The current rhythm of the market has slowed down, now oscillating around the 3300-point mark, leading various sectors to experience a shift in momentum as they enter a phase of tireless to-and-fro, often referred to as "a tug-of-war." Yet, despite the deceleration of the market, one cannot overlook the consistent vibrancy of capital flowsAs of October 25, the average daily transaction volume in October has reached approximately 1.98 trillion yuan, with even the lowest daily trading volume surpassing 1.37 trillion yuanFurthermore, there is a continuous influx of new capitalThis is partly due to the People's Bank of China rolling out policies such as the Non-Banking Swap Facility (SFISF) and stock repurchase increases, aimed at propelling the marketCollectively, these measures could inject tens of billions into the market, incentivizing more companies to engage in stock buybacks

Additionally, with the market warming up, there has been a steady increase in the financing balance throughout October.

The rapid surge in market activity prior to this slowdown was a result of a series of policy announcements made at the end of September that exceeded market expectations, effectively reversing a previously pessimistic outlookDuring that time, trading volumes surged to an extent that certain stocks became hard to acquireAs we now witness a period of hesitation, one might ponder whether this slowdown signals caution or is merely a strategic pause for a stronger future advance.

In the operational logic of capital markets, an unyielding pursuit of a "fast-paced" development model does not necessarily guarantee a healthy, sustainable environment

When the market accelerates to almost frenzied heights, it often carries with it waves of irrational sentiments that can send prices skyrocketing in a short spanThese surges are frequently unsupported by the robust fundamentals of the real economy; rather, they result from the interplay of market emotion and speculationThe immediate consequence of this rapid appreciation is a detachment in asset valuations from their intrinsic values, stretching the limits of what fundamentals can realistically supportIf such inflated bubbles grow to a significant degree, the market's vulnerability becomes glaringly apparentA minor disturbance can trigger a reversal in sentiment, leading to severe volatility where rapid gains suddenly turn into sharp declines— a scenario detrimental to the health and stability of capital markets.


In contrast, a market that "slows down" and adopts a steadier pace is akin to undergoing a thorough refinement process, which allows for the distinguishing of genuine value from the superficial

In this relatively slower rhythm, market participants gain substantial opportunities to dissect the actual worth of different assets, eliminating those overvalued due to hype, misinformation, or short-lived speculative trends while retaining those assets that genuinely possess intrinsic value and growth potentialConsequently, a market driven by veritable values and realistic projections lays a much more robust foundation that is poised to exhibit enduring vitality in the future, simultaneously fostering a healthier ecosystem within the capital market.


On a macroeconomic scale, the forthcoming changes in the market largely hinge on the strength and pace of improvements in domestic economic fundamentalsThe fundamentals of the domestic economy serve as the bedrock of the capital market, providing fresh sources of vitality

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If the domestic economy continues to grow steadily, optimizes and upgrades its industrial structure, enhances corporate profitability, maintains favorable employment conditions, and sees steady rises in household income, then these positive fundamentals will provide a continual supply of momentum and support for the capital marketConversely, if the domestic economic landscape faces numerous obstacles, such as sluggish growth, operational difficulties for businesses, and rising unemployment, the capital market would struggle to thrive in such an environmentEven with potential temporary fluctuations or rebounds due to external factors, any uptrend lacking fundamental backing will ultimately prove unsustainable.

Recent data has indicated a marginal improvement in the economy as of September, particularly evident in durable goods consumption and the real estate sector significantly impacted by policy interventions

Retail sales of household appliances and audio-visual equipment soared by 20.5% year-over-year, an impressive acceleration of 17.1 percentage points compared to AugustRetail sales for automobiles experienced a small growth of 0.4%, marking a recovery following months of declineHigh-frequency data from October 1 to 20 showed that the average daily transaction area for commercial housing across 30 cities drastically narrowed its decline from 32.4% in September to just -11%.

However, it is important to note that many policies are only just beginning to take effect, and their impacts will require time to materializeCurrently, the market exists in a phase where expectations regarding policies lead, yet there remains a divergence concerning projections of the underlying economic fundamentalsMany institutional investors have not yet entered the market en masse as they await clearer signals regarding the fundamentals

Citic Securities, based on its latest surveys, revealed that the positions of active private equity funds have rebounded to 69.9%, still noticeably shy of the historical median of approximately 75%. It is anticipated that as policies materialize and price signals stabilize, institutional funds may seize the opportunity to actively participate in the market, prolonging a steady upward trend.

The recent cluster of policies, explicitly aimed at stabilizing growth, also serves to foster a more conducive environment for subsequent reform and high-quality developmentA new productive force has consistently emerged, with high-tech industrial investment rising by 10% year-over-year in the first three quarters, significantly outpacing overall investment growth by 6.6 percentage pointsNevertheless, due to previous suppression of market sentiment, the performance of these sectors has not been particularly pronounced