion yuan, and Nanfang Zhongzheng 500 ETF also exceeded 120 billion yuan.

It should be noted that Nanfang Zhongzheng 500 ETF only broke through the 100 billion yuan mark in the last two trading days, becoming the sixth equity ETF to break through the 100 billion yuan scale. Choice data shows that on September 26, the scale of this ETF was 99.8 billion yuan, and on September 27, it increased to 105.8 billion yuan.

The rapid leap in the scale of Nanfang Zhongzheng 500 ETF is related to the strong performance of the growth sector recently. As of September 30, in the past five trading days, the growth sector represented by the ChiNext Index rose by as much as 42.12%, which also promoted the scale of growth style-related ETFs to increase significantly.

Data shows that after the sharp rise in the past few trading days, the scale of many growth style ETFs has increased significantly. The scale of Huaxia Kechuang 50 ETF is also as high as 92.4 billion yuan, Yifangda ChiNext ETF is 74.3 billion yuan, Nanfang Zhongzheng 1000 ETF is 70.2 billion yuan, and Yifangda Kechuang Board 50 ETF is 56.6 billion yuan.

In the recent sharp rise, ETFs are still an important direction for investors to enter the market. On September 30, Huatai BaiRui Shanghai and Shenzhen 300 ETF released a huge volume, with a total transaction amount of 25.8 billion yuan for the day, exceeding the 19.9 billion yuan on July 6, 2015, setting a historical record, which is also the first time that the transaction amount of Huatai BaiRui Shanghai and Shenzhen 300 ETF exceeded 20 billion yuan.

After the recent strong rise in the market, institutions still look forward to the future market, while also reminding to pay attention to the actual situation of the economic fundamentals, and the next step is to pay attention to the implementation of policies and actual effects.

Guohaifranklin Fund believes that a package of favorable policies recently has driven a round of stock market increases. Looking forward to the future market, China's future economic growth is still expected to maintain a medium speed, and the quality of economic growth is higher than before. The continuous growth of the new economy throughout 2024 and the recovery of the momentum of the traditional economy may provide a strong fundamental support for the capital market, and the foundation for the long-term good performance of the capital market is becoming more and more solid, and the explosive power of the rise may become stronger and stronger.

China Merchants Fund said that looking forward, policy expectations will help to stabilize market sentiment and drive a stock market rebound. In the short term, focus on consumer and real estate chain sectors that have been oversold and benefited from policy efforts, as well as undervalued growth with stable growth expectations, such as electric power, new medicine, electronics, and communications. The height of the medium-term market still depends on the subsequent policy implementation and the intensity of the increase, focusing on the effects of the implementation and landing of incremental fiscal policies and real estate policies, as well as the recovery of economic demand.For the upcoming layout direction, Huaxia Fund stated that with the surge in investment sentiment, the market remains in a stage of being bullish, but the rapid rise to some extent has overspent the space for a comprehensive upward trend, and the market is inevitably going to be differentiated.

Fund Issuance

In the first week after the holiday, 30 funds were launched, with equity funds taking the lead

With the significant warming of the A-share market, in the first week after the National Day holiday, equity funds will be the main players in the new issuance market, with 18 funds launching in a concentrated manner. At the same time, the fund layout presents a multi-point offensive trend, with new funds being launched in various fields such as dividends, technology, and gold. Industry insiders believe that the A-share market is expected to usher in a new phase of dual-wheel drive with a continuous rise in investors' risk preference and an improvement in corporate earnings expectations.

Choice data shows that in the first week after the holiday (October 8th to 11th), a total of 30 funds entered the sale period, with equity and hybrid funds accounting for 60%. Eight fund companies appeared in the equity new issuance market, including well-known companies such as E Fund, Huaan Fund, Southern Fund, Guotai Fund, and Fudan Fund.

"Considering the favorable policy and the upward space of the low valuation market, the company is very optimistic about the performance of the subsequent A-share market. At present, the approval pace of equity funds is relatively fast, and we will start the issuance of the newly declared funds as soon as possible." said a person in charge of a fund company that is currently declaring a new fund.

Recently, the A-share market has risen sharply under the promotion of the "policy combination punch", equity funds have rebounded on a large scale, and the stock fund index has been rising for several days. The improvement of investors' risk preference has also driven the heat of the fund sales market. Taking the data of JD Finance as an example, recently, more than 50% of the fund "sleeping customers" have been awakened, and they have opened the JD Finance App to check their account status; on September 30th, the daily fund subscription volume on the JD Finance platform increased by 1924% compared to the previous day, and the number of subscribers increased by 253% compared to the previous day.

The direction of new fund issuance reveals the subsequent layout path of fund companies. From the situation of new fund issuance in the first week after the holiday, the new fund issuance is mainly concentrated in three major directions: dividends, technology, and gold, such as Zheshang Huijin Dividend Opportunity Mixed, Huaan China Securities Information Technology Application Innovation Industry Index Initiation, and Southern China Securities Shanghai-Hong Kong Gold Industry Stock Index Initiation.

Golden Eagle Fund believes that recently, the policy level has been continuously catalyzed, and clear turning signals have been continuously released in many key areas such as currency, finance, and capital markets. In terms of sentiment and capital, the market's risk preference has also significantly warmed up, and right-side traders have begun to re-enter the market quickly, driving the index to rise continuously. At present, after the index has risen significantly, it has bid farewell to the previous downward channel, and the A-share market is expected to usher in a new phase of dual-wheel drive with a continuous rise in investors' risk preference and an improvement in corporate earnings expectations.

Yongying Fund believes that policy stimulus is expected to support the A-share market to carry out a corrective rebound in the fluctuation, and the trading opportunities will significantly increase. From a medium-term perspective, whether the fiscal side exerts force and the actual effect of credit expansion is the key to determining the medium-term trend of the A-share market. The internal economic policy turning signal, the capital market support policy, combined with the external global liquidity margin relaxation expectation, may support the continuous correction of the A-share market rebound.