A full-scale counterattack!
Today, both the A-share and Hong Kong stock markets surged across the board, with the Shanghai Composite Index rising over 1%, nearing the 4,000-point mark and reaching a new high for the year. The FTSE China A50 Index futures continued to rise sharply, surging over 1%. Analysts pointed out that the latest progress in Sino-US trade consultations has boosted market sentiment. Additionally, positive signals have emerged from macroeconomic data. The latest figures released by the National Bureau of Statistics show that profits of industrial enterprises above designated size grew by 21.6% year-on-year in September, compared to the previous reading of 20.4%.
Looking ahead, some brokerage firms believe that the market is expected to maintain strong performance. On one hand, a new round of policy measures could boost market confidence; on the other hand, the Federal Reserve is expected to cut interest rates again in October, which may increase market risk appetite. Overall, multiple favorable factors are likely to support the market in maintaining strong performance in the short term.
Major Counterattack
On October 27, after the opening of the A-share market, all three major indices strengthened collectively. As of midday, the Shanghai Composite Index rose by 1.04%, the Shenzhen Component Index increased by 1.26%, and the ChiNext Index climbed by 1.54%. Leading gains were seen in sectors such as photoresist, memory chips, and computing hardware. The CPO concept expanded its intraday gains, with New EasySight and Zhongji Xuchuang both hitting new all-time highs during trading. The securities sector experienced an unusual surge, with Hunan Fortune Securities briefly touching the upper limit.
Hong Kong stocks also continued to rise, with the Hang Seng Index climbing by 1.02% and the Hang Seng Tech Index increasing by 1.48%. Technology shares and semiconductor sectors continued their upward trajectory, with Baidu surging over 5%, Alibaba rising more than 3%, SMIC, Hua Hong Semiconductor, Tencent, and JD.com all gaining over 2%. Pharmaceutical stocks rebounded strongly, with Wuxi Apptec jumping nearly 6% as its Q3 net profit exceeded market expectations.
The FTSE China A50 Index futures opened significantly higher, surging over 1%, building on the previous session’s night trading close, which was up by 0.35%.
In terms of news, from October 25 to 26 local time, He Lifeng, the Chinese lead negotiator for Sino-US economic and trade talks and Vice Premier of the State Council, met with US lead negotiator and Treasury Secretary Bessent and Trade Representative Greer in Kuala Lumpur, Malaysia, for Sino-US economic and trade consultations. Guided by the important consensuses reached during this year’s calls between the leaders of both countries, the two sides conducted candid, in-depth, and constructive exchanges on significant trade issues of mutual concern, including the US Section 301 measures on China’s maritime logistics and shipbuilding industries, extending the suspension period of ‘reciprocal tariffs,’ fentanyl tariffs and law enforcement cooperation, agricultural trade, and export controls. The two parties reached a basic consensus on arrangements addressing each other’s concerns and agreed to further finalize specific details and follow their respective domestic approval procedures.
Meanwhile, positive signals have emerged from macroeconomic data. Today, the National Bureau of Statistics announced that from January to September, industrial enterprises above designated size nationwide achieved a total profit of 5.3732 trillion yuan, representing a year-on-year growth of 3.2%. In September, profits of industrial enterprises above designated size grew by 21.6% year-on-year, up from the previous value of 20.4%.
Yu Weining, Chief Statistician of the Industrial Statistics Department of the National Bureau of Statistics, explained that equipment manufacturing provided strong support, with some industries experiencing rapid growth. From January to September, profits in the equipment manufacturing sector increased by 9.4% year-on-year, 6.2 percentage points higher than the overall average of all industrial enterprises above designated size, contributing to a 3.4-percentage point increase in total profits of industrial enterprises above designated size. Specifically, in September, equipment manufacturing profits grew by 25.6%, driving a 10.5-percentage point increase in total profits of all industrial enterprises above designated size for that month.
Moreover, the driving effect of high-tech manufacturing is evident. In September, the profit of high-tech manufacturing industries achieved double-digit growth, with a growth rate reaching 26.8%, boosting the overall profit growth of large-scale industrial enterprises by 6.1 percentage points for the month. This has become an important driver for the high-quality development of industrial enterprises.
How will the market trend evolve?
From the current standpoint, multiple brokerage firms believe that as market sentiment stabilizes, the positive feedback effect across the entire market exhibits considerable sustainability. Both the A-share and Hong Kong stock markets are expected to maintain strong performance in the short term.
Looking ahead, CITIC Securities noted that risk appetite in overseas markets has somewhat recovered recently. The release of the “15th Five-Year Plan” proposal is expected to enhance market risk appetite in the short term. Over the medium to long term, the blueprint for a modern industrial system outlined in the “15th Five-Year Plan” provides a clear growth trajectory for A-shares, which could strengthen the foundation of a bull market through technological breakthroughs and industrial upgrading.
Huaxi Securities pointed out that the Fourth Plenary Session has solidified investors’ medium- to long-term policy expectations. Coupled with expectations of interactions between China and the U.S. at the APEC summit and potential interest rate cuts by the Federal Reserve, short-term risk appetite is likely to be boosted. The ‘slow bull’ trend in A-shares is expected to continue, with ‘big tech’ remaining the medium- to long-term main theme.
“In the short term, the market is expected to maintain robust performance. On one hand, a new round of policy initiatives may boost market confidence. On the other hand, the Federal Reserve is expected to continue cutting interest rates in October, potentially raising market risk appetite. Overall, multiple favorable factors are likely to support the market’s strong performance in the short term,” noted Everbright Securities.
Industrial Securities believes that as China and the U.S. engage in trade negotiations and expectations of Federal Reserve interest rate cuts strengthen, the peak period of overseas disruptions may have gradually passed. More importantly, the positive tone set by the ’15th Five-Year Plan’ communiqué boosts confidence, fosters consensus, and reinforces the favorable narrative for this round of market trends. Going forward, the focus should remain on domestic priorities while strategically planning around the ’15th Five-Year Plan.’
Zheshang Securities noted in its research report that the A-share market is currently in the midst of a systematic ‘slow bull’ phase, with the mid-term process of shifting savings into investments still gaining momentum. Various sources of incremental capital are anticipated, and wealth effects are also worth looking forward to, ensuring that the overall positive feedback effect in the market exhibits considerable sustainability.
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