Recently, the market index approached the 4000-point mark, experiencing repeated fluctuations with frequent style switches. The previously strong technology sector underwent significant adjustments, while the dividend sector, represented by banks, rose against the trend, with a major bank even reaching a historical high in its stock price. However, the focus soon shifted back to technology stocks. This style churning indicates a considerable disparity in market sentiment, but the underlying logic for market growth remains unchanged, with more sectors starting to show opportunities for rotation, including new energy. Officials from the Ministry of Industry and Information Technology have expressed strong support for the future development of new energy, particularly the advancement of solid-state batteries and other next-generation battery technologies, which may catalyze the launch of New Energy 2.0.

In this bullish market trend, technology stocks are the predominant force. The upcoming "14th Five-Year Plan" is expected to announce specific implementations during the 20th Central Committee's Fourth Plenary Session. The primary goal during the "14th Five-Year Plan" period is to achieve significant results in high-quality development and to greatly enhance the level of technological self-reliance, indicating that technological innovation will continue to play an important role in China's economic development. The capital market serves as a crucial hub connecting technology and industry, injecting valuable capital into early-stage hard tech industries through the primary market (PE/VC) while supporting the IPO financing of more technological innovation companies in the secondary market, thus fostering their growth into industry giants.

Currently, the A-share market has generated a technology-driven bull market, with sectors such as humanoid robots, semiconductor chips, solid-state batteries, innovative pharmaceuticals, and low-altitude economy attracting substantial investment and showing marked increases. During the "14th Five-Year Plan," China's economy is expected to achieve steady growth, with the focus on growth not being the speed but the quality, aimed at enhancing total factor productivity and increasing product added value to achieve self-controllable key core technologies. Over the next five years, significant breakthroughs in technological innovation are anticipated, significantly boosting foreign capital's confidence in China's tech industry. Recently, several foreign investment giants, including Goldman Sachs, JPMorgan Chase, and Morgan Stanley, have expressed optimistic views on the future of A-shares and Hong Kong stocks.

In its latest research report, Goldman Sachs points out that the Chinese stock market is entering a slow bull market, a perspective that aligns with mine, as I have previously noted that this market trend represents a slow and long bull market rather than a rapid and irrational bull market. In a slow and long bull market, investors are more likely to achieve returns; in contrast, a fast and irrational bull market can catch many investors off guard and result in significant losses. Hence, the market that truly sustains consumption recovery should be characterized by a prolonged slow and long bull market. Goldman Sachs further stated that as the bull market unfolds, investors’ mindset should shift from selling at highs to buying at lows. This is consistent with my previous emphasis that one should gradually transition from a bear market mindset to a bull market mindset, where each adjustment could represent an opportunity to buy quality stocks and funds. Goldman Sachs' equity strategy analysis team noted that the MSCI China Index has rebounded 80% from its cyclical low at the end of 2022, during which it has experienced four major pullbacks. The Goldman Sachs team believes that the Chinese stock market will enter a more sustainable upward trend, driven by an anticipated 12% growth in earnings and a further 5% to 10% increase in valuations.

According to reports from the Securities Times, Morgan Stanley's Chinese equity strategist Wang Ying stated on October 21 that, in terms of global investors' overall asset allocation, the exposure to Chinese equities remains relatively low. In the long run, increased allocation to Chinese assets by global investors is inevitable. In recent years, many investors have praised China's rapid development across various sectors, noting significant progress in humanoid robotics, automation, biotechnology, and artificial intelligence. Consequently, in their stock allocation, Morgan Stanley recommends a long-term focus on high-tech sectors, including artificial intelligence, automation, robotics, biotechnology, and high-end manufacturing, along with continuous investment in high-quality dividend stocks to mitigate short-term market fluctuations.

JPMorgan Chase's Chinese equity strategy team maintains an optimistic outlook on the A-share market, focusing on the positions of the CSI 300 Index through the mid-term until the end of 2026, mainly due to the gradual shift of residents' asset allocation towards the stock market, which is expected to sustain a rebound trend. It's evident that these foreign investment firms' favorable views on Chinese assets resonate with my perspective.

A massive shift in Chinese household savings is creating increasing investment opportunities in the capital market. Over recent years, savings among Chinese residents have surged to 160 trillion yuan, while the interest rate on deposits has been on a downward trend, with the one-year deposit rate now falling below 1%, resulting in diminishing returns from bank interest. The recent potential for the Federal Reserve to lower interest rates by 25 basis points again, combined with another possible 25 basis point cut in December, also provides room for China's central bank to consider rate cuts. Further reductions in interest rates are expected to facilitate the shift of household savings out of banks in search of investment opportunities. Currently, both the A-share and Hong Kong markets have embarked on a bullish trend, still in the first half of the market cycle; whether through new fund sales, the CSI 300's price-to-earnings ratio, or investor sentiment, all indicators align with characteristics typical of a bull market’s initial phase, suggesting that the market could continue to expand next year.

From the predictions of the three major foreign investment banks, their viewpoints largely align with mine, favoring the market prospects over the next two to three years. In this market cycle, growth sectors represented by technology stocks and dividend sectors represented by banks are likely to exhibit alternating strengths, while new energy and consumer blue-chip stocks may also experience rotation opportunities. This year’s market performance is characterized by a standout performance in technology stocks, indicating a structural bull market. As household savings shift into the capital market, the market is expected to lean towards a comprehensive bull market next year, with more sectors likely to experience upward opportunities.

In late October, trade representatives from China and the U.S. will engage in a new round of trade negotiations in Malaysia. U.S. Treasury Secretary Basent has expressed a desire to avoid a decoupling between the two economies, suggesting that trade negotiations are likely to make progress. China also hopes for a prompt consensus from the U.S. side to promote positive developments in Sino-U.S. trade. The recent upgrade of China's rare earth export controls has positioned us advantageously in trade negotiations, while U.S. President Trump has notably relaxed his stance, indicating that a framework for the Sino-U.S. trade agreement might be established at the APEC meeting later this month in South Korea. This development is viewed as a significant boon for the current A-share and Hong Kong stock market. A cooperative Sino-U.S. trade relationship benefits both sides, while conflict harms both. If a consensus can be quickly reached in the negotiations, it will be favorable for trade and will also promote economic growth in both countries, which is beneficial for the peoples of both nations as well as for the global community.

Overall, the market is still expected to be in an upward trajectory of a bull market. While there are rotations among sectors and frequent style shifts occurring, the overall trend remains upward. Therefore, I recommend investors maintain confidence and patience, strategically investing in quality stocks or funds benefitting from the economic transition, seizing opportunities in this bull market to achieve wealth growth.