Core Viewpoint - The article discusses the current state of the Chinese stock market, highlighting a decrease in trading activity and concentration, while noting an increase in foreign capital inflow into A-shares and Hong Kong stocks [3][4]. Market Pricing Status - Market sentiment has declined, with average daily trading volume dropping to 2 trillion yuan and the average number of daily limit-up stocks decreasing to 68.4 [3] - The proportion of stocks that increased in value has risen to 54.77%, with the median weekly return for all A-shares increasing to 0.6% [3] - Industry trading concentration has decreased, with only one industry (electric power equipment and new energy) having a turnover rate above 95% [3] A-Share Fund Flow - The issuance of new equity funds has decreased to 21.84 billion yuan, with overall stock positions slightly reduced [4] - The private equity confidence index has slightly declined, but positions are nearing the highest levels of the year [4] - Foreign capital inflow reached 800 million USD, with northbound trading accounting for 27.4% of total trading volume [4] - The IPO fundraising for the period was 3.59 billion yuan, with a future lock-up release scale of 24.73 billion yuan [4] - Net buying in margin trading has decreased to 11.63 billion yuan, accounting for 10.8% of total trading volume [4] A-Share Industry Allocation - Foreign capital primarily flowed into the electronics sector, with a net inflow of 6.32 million USD, while the power equipment sector saw a net inflow of 6.83 billion yuan [5] - The non-bank financial sector and pharmaceutical sector saw significant net inflows in ETFs, while the electronics and power equipment sectors experienced net outflows [5] Hong Kong and Global Fund Flow - Southbound capital inflow increased to 38.68 billion yuan, reaching the 89th percentile since 2022 [6] - Global capital flows showed a net outflow from developed markets and a net inflow into emerging markets, with significant inflows into Asian stock markets, particularly in Japan and China [6]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The trading enthusiasm in the market declined this period. In terms of funds, the issuance of equity - oriented funds increased marginally, the inflow of margin trading funds accelerated, while foreign funds had a slight outflow from A - shares and Hong Kong stocks [1][5]. 3. Summary by Related Catalogs 3.1 Market Pricing Status: The trading enthusiasm declined marginally - **Market sentiment**: The trading turnover rate decreased, the average daily trading volume of the entire A - shares dropped to 1.8 trillion, the average daily number of limit - up stocks rose to 73.2, the maximum consecutive limit - up number was 7, the limit - up board rate rose to 78.6%, and the number of stocks on the Dragon and Tiger List decreased to 59 [5]. - **Profit - making effect**: The proportion of rising stocks increased to 81.2%, and the median weekly return of all A - share stocks rose to 3.1% [5]. - **Trading concentration**: The trading concentration of industries declined. There were 4 industries with the historical percentile of industry turnover rate above 90%, among which the turnover rates of the coal and petroleum and petrochemical industries were above 95% [5]. 3.2 A - share Capital Flow - **Public funds**: The newly - issued scale of equity - oriented funds rose to 12.15 billion, and various public funds reduced their stock positions compared with the previous period [5]. - **Private funds**: In October, the confidence index of private funds decreased slightly, and the positions continued to approach the highest level of the year (as of October 17) [5]. - **Foreign capital**: There was a slight outflow of 120 million US dollars, among which active foreign capital inflowed 16 million US dollars (as of October 22), and the historical percentile of the trading proportion of north - bound funds rose to 38.7% [5]. - **Industrial capital**: The initial public offering (IPO) raised 2.54 billion yuan this period, the private placement scale was 21.151 billion yuan, and the restricted - share lifting scale was 48.76 billion yuan [5]. - **ETF**: Passive funds suddenly turned to net outflow, with a net outflow of 14.7 billion yuan. The passive trading proportion decreased to 6.9% month - on - month, and the premium/discount rate of stock ETFs decreased [5]. - **Margin trading**: The net purchase this period was 21.09 billion yuan, and the trading volume proportion decreased to 11% [5]. - **Retail investors**: Alternative indicators showed that the activity of retail investors increased marginally [5]. 3.3 A - share Industry Allocation - **Foreign capital**: (As of October 22) Non - ferrous metals (+47.3 million US dollars) and electronics (+29.0 million US dollars) had the highest net inflows, while food and beverages (-15.3 million US dollars) and transportation (-13.2 million US dollars) had net outflows [5]. - **Margin trading**: (As of October 23) Electronics (+8.23 billion yuan) and communication (+3.42 billion yuan) had the highest net inflows, while non - ferrous metals (-1.43 billion yuan) had a net outflow [5]. - **ETF**: The passive capital flow behavior of primary industries was concentrated. The non - banking sector (+770 million yuan) had the highest net inflow; among secondary industries, securities and traditional Chinese medicine had net inflows. Power equipment (-4.52 billion yuan) and electronics (-3.24 billion yuan) had the highest net outflows, and among secondary industries, batteries and semiconductors had net outflows. The ETFs with the highest increase this period included securities ETFs and STAR Market 50 ETFs, etc. The 7 - 10 - year China Bond ETF and 0 - 3 - year China Bond ETF had the highest margin trading net purchases; the ChiNext ETF and CSI 300 ETF had the highest net redemptions, and the CSI Overseas Internet ETF and Hang Seng Technology ETF had margin trading net sales [5]. - **Dragon and Tiger List funds**: Machinery, electronics, and power equipment were the top three industries on the Dragon and Tiger List [5]. 3.4 Hong Kong Stocks and Global Capital Flow - **South - bound capital**: The net purchase of south - bound capital per week rose to 17.28 billion yuan, at the 59th percentile since 2022 (MA5) [5]. - **Global capital flow**: This period (as of October 22), the net flow of active/passive funds in developed markets was -6.53 billion/21.88 billion US dollars, and the net flow of active/passive funds in emerging markets was -610 million/-660 million US dollars. From the perspective of foreign capital only, global foreign capital marginally flowed into non - US developed markets this period, with the UK (+1.01 billion US dollars) and France (+550 million US dollars) having the highest inflows, while the US (-132 million US dollars) continued to have an outflow. From the perspective of the overall global flow including domestic capital of each country, the US had the highest inflow, while China and the UK had outflows. North American funds had a large net subscription, and US technology/industrial funds had the highest net subscriptions [5].

Core Viewpoint - The recent rise of A-shares above 3800 points presents an opportunity for investors to reassess their portfolios, emphasizing the importance of a diversified asset allocation strategy to navigate market volatility and potential downturns [4][6]. Group 1: Market Sentiment and Fund Performance - Despite the current bullish market sentiment and many funds reaching historical highs, a significant number of investors redeemed their holdings before the market's upswing, leading to missed opportunities [6]. - Data indicates that from 2022 to 2024, the net subscription scale of equity funds has continuously shrunk, with net redemptions peaking in the first quarter and fourth quarter of 2024 [6]. Group 2: Volatility and Historical Performance - The Shanghai Composite Index has a compound annual growth rate of 11.6% since its inception in 1990, but it also has an annualized volatility of 43.71%, which is significantly higher than many global indices [10][11]. - Since 2014, the annual maximum drawdown for the CSI 300 and equity fund indices has exceeded 15% in about 60% of the years, highlighting the challenges of long-term holding for domestic investors [12]. Group 3: Timing Strategies and Their Challenges - The desire to time the market is common among investors, but the reality often leads to missed opportunities, as evidenced by the significant drop in annualized returns when missing the best-performing days [16][18]. - From 2014 to the present, maintaining a position in equity funds yields an average annual return of around 15%, but missing the top-performing days drastically reduces this return [16][18]. Group 4: Asset Allocation Strategies - Given the high volatility of the A-share market, a diversified asset allocation strategy is recommended to mitigate risks and enhance returns [22]. - Different asset classes exhibit varying risk-return characteristics, and combining low or negatively correlated assets can help reduce overall portfolio volatility [22][24]. Group 5: Simulation of Asset Allocation - Simulations show that adjusting the asset allocation to include dividend stocks and global indices can lead to smoother net value curves and reduced drawdowns during market downturns [30][32]. - Incorporating bonds into the asset mix further stabilizes the portfolio, increasing the likelihood of maintaining positions during market fluctuations [35][37]. Group 6: Importance of Diversification - Diversification in asset allocation is emphasized as a crucial strategy for investors, with notable figures in finance advocating for a mix of uncorrelated return streams to enhance portfolio performance [38].

Core Viewpoint - The article emphasizes the importance of constructing a diversified asset allocation strategy to navigate the volatility of the A-share market, especially as it recently surpassed the 3800-point mark. Investors should prepare for both gains and losses, as the market does not guarantee a one-way upward journey [2]. Group 1: Market Sentiment and Investor Behavior - Despite the current bullish sentiment and many funds reaching historical highs, numerous investors redeemed their holdings before the market's rise. Data shows that from 2022 to 2024, the net subscription scale of equity funds continuously shrank, with significant net redemptions in the first and fourth quarters of 2024 [3][4]. - Many investors did not endure the market downturn alongside their funds, resulting in missed opportunities for recent gains [3]. Group 2: Market Volatility and Challenges - The Shanghai Composite Index has a compound annual growth rate of 11.6% since its inception in 1990, but it also has an annualized volatility of 43.71%, which is significantly higher than many other global indices [7]. - Since 2014, the annual maximum drawdown for the CSI 300 and equity fund indices has exceeded 15% in about 60% of the years, with the ChiNext Index experiencing over 15% drawdowns every year since 2014 [8][9]. Group 3: Timing Strategies and Their Limitations - Investors often wish to time the market to buy low and sell high, but this is frequently counterproductive. Missing just a few of the best-performing days can drastically reduce annualized returns [11][14]. - From 2014 to the present, holding equity funds consistently yields an average annual return of around 15%, but missing the top-performing days can lead to significantly lower or even negative returns [14][16]. Group 4: Asset Allocation Strategies - The article suggests that different asset types have varying risk-return characteristics, and a reasonable asset allocation can help reduce portfolio volatility and alleviate the need for timing the market [20]. - Simulations show that adjusting asset allocations, such as incorporating dividend assets and global indices, can lead to smoother net value curves and reduced drawdowns during market declines [24][26][30]. - A final portfolio that includes a mix of equity funds, dividend indices, global indices, gold, and bonds demonstrates significantly improved performance and reduced volatility compared to a portfolio solely invested in equity funds [33][35]. Group 5: Importance of Diversification - The article highlights that diversification in asset allocation is crucial for investors, as it provides the necessary resilience to endure market downturns and ultimately benefit from long-term gains [36]. - The concept of diversification as a "free lunch" in investing is supported by notable figures in finance, emphasizing the need for a well-rounded investment approach [37].

Core Viewpoint - The article emphasizes the value of systematic investment plans (SIPs) or dollar-cost averaging, highlighting how consistent investments during market fluctuations can lead to significant long-term gains, even when starting at market highs [2][4][28]. Group 1: Historical Performance of SIPs - A historical example from 1997 shows that an investor who consistently invested $1,000 monthly in a fund during a market downturn ended up with a 41% profit after two years, despite an 80% drop in fund value [4]. - A simulation from 2015 to 2021 indicates that investors who started SIPs at the peak of the A-share market could achieve a 72% return, outperforming the Shanghai Composite Index by 102 percentage points [4][12]. Group 2: Recent Performance Analysis - Data from various indices over the past five years shows that investors who maintained SIPs during market volatility achieved positive returns, while those who made lump-sum investments often faced losses [13][26]. - For instance, SIPs in the CSI 1000 index yielded a total return of 19.58% compared to a loss of 0.28% for a one-time investment [12][26]. Group 3: Performance Over Different Time Frames - In the past year, SIPs yielded returns between 10% and 24%, while lump-sum investments achieved returns of 33% to 69%, indicating that while lump-sum investments can outperform in a strong rebound, SIPs provide a more stable approach during uncertain times [18][22]. - Over three years, SIPs consistently outperformed lump-sum investments across most indices, with the CSI 1000 index showing a return of 22.58% for SIPs versus 12.70% for lump-sum investments [21][22]. Group 4: Long-Term Advantages of SIPs - The article highlights that over five years, SIPs demonstrated a clear advantage, with all indices showing positive returns for SIPs, while many lump-sum investments remained in the red [26][28]. - The consistent investment strategy allows investors to accumulate shares at lower prices during market downturns, which can lead to substantial gains when the market recovers [29][30]. Group 5: Key Takeaways on SIPs - SIPs are portrayed as a strategy that mitigates the risks associated with market timing, allowing investors to avoid the psychological pressures of trying to "time the market" [29][30]. - The article concludes that while SIPs are not without risks and require a long-term commitment, they can be a more effective strategy for building wealth over time compared to waiting for perfect market conditions [30][31].

Core Viewpoint - The article discusses the significance of the three-year annualized return of equity funds as a timing indicator for market trends, particularly in the context of the recent bull market in A-shares [2][11]. Group 1: Historical Context and Analysis - The three-year annualized return of equity funds has been a focal point since the first wave of the bear market in 2022, highlighted by investor Dong Chengfei [3][4]. - Historical peaks of the three-year annualized return occurred in 2015 and 2021, both exceeding 30%, indicating a doubling of total returns over three years [4][17]. - The article references past bull and bear market cycles, noting that bull markets typically last between 2 to 3 years and 2 months [15]. Group 2: Future Projections - The author suggests that the bottom of the current bear market may occur in early 2024, with potential subsequent lows in mid-2024 [8][22]. - The analysis indicates that if the bear market bottom is established in early 2024, a three-year projection could lead to a peak around early 2027, assuming a minimum return of 30% [20][24]. - The potential for a bull market is further supported by the observation that the current three-year rolling annualized return is still negative, suggesting that the market has not yet reached a bubble phase [24][32]. Group 3: Market Dynamics and Fund Performance - The article notes that the equity fund index has seen a cumulative increase of 46.8% since its bottom on February 5, 2024 [28]. - To achieve a three-year annualized return of 30%, a potential increase of 49.66% is required, emphasizing the importance of compounding effects [30][32]. - The performance of equity funds may not align perfectly with the broader A-share market, indicating that future trends could diverge based on market conditions [30][32].

Core Viewpoint - The article discusses the behavior of mutual fund investors as the Shanghai Composite Index surpasses 3600 points, emphasizing the need for investors to reassess their strategies and avoid impulsive decisions based on short-term market fluctuations [3][4]. Investor Behavior and Challenges - Many investors exhibit a "redemption upon breakeven" mentality, which reflects a fundamental misalignment in their investment understanding and behavior [5][6]. - Behavioral finance concepts such as "loss aversion" and "anchoring effect" contribute to this mindset, leading investors to make irrational decisions based on short-term price movements rather than long-term potential [6][7]. - The lack of a clear long-term investment plan often results in investors being swayed by market volatility, creating a cycle of holding during losses and redeeming upon minor gains [6][7]. Proposed Solutions - Investment advisory firms suggest focusing on "investor account profitability" and aligning investment strategies with reasonable time horizons to mitigate losses from mismatched funding [7]. - Fund companies and sales channels are encouraged to enhance investor education, improve communication, and create mechanisms that align the interests of fund managers and investors [7]. Differentiated Strategies for Various Investor Scenarios - For investors who have returned to profitability, it is recommended to "lock in profits" partially before making further decisions, especially if the fund's long-term performance is stable [9][10]. - Investors who are still at breakeven but with minimal gains should evaluate valuation levels and industry trends to make informed decisions about adjusting their positions [10]. - Investors who are still "underwater" may consider averaging down if the fund's fundamentals remain strong, while those with deteriorating fundamentals should consider cutting losses [10]. - For investors with no positions or light positions, a gradual entry strategy is advised, focusing on low-volatility products initially [11]. Portfolio Review and Adjustment - Investors are encouraged to reassess their fund holdings, ensuring alignment with their initial investment strategies and risk tolerance [12][13]. - Key factors to consider include industry diversification, equity-to-bond ratios, and the stability of fund managers' investment styles [13][14]. - Continuous evaluation of fund performance against peers is crucial, particularly in volatile market conditions [14]. Market Outlook and Investment Discipline - The current market environment is characterized as an "investment new cycle," with a recommendation for investors to maintain patience and adhere to investment discipline [25][26]. - Investors are advised to manage their funds across different time horizons and to engage in systematic investment approaches like dollar-cost averaging [30][31]. - Emphasis is placed on the importance of constructing a well-diversified portfolio to mitigate risks associated with market fluctuations [31].

Market Pricing Status - The trading heat in the market has slightly declined, with turnover rates decreasing and net capital inflows reducing [8][24][28] - The average daily trading volume for the entire A-share market decreased to 18.1 billion, down from 18.5 billion the previous week [8] - The proportion of stocks rising in the A-share market dropped to 31.9%, with a median weekly return of -1.48% [8][9] A-Share Liquidity Tracking - ETF outflows have accelerated, with overall capital inflows slowing down [24][28] - The new issuance scale of equity funds decreased to 8.87 billion, down from 19.41 billion [35] - Foreign capital inflow into the A-share market was 25.9 million USD, with the northbound capital transaction proportion dropping to 11.6% [46][48] A-Share Industry Allocation - Financing capital is flowing into the pharmaceutical and electronics sectors, while foreign capital is entering the banking sector [3][46] - The net inflow for the pharmaceutical sector was 6.7 billion, and for electronics, it was 6.06 billion [3] - The ETF capital flow showed net inflows in food and beverage (+0.95 billion) and coal (+0.22 billion), while electronics (-11.09 billion) and pharmaceuticals (-6.46 billion) experienced net outflows [3][46] Hong Kong and Global Capital Flow - Southbound capital inflows increased, with net purchases rising to 59.02 billion, the highest since 2022 [4][48] - The Hang Seng Index fell by 3.5%, with major global markets also experiencing declines, particularly the French CAC40 index, which dropped by 3.7% [4][48] - Foreign capital primarily flowed into developed markets, with the US receiving 4.06 billion and the UK 0.98 billion [4][48]

Macroeconomic Liquidity and Capital Prices - The central bank maintained a net injection of 129.5 billion CNY, continuing to support the liquidity environment[10] - The money market rates have increased, with R007 rising by 18.7 basis points and DR007 by 14.6 basis points[13] - Bond market yields are under pressure, with 1Y and 10Y government bond yields increasing by 3.45 and 6.72 basis points respectively[13] Microeconomic Liquidity and A-share Market - A-shares experienced a net inflow of 46.6 billion CNY, primarily driven by significant inflows of leveraged funds[21] - Retail investors showed increased activity, with net inflows of 78.6 billion CNY, a rise of 26.2 billion CNY from the previous period[24] - Leveraged funds saw a net inflow of 444 billion CNY, marking a significant increase in market risk appetite[28] Fund Flows and Public Offerings - New issuance of equity funds reached 19.4 billion CNY, an increase of 6.8 billion CNY from the previous period[39] - Equity ETFs experienced a net outflow of 58.3 billion CNY, while industry-themed ETFs saw a net inflow of 115.1 billion CNY[40] - The total supply of funds was 58 billion CNY, up 35.9 billion CNY, while total demand decreased to 11.3 billion CNY, down 16.4 billion CNY[21] Risk Factors - Economic recovery may fall short of expectations, potentially increasing market uncertainty[65] - Geopolitical events could escalate tensions, impacting domestic and international markets[65] - Statistical data discrepancies may lead to inaccuracies in market assessments[65]

Market Overview - The trading heat continues to rise, with new issuance of equity funds and accelerated inflow of financing funds, while retail investor activity increases and foreign capital turns to outflow [1][2] - The average daily trading volume exceeds 1.5 trillion, indicating a marginal increase in market sentiment [1] Market Sentiment - Market sentiment is on the rise, with the average daily trading volume of the entire A-share market exceeding 1.5 trillion, and the turnover rate of the Shanghai Composite Index falling to 88% [1] - The number of daily limit-up stocks has decreased to 59, with the maximum consecutive limit-up stocks being 8, and the sealing rate dropping to 70.2% [1] Fund Flows - New issuance of public equity funds has increased to 12.6 billion, with an ordinary stock position rising by 0.1% [2] - Foreign capital has seen a net outflow of 1.4 million USD, with the northbound capital transaction proportion dropping to 11.6% [2] - The net inflow of financing reached 28.57 billion, with the transaction proportion rising to 9.7% [2] Industry Allocation - There is a notable divergence in funding within the electronics sector, with financing and ETF allocations increasing while foreign capital allocation decreases [3] - The net inflow in financing for the computer sector is 4.42 billion and for the electronics sector is 3.07 billion [3] - The non-bank financial sector and media sectors saw net inflows of 0.71 billion and 0.57 billion respectively in ETFs [3] Hong Kong and Global Fund Flows - The southbound capital inflow has decreased to 21.46 billion, representing the 76th percentile since 2022 [4] - Global foreign capital primarily flows into developed markets, with the US and Japan seeing inflows of 3.02 billion and 1.16 billion respectively [4]