On December 5, A-shares surged in the afternoon session with heavy trading volume. Non-banking financial sectors, including insurance, securities, internet finance, and diversified finance, led the gains. In the securities sector, Bank of China Securities hit the daily limit-up at 13:56, briefly opened, and then sealed the limit-up again at 14:26. Among internet finance stocks, YSSCF surged with a "20CM" limit-up, while Huijin Co. (Rights Protection) rose over 14% at one point, and Compass briefly gained over 10%. Other stocks like DZH, Yinzhi Jie, East Money, and Tonghuashun also followed the upward trend.
Concurrently, the tech sector stood out, with strong performances in superconductivity, commercial aerospace, controlled nuclear fusion, virtual robotics, and optical communication modules.
Driven by the non-banking financial and tech sectors, the Shanghai Composite Index, ChiNext Index, and Shenzhen Component Index all climbed. Data from East Money showed that by the close, the Shanghai Composite rose 0.70%, the ChiNext surged 1.36%, and the Shenzhen Component jumped 1.08%. A total of 4,387 stocks advanced, with trading volume expanding by 176.8 billion yuan from the previous session to 1.7258 trillion yuan.
Notably, brokerage stocks had been weak earlier, with the brokerage index breaking support in November and recording its second-largest monthly decline this year. So why did the broader financial sector, including brokerages, rally today?
Sui Dong, a researcher at Shenzhen Qianhai Paipaiwang Fund Sales, attributed the financial sector's surge to two factors: First, external institutions' positive stance—Morgan Stanley added Ping An to its focus list, and CITIC Securities publicly endorsed insurance stocks, directly stimulating the insurance sector and lifting related segments. Second, macro liquidity support and policy tailwinds—the central bank's 1 trillion yuan reverse repo injection and the ongoing "financial power" strategy jointly fueled a valuation rebound in the financial sector.
"This movement typically signals three things: rising market expectations for policy support, potential capital inflows to stabilize sentiment, and a possible shift toward undervalued blue chips amid low trading volumes," Sui noted.
Chen Xingwen, Chief Strategy Officer at Zhuhai Heiqi Capital, analyzed that the sudden afternoon rally in financial stocks (insurance, fintech, brokerages, etc.) sent multiple positive signals despite recent sluggish A-share trading.
Chen viewed the financial rally as a potential precursor to a market bottom and a year-end rebound. "Macro-wise, the financial sector's movement aligns with policy expectations. December is a critical policy window, with the Central Economic Work Conference approaching, and markets anticipate positive signals. Additionally, growing expectations of a Fed rate cut in December could improve global liquidity, supporting A-share risk appetite," he said.
"Micro-level, the rally reflects early capital positioning," Chen added. "Foreign interest in Chinese assets is reviving, with Morgan Stanley and others upgrading China stock ratings, while northbound funds show sustained inflows. Domestic institutions may also be rebalancing into financials for year-end rankings. Meanwhile, insurance funds are quietly accumulating undervalued financial stocks as long-term plays."
For December's outlook, Sui expects a volatile rebound. "Continued central bank liquidity support, year-end positioning demand, and frequent positive news in tech and aerospace could underpin the market. Today’s broad rally, with tech and finance leading, sets the stage for further gains," he said.
Chen, however, predicts a "first dip, then rise" year-end trend for A-shares. Policy-wise, the Central Economic Work Conference will set the tone for 2026, likely with more proactive measures. Liquidity injections by the central bank and historical sector rotation patterns—where value stocks lead in December-January, followed by growth—favor large-cap, undervalued, and cyclical plays.
"The financial rally reflects a market bottom, policy hopes, and early capital deployment," Chen concluded. "With policy, liquidity, and fundamentals aligning, December could kickstart a year-end rebound. Investors should monitor policy shifts, fund flows, and sector rotation for structural opportunities."
For key variables ahead, Sui advised watching: (1) whether financials and consumer heavyweights sustain strength; (2) tech sector fund flows and earnings delivery; (3) central bank policy moves and year-end liquidity fluctuations; and (4) external factors, particularly Fed policy's impact on global liquidity.
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