A-Share Market Soars 9% in 3 Days, Shanghai Index Hits 3,000 Points
On September 26th, following the convening of the conference, the confidence of A-share investors was once again bolstered.
The conference explicitly emphasized the need to strive to invigorate the capital market, vigorously guide medium and long-term capital into the market, and unblock the bottlenecks for funds from social security, insurance, and financial management to enter the market; support mergers and acquisitions of listed companies, steadily advance the reform of public funds, and study and introduce policies and measures to protect small and medium investors.
This comes after the financial regulatory authorities unveiled a "combination punch" to support the economy and capital market on September 24th at a press conference held by the State Council Information Office (referred to as the "9·24" new policy), with the high-level authorities once again clearly stating their support for the capital market from a policy perspective.
Advertisement
In the afternoon, the market began to surge.
On September 26th, the three major A-share indices all rose sharply. By the close, the Shanghai Composite Index recaptured the 3,000-point mark, surging by 3.61%, the Shenzhen Component Index rose by 4.44%, the ChiNext Index rose by 4.42%, the Beijing Stock Exchange 50 Index rose by 2.97%, and the total market turnover was 1,166.4 billion yuan. Over 5,100 stocks in the two markets rose. The consumer, real estate, and financial sectors all rose across the board.
Prior to this conference, the strength of the "9·24" new policy had already significantly exceeded market expectations, with multiple major policy benefits continuously fermenting, and the sentiment in the capital market was quickly ignited. A-shares staged a "great reversal," initiating a rapid rise, with the Shanghai Composite Index accumulating a gain of over 9% in the last three trading days.
Wind data shows that, looking at the performance ranking of the Wind All A Index over the past five years, there have only been four instances where the Shanghai Composite Index rose by more than 4%, which were on July 6, 2020, February 6, 2024, September 24, 2024, and September 26, 2024.
On the evening of September 26th, the Central Financial Office and the China Securities Regulatory Commission jointly issued the "Guiding Opinions on Promoting Medium and Long-term Capital into the Market," focusing on three measures: building and fostering a capital market ecosystem that encourages long-term investment, vigorously developing equity-based public funds, and focusing on improving the supporting policies and systems for various medium and long-term capital to enter the market.
CITIC Construction Investment Securities' Chief Strategist, Chen Guo, stated in an article that the conference's signal to fully revitalize the economy is very strong, and it also specifically mentioned the effort to invigorate the capital market, which is inspiring and constitutes a double benefit of profits and valuation for the stock market. It is expected that the trends of A-shares and Hong Kong stocks will both reach a higher level.
Reigniting Investor EnthusiasmA rare series of significant moves by the policy level to support the economy and capital markets has reignited enthusiasm among stock market funds.
"Caught another 20% daily limit up."
"Today's performance was good, let's continue tomorrow!"
The great market performance brings a great mood. On the interactive platforms of financial websites, investors are all showing off their profits.
In terms of sectors, liquor stocks are wildly venting, Penghua Zhongzheng Liquor ETF (512690) hit the daily limit up for the first time in history, almost all stocks in the sector hit the daily limit up, Kweichow Moutai (600519.SH) rose by 9%, with the transaction volume breaking 10 billion yuan for three consecutive days. Real estate stocks set off a wave of daily limit ups, Vanke A (000002.SZ) and Poly Development (600048.SH) rarely hit the daily limit up simultaneously, with more than 30 stocks in the sector hitting the daily limit up.
Large finance continues to be strong, Tianfeng Securities (601162.SH), Changjiang Securities (000783.SZ), and Guohai Securities (000750.SZ) hit the daily limit up, CITIC Securities (600030.SH) and China Ping An (601318.SH) rose by more than 6%.
In addition, East Money (300059.SZ), Tonghuashun (300033.SZ), and Aier Eye Hospital (300015.SZ) rose by more than 10%.
An investor from Beijing told the Economic Observer Network that in 2018, he bought a house in Beijing's East Third Ring for marriage. Recently, due to the unbearable existing housing loan interest rate of 4.5%, he decided to use the money at hand to repay part of the housing loan in advance. However, after the meeting on September 24, he abandoned the plan to repay the loan in advance, "just transferred this money from 'silver to certificate', preparing to add some stocks."
On September 26, economist Ma Guangyuan posted on his public account that the long-term downturn in the stock market has seriously affected people's expectations and confidence in the economy. The recent strong rebound in the stock market is partly because it has fallen too much and has almost fallen into an investment pit; on the other hand, it is also related to the recent continuous introduction of policies to stabilize the stock market. Ma Guangyuan mentioned that for the stock market, it is a good time, good location, and good people, with low indices, good policies, strong economic policies, and a bull market, there should be a wave with a high probability.
Financial institutions are also optimistic about the stock market. Manulife Fund said that this year, the stock market as a whole has faced certain pressures, and the market transaction volume has also experienced a certain degree of decline, with a certain situation of insufficient incremental funds and overall market stock game. The introduction of reserve requirement ratio reduction, interest rate reduction, and structural policies will provide more sufficient liquidity support for the market, which is helpful to alleviate funding pressure and stabilize market confidence. The market's demand for long-term stable low-cost liquidity still exists, and the coordination role between monetary policy tools is becoming more and more obvious. Coupled with the recent unexpected interest rate cuts by major overseas economies, global liquidity has also ushered in a phased improvement.The Market's "Stimulant"
Following the official announcement of the "combination punch" policy on the "9·24" new policy, the Politburo meeting continued to express a positive stance, further boosting the confidence of A-share investors.
China Galaxy Securities stated that the Politburo meeting in July 2023 mentioned "vibrant capital markets" and the Politburo meeting in April 2024 mentioned "multiple measures to promote the healthy development of the capital market." The recent Politburo meeting's statement of "striving to boost the capital market" was even more proactive and positive.
Wang Qing, Chief Macro Analyst at Orient Jincheng, believes that the Politburo meeting held on September 26 deviated from the usual practice, indicating that at this point, the work of stable growth is highly valued; the important arrangements made by the meeting, especially the arrangements for real estate work, exceeded general expectations and will play a significant role in unifying thoughts, guiding expectations, and boosting confidence.
On the morning of September 24, Pan Gongsheng, Governor of the People's Bank of China, Li Yunze, Director of the State Financial Supervision Administration, and Wu Qing, Chairman of the China Securities Regulatory Commission, respectively, made significant announcements at a press conference held by the State Council Information Office. A series of policy benefits welcomed A-shares, including reducing the interest rates on existing mortgages, further lowering reserve requirements, vigorously developing equity funds, and arranging for medium and long-term capital to enter the market.
This is the first time the central bank has targeted the capital market with such a large scale to introduce fresh funds. Moreover, in response to a reporter's question about the creation of a stabilization fund, Pan Gongsheng said "under study," which brought another "stimulant" to the market.
After the central bank rarely launched a strong combination of measures to boost the stock market, the A-share market welcomed a long-lost boiling. On September 24, the Shanghai Composite Index returned to 2800 points, with a gain of 4.15%, the largest single-day increase in more than four years.
On the evening of September 24, the China Securities Regulatory Commission (CSRC) formulated the "Opinions on Deepening the Reform of the Mergers and Acquisitions and Restructuring Market of Listed Companies." At the same time, the CSRC publicly solicited opinions on the "Decision on Amending the Measures for the Administration of Major Asset Restructuring of Listed Companies (Draft for Comments)." The CSRC also drafted the "Guidance for Listed Companies No. 10 - Market Value Management (Draft for Comments)" (hereinafter referred to as the "Guidance") and publicly solicited opinions from society. The "Guidance" requires listed companies to improve the quality of listed companies as the foundation, enhance operational efficiency and profitability, and legally and compliantly use mergers and acquisitions, equity incentives, cash dividends, investor relations management, information disclosure, share buybacks, and other methods according to actual conditions to promote the enhancement of the investment value of listed companies.
Wang Zonghao, Head of China Equity Strategy Research at UBS, believes that although the impact on the real economy may take time to manifest, these measures will be more beneficial to the stock market. The most important measures include improving the quality of listed companies, establishing credit tools to provide incremental liquidity to the stock market, providing financial support for companies to repurchase shares, and studying the establishment of a stabilization fund. He believes that a series of measures should be able to build a bottom for market sentiment in the short term. Subsequent documents and the financing costs of credit tools may be the focus that investors need to pay attention to next.
"The bull market is back, return quickly!"This year, the performance of the A-share market has left investors with mixed feelings.
Since 2022, the Shanghai Composite Index began to fluctuate downwards. Especially entering 2024, the Shanghai Composite Index continued to decline from a position close to 3000 points. Starting at the end of January, it successively plummeted, and at the beginning of February, it once fell below 2700 points. The market was extremely depressed.
On February 7th, Wu Qing left his position as the deputy secretary of the Shanghai Municipal Party Committee and took up a post at the China Securities Regulatory Commission (CSRC), becoming the 10th chairman of the CSRC.
After Wu Qing took office, investors held high expectations for the new head of the CSRC. The A-share market ushered in a rebound. Subsequently, the CSRC successively introduced a series of new policies regarding the IPO (initial public offering) of listed companies, dividends, refinancing, delisting, and strict supervision of listed companies and intermediary agencies, continuously reforming and improving the institutional framework of the capital market.
With continuous policy benefits and support from long-term capital entering the market, the Shanghai Composite Index rose from 2700 points at the beginning of February, and after more than three months, it reached close to 3200 points on May 20th.
However, due to various reasons including the decline in Chinese asset prices, the A-share market continued to shrink and decline. On September 13th, the Shanghai Composite Index once again fell close to 2700 points. Market sentiment plummeted to an all-time low.
Investors suffered in the depressed market. Some investors said that they had lost so much that they were even unwilling to open their stock accounts.
On September 24th, the unexpected "combination punch" provided strong stimulus policies for the capital market, opening the door for the "reversal" of A-shares. Market sentiment was quickly activated.
The Politburo meeting on September 26th was even more like a "strong heart injection" for the capital market. The Shanghai Composite Index surged to 3000 points. Investors shouted "Bull is back, come back quickly!"
As of September 26th, Wu Qing has been the head of the CSRC for more than 200 days. In these more than 200 days, the capital market has fluctuated, but what remains unchanged is the forward progress of reforms and investors' expectations for a sense of gain from stock investments.CICC believes that the "1+N" policy system of the capital market is expected to continue to be improved in the future. The China Securities Regulatory Commission (CSRC) has indicated that it will soon issue the "Guidance on Promoting Long-term Capital into the Market," aiming to promote the establishment of a market-oriented incentive and restraint mechanism for share buybacks by listed companies. The release of future relevant institutional rules will help further improve the basic institutional system of the capital market, promote the market's functional role, and assist in driving high-quality development of the capital market.
Looking ahead, Manulife Fund believes that the current domestic macroeconomic fundamentals still face significant pressure, with major indicators such as investment and consumption facing downward revision pressures since the beginning of the year. The policy introduced this time is of significant magnitude and carries a significant signal. After the shift in monetary policy, subsequent policies related to fiscal, consumer, and real estate sectors can still be expected to stimulate domestic demand and stabilize economic growth.
Wang Zonghao believes that the "9·24" new policy has brought surprises to the market because investor expectations were low. These measures also support UBS's views on value enhancement initiatives and improvements in ROE (Return on Equity). UBS believes that this will help achieve long-term, sustainable returns in the Chinese stock market.
CICC stated that, looking at the performance of the A-share market, after experiencing a volatile correction in late May, the market sentiment has rebounded significantly, boosted by a package of policies aimed at stabilizing growth, the market, and expectations. The market performance may encounter some twists after a sharp short-term rise, but the rebound trend is still expected to continue. Active policies help to boost investor confidence, and the current A-share market also shows more obvious bottom characteristics in technical indicators such as trading volume, turnover rate, capital, and valuation.