The stock market sees a significant rebound today!

A-shares and Hong Kong stocks are experiencing a collective surge, with the Shanghai Composite Index hitting a peak above 1% and nearing the 4,000 point mark, achieving a new yearly high. The FTSE China A50 Index futures continue to rise, gaining over 1%. Analysts indicate that the recent progress in Sino-U.S. trade discussions has boosted market sentiment. Furthermore, positive macroeconomic data has emerged, with the National Bureau of Statistics reporting a 21.6% year-on-year profit growth for industrial enterprises above a designated size in September, up from 20.4% previously.

Looking ahead, several brokerage firms believe the market is poised to maintain strong performance. On one hand, a new round of policy deployments is expected to bolster market confidence; on the other hand, the Federal Reserve's potential interest rate cuts in October may elevate market risk appetite. Overall, multiple favorable factors are likely to support the market's strong performance in the short term.

Upon the market opening on October 27, all three major indices showed strength. By 10:30 AM, the Shanghai Composite Index rose by 0.8%, the Shenzhen Component increased by 0.77%, and the ChiNext Index gained 0.84%. Sectors such as photoresists, memory chips, and computing hardware led the gains, with the CPO concept experiencing a notable upward trend. Companies like Newyeast and Zhongji Xuchuang reached historical highs during intraday trading, and the securities sector also saw significant movements, with Xiangcai Holdings briefly hitting its daily limit.

Similarly, the Hong Kong market continued to climb, with the Hang Seng Index rising by 0.89% and the Hang Seng Tech Index up by 1.1%. Tech stocks and the semiconductor sector were on the rise; Baidu soared over 4%, while Alibaba, SMIC, XPeng Motors, and Hua Hong Semiconductor all rose more than 2%. Pharmaceutical stocks rebounded strongly, with WuXi AppTec surging over 8%, significantly exceeding market expectations for third-quarter net profit.

The FTSE China A50 Index futures opened significantly higher today, building on a 0.35% gain from the previous trading day and rising over 1%.

In terms of news, from October 25 to 26, the Chinese side led by Vice Premier He Lifeng and the U.S. side led by Treasury Secretary Janet Yellen and Trade Representative Katherine Tai held trade consultations in Kuala Lumpur, Malaysia. The discussions were guided by the significant consensus reached during various communications between the two countries' leaders this year, covering important economic and trade issues such as U.S. maritime logistics and shipbuilding 301 measures, extending the suspension period for "reciprocal tariffs", fentanyl tariffs and law enforcement cooperation, agricultural trade, and export control. Both sides engaged in open, in-depth, and constructive discussions and reached a basic consensus on arrangements to address each other's concerns. Agreements were made to further determine specific details and fulfill domestic approval processes.

Meanwhile, positive signs also emerged from macroeconomic data. The National Bureau of Statistics released data today indicating that from January to September, profits of industrial enterprises above a designated size totaled 53,732.0 billion yuan, reflecting a 3.2% year-on-year increase. In September alone, profits surged by 21.6%, compared to a previous increase of 20.4%.

Chief statistician Yu Weining from the Industrial Statistics Department stated that strong support came from the equipment manufacturing sector, with certain industries experiencing rapid growth. From January to September, profits in the equipment manufacturing sector rose by 9.4%, surpassing the average growth rate of all industrial enterprises by 6.2 percentage points and driving a 3.4 percentage point increase in overall profits. Notably, equipment manufacturing profits increased by 25.6% in September, contributing 10.5 percentage points to the monthly profits of all industrial enterprises above the designated size.

Additionally, the high-tech manufacturing sector displayed a significant driving effect. In September, profits in this sector saw double-digit growth, soaring by 26.8% and contributing 6.1 percentage points to the monthly profits of all industrial enterprises above the designated size, marking it as an important driver of high-quality development in industrial enterprises.

How will the market unfold moving forward?

At this juncture, multiple brokerage firms predict that with market sentiment stabilizing, the overall positive feedback effect in the market shows considerable sustainability, suggesting that both A-shares and Hong Kong stocks are likely to maintain strong performance in the short term.

Looking to the future, CITIC Securities anticipates that recent overseas market risk appetite has improved. The release of the "14th Five-Year Plan" proposal is expected to enhance policy clarity, positively impacting market risk appetite in the short run. In the longer term, the blueprint for a modern industrial system outlined in the "14th Five-Year Plan" provides a clear growth path for A-shares, potentially solidifying the foundations of a bullish market through technological breakthroughs and industrial upgrades.

Huaxi Securities noted that the Fourth Plenary Session has solidified investors' expectations for medium- and long-term policies, combined with expectations for Sino-U.S. interactions at the APEC summit and possible Fed rate cuts; short-term risk appetites are likely to be lifted, suggesting that A-shares will continue a "slow bull" market. In terms of structure, "big technology" remains the main line for the medium to long term.

"Short term, the market is expected to maintain strong performance. On one hand, new policy deployments are likely to lift market confidence. On the other hand, the Federal Reserve is expected to continue interest rate cuts in October, which may raise market risk appetite. Overall, many favorable factors are likely to support the market's strong performance in the near term," according to Everbright Securities.

Industrial Securities suggests that with ongoing Sino-U.S. trade negotiations and strengthening expectations of Fed rate cuts, the peak of external disturbances may be gradually passing. More importantly, the proactive positioning of the "14th Five-Year Plan" aims to bolster confidence, unify consensus, and solidify the medium- and long-term narrative of the current positive market conditions; future strategies should be dominated by internal considerations, focusing on the strategic layout surrounding the "14th Five-Year Plan."

Zheijiang Merchants Securities, in its research report, pointed out that A-shares are currently in a systematic slow bull phase. The process of capital migration is gaining momentum, and an influx of new funds is anticipated, leading to expected wealth effects, suggesting that the overall positive feedback effect in the market will prove to be sustainable.

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