Market Overview On Friday (October 31), the A-share market opened lower and experienced minor consolidation. After a weak opening, the indices fluctuated downward, with the Shanghai Composite Index finding support near 3,954 points. The afternoon session saw continued sideways movement. Sectors such as cultural media, software development, auto parts, and internet services performed well, while insurance, minor metals, semiconductors, and electronic components underperformed. The Shanghai Composite Index displayed a pattern of mild consolidation throughout the day. The ChiNext Index declined, underperforming the main board.
Outlook and Investment Recommendations The A-share market’s consolidation on Friday reflected a cautious tone. The Shanghai Composite Index and ChiNext Index currently trade at average P/E ratios of 16.33x and 50.25x, respectively—above their three-year median levels, suggesting suitability for medium-to-long-term positioning. Daily turnover reached 2.35 trillion yuan, also above the three-year median.
Multiple tailwinds support the market: the Fifth Plenum’s "15th Five-Year Plan" proposal outlines a clear national development strategy, emphasizing technological self-reliance and modern industrial systems. Easing U.S.-China tensions further bolster risk appetite. With the Fed’s rate-cut cycle and improving trade relations, a gradual A-share uptrend is expected. Investors should balance allocations between growth (e.g., tech) and value sectors, combining offensive and defensive strategies. Short-term, steady upward movement is likely, but policy, liquidity, and global market developments warrant close monitoring. Focus areas include cultural media, software, auto parts, and internet services.
Risks: Unexpected overseas recessions disrupting domestic recovery; slower-than-expected policy or economic rebound; macroeconomic volatility; abrupt policy shifts; geopolitical tensions; tighter global liquidity; heightened overseas market fluctuations.
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