A-shares Midday Report | Shanghai Composite Index rose 1.73% to reclaim 2900 points, with over 5000 stocks rising in both markets. The financial sector continued to show strength.

On September 25th, A-shares continued to open significantly higher, with the Shanghai Composite Index reclaiming 2900 points. By the close, the Shanghai Composite Index was up 1.73%, the Shenzhen Component Index was up 2.36%, and the Growth Enterprise Index was up 2.63%. Over 5000 stocks in the two markets rose. In terms of the market, the major financial sectors continued to be active, with Tianfeng, Minmetals Capital, Shanghai Aj Group, and Cofco Capital Holdings hitting their daily limit up; stocks trading below par value quickly rose, with more than 20 stocks including Beijing Haixin Energy Technology hitting their limit up; the real estate sector saw a rapid rise, with CCCG Real Estate Corporation, Everbright Jiabao, Financial Street Holdings, and Hefei Urban Construction Development hitting their limit up; steel stocks continued to rise, with Guangdong Zhongnan Iron & Steel hitting its third consecutive limit up, and Hunan Valin Steel and Bengang Steel Plates hitting their limit up; the concept of state-owned enterprise reform remained active, with Datang Telecom Technology hitting its 7th consecutive limit up and Jilin Yatai and Qingdao Doublestar also hitting their limit up. In terms of declines, high-flying stocks retreated, with Shenzhen Huaqiang Industry and Yunnan Nantian Electronics Information hitting their second consecutive limit down, CHINA BEST Web Security hitting its daily limit down, and Shanghai Highly, Shijiazhuang ChangShan BeiMing Technology, Beijing Electronic Zone High-tech Group, Baoding Tianwei Baobian Electric, and Shenzhen Farben Information Technology leading the declines. In terms of main capital flows, funds favored industries such as batteries, real estate development, and industrial metals; funds flowed out of industries such as photovoltaic equipment, communication equipment, and securities. Institutional Views Looking ahead, although the bottom logic of the stock market still depends on the economy, the current valuation of A-shares is at historical lows. With the stimulation of major positive news, a comprehensive valuation repair in the market is worth looking forward to. China Securities Co., Ltd.: Expecting a comprehensive valuation repair in the market with the stimulation of major positive news On September 24th, the State Council Information Office held a press conference, previewing a large number of upcoming policy measures, including the introduction of two new monetary policy tools to support the stable development of the stock market. This policy shift will have a profound impact on the market, laying a solid foundation for the long-term stable development of the stock market. Although the bottom logic of the stock market still depends on the economy, the current valuation of A-shares is at historical lows. With the stimulation of major positive news, a wave of comprehensive valuation repair in the market is worth expecting. CITIC: Short-term turbulence after the sharp rise in the stock market, but the rebound is expected to continue According to a research report from CICC, the current valuation of the A-share market is already at an extreme position, with the forward valuation of the Shanghai and Shenzhen 300 Index near the historical low of one standard deviation, showing significant investment attractiveness both horizontally and vertically; there are also common features of a turning point in historical trading and behavior, with the turnover rate calculated by the market value of freely tradable A-shares in the previous period at a historical low of around 1.5% (during periods of historical turning points, the turnover rate is around 1%-2%). In this context, positive policy signals are expected to boost investor sentiment, and although there may be short-term turbulence after the sharp rise in the stock market on September 24th, the rebound is expected to continue. Further stability in the market trend will depend on changes in the expectations of the fundamentals of listed companies. CITIC SEC: A set of financial policies is implemented Positive for bank fundamentals expectations According to a research report from CITIC SEC, the State Council Information Office of the three ministries of monetary policy and financial regulation held a press conference, announcing a set of financial policies to support the real economy, with the clear intention of boosting market confidence. For banks, the adjustment of mortgage loan rates has a negative impact on the pricing of bank assets, while a subsequent decrease in the LPR and deposit rates will have a neutral impact on bank interest spreads. Swap convenience tools will increase financing convenience for non-bank institutions and focus on investing in the stock market, re-loan tools will help listed companies buy back and increase holdings of stocks, index heavyweight stocks with good qualifications and liquidity will have more operational space, and listed banks are expected to benefit directly. Popular Sectors 1. The major financial sector continues to be strong The major financial sector remains strong, with Tianfeng, Minmetals Capital, Shanghai Aj Group, Cofco Capital Holdings, Anhui Xinli Finance, and Holly Futures, among others, hitting their daily limit up. Review: According to a research report from CITIC SEC, the State Council Information Office of the three ministries of monetary policy and financial regulation held a press conference, announcing a set of financial policies to support the real economy, with the clear intention of boosting market confidence. 2. Real estate sector sees rapid rise The real estate sector saw a rapid rise, with CCCG Real Estate Corporation, Everbright Jiabao, Financial Street Holdings, and Hefei Urban Construction Development hitting their limit up, Tianjin Tianbao Infrastructure up over 7%, and Jiangsu Phoenix Property Investment and ShenzhenOverseas Chinese Town, Black Peony, Cinda Real Estate, etc. are rising together.Review: On September 24, 2024, Pan Gongsheng, the president of the People's Bank of China, announced at a press conference at the State Council Information Office that they would guide the LPR to decrease, lower the interest rates on existing housing loans, reduce the ratio of second-home loans, increase central funding support for re-loans on affordable housing, support the acquisition of land by real estate companies, and introduce new policies for real estate finance. 3. Stocks below net asset value rapidly soared Stocks below net asset value opened sharply higher, with more than 20 stocks such as Beijing Haixin Energy Technology, Guangdong Zhongnan Iron & Steel, Everbright Jiabao, Hubei Fuxing Science and Technology, Minmetals Capital, Black Peony, Jilin Yatai, Bengang Steel Plates, Financial Street Holdings, and Zheshang Development Group hitting the limit up. Comments: On the news front, the China Securities Regulatory Commission publicly solicited opinions on the "Guidelines for the Supervision of Listed Companies No. 10 - Market Value Management (Draft for Solicitation of Opinions)" on September 24th, which mentioned that main index constituent companies should establish and disclose their market value management system, and companies trading below net asset value for an extended period should disclose their valuation enhancement plan. 4. Steel sector remains active The steel sector remains active, with Guangdong Zhongnan Iron & Steel hitting three consecutive limit-ups, and Hunan Valin Steel and Bengang Steel Plates also hitting the limit-up, while Anyang Iron and Steel, Hbis Resources, and Lingyuan Iron & Steel opened higher collectively. Comments: Recently, Jin Xiandong, the director of the Policy Research Office of the National Development and Reform Commission, stated that efforts will be focused on addressing weaknesses and promoting long-term development, accelerating the construction of a modern industrial system supported by the real economy. In terms of promoting long-term development, efforts will be made to promote the accelerated consolidation of key industries such as steel. Local governments are also actively promoting restructuring and consolidation in the steel industry. Industry insiders also suggest that with the approaching National Day holiday, downstream restocking demand will be released, and the social inventory of steel is expected to continue to decline. This article is reprinted from "Tencent Stock Selection"; Edited by GMTEight: Wang Qiujia.