Today, the market rebounded after an early dip, with mixed performances across major indices. The Shenzhen Component Index and the ChiNext Index briefly turned positive during the session, though the latter had earlier fallen over 2%. The Shanghai Composite Index closed down 0.23%, while the Shenzhen Component Index rose 0.29%, and the ChiNext Index edged down 0.02%. Total trading volume in the Shanghai and Shenzhen markets reached 1.78 trillion yuan, shrinking by 125.4 billion yuan from the previous session. Sector-wise, property stocks surged in the afternoon, with precious metals leading gains, while CPO and semiconductor themes strengthened later in the day. Banking, power equipment, and computer sectors saw adjustments.
【Highlight 1】 According to JPMorgan’s chief China equity strategist, the MSCI China Index is expected to rebound further as valuations normalize and measures to curb overcapacity boost profitability in key industries. By the end of 2026, the MSCI China Index could rise by about 18%, while the CSI 300 Index may gain 12%. The MSCI Hong Kong Index, supported by capital flows and a recovery in real estate sentiment, could climb up to 18%.
Recent supportive policy signals and prolonged market consolidation suggest a potential window for year-end positioning. Historical data from Cinda Securities shows that since 2010, year-end rallies often emerge between December and the following spring, lasting 1-2 months. When indices are low, these rallies tend to start earlier, with higher returns and greater probability of gains.
From a liquidity perspective, Huaxi Securities notes that multiple inflows into A-shares are expected around year-end. Overseas, a likely Fed rate cut and a stronger yuan may attract foreign capital, while domestically, lower risk factors for insurance funds’ equity investments and the "New Year rally" effect could drive inflows.
Since mid-November, weaker economic expectations, shifting global liquidity outlooks, and geopolitical uncertainties have accelerated index adjustments, potentially creating a favorable window for year-end positioning. The low-rate environment continues to drive household investments into equities, and with the upcoming Central Economic Work Conference, policy optimism may rise, sustaining the market’s long-term upward trend. Investors may consider the CSI A00 ETF (159338) as a core holding for a slow bull market supported by fiscal and monetary policies.
【Highlight 2】 Precious metals rallied today, with spot silver breaking $60, up 109.97% YTD as of December 9. SHFE silver rose 5.44% on December 10. Historically, Fed easing cycles trigger strong performances in gold, silver, and commodities. Spot gold hovers near $4,200, while silver benefits from rate-cut expectations, tight supply, and its inclusion in the U.S. critical minerals list.
The Fed’s final 2025 rate decision is due early tomorrow. Mixed U.S. job data—October JOLTs openings unexpectedly rose to a five-month high, but hiring slowed and layoffs increased—supports easing expectations. However, despite strong 10-year Treasury auction demand, yields remain elevated, reflecting market adjustments to 2025 rate-cut projections.
Markets widely expect another 25bps cut tonight, with focus on Powell’s press conference and policy guidance. A dovish tilt could further lift gold and silver prices. Investors may consider gold-focused ETFs like the Physical Gold ETF (518800) or gold equity ETF (517400) for exposure.
While Fed decisions may cause short-term volatility, gold’s long-term drivers remain intact: challenges to the dollar’s credibility, U.S. fiscal risks, and rising demand for safe-haven assets amid geopolitical tensions. Investors can explore long-term opportunities in the Gold Fund ETF (518800).
【Highlight 3】 The Construction Materials ETF (159745) outperformed today.
Vanke’s creditor meeting for its first bond extension ("22 Vanke MTN004") is underway, with three proposals reportedly tabled, aiding consensus-building. Reports suggest CICC is involved in Vanke’s rescue plan, assisting Shenzhen authorities and major shareholder Shenzhen Metro in addressing liquidity risks.
Property stocks rallied in the afternoon amid expectations of fiscal support for market stabilization, benefiting related sectors like construction materials.
Risk Disclosure: Investors should note that systematic investment plans differ from savings products and do not guarantee returns. Equity ETFs/LOFs/structured funds carry higher risks and returns than mixed, bond, or money market funds. Investments in STAR Market or ChiNext stocks involve unique risks. Short-term performance data is for reference only and does not predict future results. Consult risk assessments before investing.
By Guotai Asset Management (Special Contributor).
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