In recent times, the A-share stock market has shown signs of stabilization after dipping below the 3200 markTraders have taken note of a significant rebound in transaction volumes following a period of decreased trading activities, suggesting that sell pressure has eased considerablyIt seems like the market is likely entering a bottoming phase, indicating a point of potential recovery.

Historically, whenever the A-share index fell below 3000 points in previous years, state-owned institutions stepped in to acquire large and medium-sized stocks to provide market supportIndices such as the CSI 300 and A500 have become entrenched as favorites in their portfoliosThis year, one could expect similar interventions from state-backed entities, perhaps initiating support even as early as the 3100 mark.

For the last couple of years, I have maintained that the A-share market is likely to witness a bull run in 2025 and 2026. Despite this recent downturn, it appears more like a typical adjustment within an ongoing bull marketTherefore, investors might be mistaken to liquidate their positions during these periods of adjustment; staying invested and accumulating shares could be the prudent strategy.

From a fundamental standpoint, governmental efforts to stimulate domestic demand and enhance consumption—coupled with a suite of proactive monetary and fiscal policies—may lead to a more robust economic landscape in the near futureSuch macroeconomic tailwinds are anticipated to boost the performance of numerous listed companies, solidifying a favorable environment for stock market uplift.

Since the onset of a bear market in early 2021, the A-share market has been through a long adjustment phase spanning four yearsHistorically, the longest bear market in A-share history has lasted a little over four years, which makes the odds of a bull market emerging in the next couple of years quite promising.

A recent report from JPMorgan highlighted that while Chinese stocks may remain under pressure in the short term due to U.S. policy shifts, a strong dollar, and geopolitical tensions, there is potential for a market reversal around late January, contingent upon clarifications in U.S.-China relations.

Such dynamics suggest that when bearish sentiment has run its course, positive conditions could emerge

Advertisements

Following the inauguration of a newly elected U.S. president, aligned policies might create clearer market expectations, enticing sidelined capital to re-enter the investment arenaThis poses an opportune moment to consider building positions in the A-share market.

At first glance, the current A-share market might seem weak, but in fact, it represents an excellent investment opportunityJust a few days ago, a follower inquired about purchasing shares in the North Exchange's 50 Index after a remarkable 10% surgeThis question highlighted a common misconception: that a stock’s recent upward movement should dictate investment decisionsThe notion that rising prices serve as the primary trigger for buying decisions can lead to missed opportunities.

When I consider making an investment, I don't fixate on whether a certain index or sector has recently surgedWhether a stock is subject to a price drop doesn’t deter my decision-making process; what drives me is an evaluation of its fundamental valueUltimately, the North Exchange's 50 Index is not defined by today’s percentage rise but instead by its long-term growth potential.

Advertisements

Advertisements

Advertisements

Advertisements