The first week of December saw a bullish start in both daily and weekly market performance. Despite mid-week adjustments, Friday witnessed a strong rebound driven by positive news. The Shanghai Composite Index fluctuated around 3,900 points, with trading activity notably increasing amid mild volume expansion. Sector rotation accelerated last week, with tech (led by consumer electronics and semiconductors) and resources (such as nonferrous metals) taking turns to shine. On Friday, financial heavyweights propelled the index upward in anticipation of policy tailwinds.
This week marks a critical juncture with two major events: the Fed’s rate decision (due early December 11 Beijing time) amid strong market expectations for cuts, and China’s Central Economic Work Conference, which may set the tone for year-end and 2026 market trends.
Approaching key resistance near 4,000 points during this event-sensitive window, short-term volatility may emerge despite intact long-term upside logic. Investors should prioritize balanced allocations—dynamically adjusting between dividend and growth strategies—rather than chasing fleeting sentiment. A "barbell approach" combining policy-backed core sectors (like financials) and fundamentally sound tech plays could mitigate risks while capturing structural opportunities.
**Long-Term Capital Inflows: A Market Stabilizer** The financial regulator’s recent adjustment to insurers’ risk weightings incentivizes long-term holdings of quality assets. For instance, risk factors for CSI 300 and dividend-low-volatility stocks held over three years were cut to 0.27 (from 0.3), while STAR Market stocks held beyond two years saw reductions to 0.36 (from 0.4). This move not only boosts insurers’ equity allocation but also signals policy endorsement for strategic sectors like blue-chips and tech innovators. Coupled with eased leverage limits for brokers, financial institutions are poised to become market anchors.
**Tactics Near 4,000 Points** Positive financial sector news may fuel further short-term gains, but caution is warranted. Potential Fed hawkishness and profit-taking pressure (if volume lags) could spark swings. Focus areas: - **CSI 300**: Insurers’ increased allocations may provide downside protection, with large-caps benefiting from year-end seasonality. - **Non-Bank Financials**: Insurers’ expanded equity quotas and broker leverage relaxation (potentially unlocking trillions) favor leading players. M&A tailwinds add upside. - **Consumer Electronics**: AI-driven demand and undervalued valuations offer margin of safety as the sector awaits an inflection point.
*Data as of December 7, 2025 (via Tonghuashun iFind). ETF rankings reflect top-three funds by AUM in respective categories. Capture ratios assess sensitivity to market moves.*
Investors should note that content herein is for reference only and does not constitute advice.
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