Goldman Sachs(US:GS) Cai Jing Wang·2025-08-22 02:05Core Viewpoint - Foreign capital remains optimistic about the Chinese stock market, particularly small and mid-cap stocks, despite recent gains in major indices [1][2]. Group 1: Market Performance - Since the rebound began on April 8, the Shanghai Composite Index has risen over 21%, the Shenzhen Component Index over 27%, and the ChiNext Index over 43% [2]. - The CSI 300 Index has increased by over 19%, while the CSI 500 and CSI 1000 indices have risen by 26.8% and 31.96%, respectively [2]. - The CPO index has shown the strongest performance with a rise of over 123%, while other indices related to light chips, CRO, and rare earths have also seen significant increases [2]. Group 2: Capital Flow and Investment Trends - High net worth individuals have only allocated 22% of their financial assets to funds and stocks, indicating a potential inflow of over 10 trillion yuan into the market [2]. - There are signs of a shift in household savings from bank deposits to stock investments, as indicated by a negative monthly change in household deposits and an increase in non-bank financial institution deposits [3]. - The A-share market has become the most net bought market recently, with a buying ratio of 1.1 times [3]. Group 3: Broker Insights - CICC reports that since May, there have been signs of deposits moving to the stock market, with M1 growth rising to 5.6% in July from 2.3% in May [5]. - The rapid growth of margin accounts at brokerages suggests that deposits are being prepared for market entry, with non-bank deposits increasing by 1.4 trillion yuan in July [6]. - The trading volume in the A-share market has significantly increased, with daily turnover surpassing 2 trillion yuan and margin financing exceeding 2 trillion yuan [6]. Group 4: Future Outlook - Huaxi Securities believes that the A-share market has ample space and opportunities, supported by strong household savings and a shift in risk appetite among residents [7]. - The potential inflow of household savings into the stock market could be substantial, with estimates suggesting a range of 5 trillion to 7 trillion yuan [6][7]. - The current valuation of A-shares remains reasonable compared to historical levels, indicating potential for further growth [6].