Core Viewpoint - The recent important meeting did not introduce new policies, leading to disappointment among some investors who expected aggressive measures for the real estate market and price increases [3]. Group 1: Asset Competition - Major asset classes include real estate, stocks, bonds, commodities, and deposits [5]. - Assuming a constant total amount of funds, assets compete for capital [6]. - Increased capital flow into real estate results in reduced investment in the stock market, and vice versa [7]. - Over the past 20 years, real estate has attracted the most capital, peaking at a total market value of 450 trillion yuan [7]. - The long-term relationship between real estate and debt has led to a sustained bull market for both [8]. Group 2: Mean Reversion - Mean reversion applies not only to the stock market but also to other assets [10]. - The rental yield in Beijing was 6%-10% in 2000, leading to a valuation of 12.5 times earnings; by 2007, it dropped to 5%, resulting in a valuation of 20 times [12][13]. - Currently, Beijing's rental yield is around 2%, equating to a valuation of 50 times, while Shenzhen's is even lower at 1.6%, leading to a valuation of 62.5 times [14][16]. - This indicates that the valuation of China's real estate has been elevated for over 20 years [17]. - The valuation of the CSI 300 index has decreased from around 18 times to approximately 12 times, showing that capital has been diverted from the stock market to the real estate market [18][19]. Group 3: Policy Direction - The recent political bureau meeting emphasized the need for high-quality urban renewal, indicating a shift in focus from real estate risks to urban development [24][25]. - The management believes that the risks in the real estate market are manageable and that current housing prices are acceptable [26]. - The goal is for real estate to transition from a financial asset to a consumer good, releasing the productive potential of land [27]. - The meeting also highlighted the need to enhance the attractiveness and inclusivity of the capital market, suggesting a more proactive approach to boosting the stock market [29]. Group 4: Future of the Stock Market - The divergence between the real estate and stock markets has lasted around 20 years, and the mean reversion process is expected to take 5-10 years [33][34]. - The stock market is anticipated to rise based on performance, similar to the U.S. market post-2008 [35]. - A vibrant capital market is essential for fostering technological innovation, which is crucial for future competitiveness [37]. - The current dividend yield of the CSI 300 index is around 3%, indicating potential value for investors [38]. - As the stock market begins to rise, latecomers may enter due to price increases, despite previous attachments to real estate [40].