A-share market closing report: A-shares surged and fell back, with the Shanghai Composite Index standing above 4000 points for the first time in a decade. What will happen next?

On October 28, A-shares rose and then fell back, with the Shanghai Composite Index breaking through the 4000-point mark for the first time in ten years, hitting a new high since August 19, 2015. By the closing bell, the Shanghai Composite Index fell by 0.22%, the Shenzhen Component Index fell by 0.44%, and the ChiNext Index fell by 0.15%. It is worth noting that the Shanghai Composite Index returning to the 4000-point mark. Looking back at the two previous bull markets, in the bull market of 2007, the Shanghai Composite Index first broke through the 4000-point mark on May 9, 2007, and within five months, it reached a high of 6124 points, an increase of 53%. In the bull market of 2015, the Shanghai Composite Index first broke through 4000 points on April 8, 2015, and within two months, it reached a high of 5178 points, an increase of nearly 30%. In terms of the market, hot spots are quickly rotating. The Fujian Plate continues to be strong, with Zhongfu Straits up for 8 consecutive days and 6 limit-ups, and Strait Innovation Internet and other stocks; the military industry sector has collectively surged, with Jianglong Shipbuilding, Anhui Greatwall Military Industry, and other stocks hitting the limit; the controllable nuclear fusion concept continues to strengthen, with Advanced Technology & Materials up for 2 consecutive days; CPO and other computing power sectors rising, with leading stock Zhongji Innolight hitting a new high again; the quantum technology concept is on the rise, with Beijing Electronic Zone High-tech Group and others hitting the limit. In addition, sectors such as commercial aerospace, Siasun Robot & Automation, minor metals, military industry, shipping, and solid-state batteries have shown some performance on the stock market. On the downside, the non-ferrous metals sector weakened, with sectors such as wind power, securities, and traditional Chinese medicine leading the decline. How will the market move after the Shanghai Composite Index breaks through 4000 points for the third time? In the history of A-shares, the Shanghai Composite Index has only broken through the 4000-point mark for the first time in two rounds of market trends: in May 2007 and in April 2015. Looking back at these two times, although there was short-term selling pressure around the 4000-point mark, overall, the index did not stay there for long and continued to rise within less than six months. In the bull market of 2007, after the Shanghai Composite Index first broke through the 4000-point mark on May 9, 2007, it continued to rise for more than 5 months, reaching a high of 6124 points on October 16, 2007, an increase of 53%. In the bull market of 2015, after the Shanghai Composite Index first broke through 4000 points on April 8, 2015, it continued to rise for more than 2 months, reaching a high of 5178 points on June 12, 2015, an increase of nearly 30%. Looking back at these two times, although there was short-term selling pressure around the 4000-point mark, overall, the index did not stay there for long, and within less than six months, it reached highs of 6124 points and 5178 points, respectively. What is different about this current market trend? Reviewing the macroeconomic, technological, and industrial backgrounds of the previous two times the Shanghai Composite Index exceeded 4000 points, there are significant differences. In 2007, the market benefited from rapid economic growth and excess liquidity. In 2015, the market was driven by leveraged funds and supply-side reforms. Looking at the current situation, while global monetary easing and domestic "anti-internal competition" have boosted market sentiment, it is more important to note that the long-awaited vitality of China's economic transformation and upgrading is beginning to emerge. Several industries have significantly increased their global influence, which is the underlying logic for the revaluation of Chinese assets in this current round. Earlier this year, the DeepSeek-R1 AI model was launched. This "Made in China" AI model has groundbreaking performance and ultra-low training costs, breaking the long-term monopoly of overseas giants in the field. Since then, China has seen significant advancements in industries such as innovative drugs, humanoid robots and automation, film and television culture, and entertainment collectibles. This indicates that China is at the forefront of the new technological revolution and industrial transformation, which is a significant fundamental change compared to previous market trends. Popular sectors: 1. Fujian Plate continues to be strong with Zhongfu Straits up for 8 consecutive days and 6 limit-ups, Fujian Cement Inc. up for 2 consecutive days, and Xiamen Port Development, Xiamen International Airport, and other stocks hitting the limit. 2. The controllable nuclear fusion concept continues to strengthen with Advanced Technology & Materials up for 2 consecutive days, Ningxia Orient Tantalum Industry up for 3 consecutive days, and Neway Valve, Western Superconducting Technologies, and other stocks following the trend. Future trends and sectors to focus on: 1. Guotai Haitong: China's stock market transformation is heading towards new highs as the new round of financial policies and capital market reforms are expected to further drive economic transformation, lower risk returns, and boost societal attitudes towards the value of Chinese assets. The "transformational bull market" in China is still on course for new highs. The emerging technology sector is the main theme of this market trend; the future market in China will be more diversified and various sectors will undergo revaluation. The drivers of the "transformational bull market" in China, such as accelerated economic transformation, lower risk returns, and capital market reforms, are healthy and sustainable. Key areas to watch: 1) Technological growth: Hong Kong Internet/TMT/New Energy/Innovative Drugs/National Defense Industry, etc.; 2) New materials and improved cyclical products: Chemicals/Non-ferrous metals/Steel, etc.; 3) Financial stability: Brokerage/Banking/Insurance. Positioning for the end of the year in consumer goods. 2. EB SECURITIES: With multiple positive factors, the market may continue to show strong performance in the short term. The fourth plenary session of the Twentieth Party Congress has outlined the main goals for the economic and social development of the "Fourteenth Five-Year Plan" period, which is expected to boost market confidence with new policy deployments. The new round of China-US economic and trade negotiations, combined with the possibility of further interest rate cuts by the Federal Reserve in October, may increase market risk appetite. Overall, multiple positive factors are expected to support continued strong performance in the market in the short term. In the medium term, improvements in listed corporate earnings could provide new momentum for the market. In terms of industry allocation, the focus is on TMT and advanced manufacturing sectors in the medium term, with attention turning to stagnant sectors such as high-dividend and consumer sectors if the market experiences volatility. 3. CITIC SEC: The market is trending towards calmness and positioning for new clues. Three characteristics indicate that the style shift is basically over, not just beginning, and the market is returning to a performance-driven structure: 1) In the past two weeks, active funds have quickly completed their portfolio adjustments; 2) Market understanding of the trade dispute has transitioned from replicating TACO trading experience to taking it seriously; 3) Sectors that have performed negatively for the past 3 months have recovered in less than three weeks. Next week, there may be a phased result in US-China negotiations, and the disclosure of third-quarter reports has ended. Looking ahead, it is important to actively search for directions that may experience sustained high profit growth next year. Two new clues are emerging: firstly, industrial chain securitythe increasing interference of non-commercial means globally, China's significant market share advantages, and the high costs of overseas competitive manufacturing companies' capacity resetting could benefit significantly, as market share gains are translated into pricing power, driving a continuous rise in profit margins; secondly, AI is spreading from the cloud side to the edge sidethe trend of edge-side AI as a more extensive data entry and personalization AI carrier is evident, but the market launch still requires more product examples for catalysis. 4. China Securities Co., Ltd.: The adjustment is nearing its end, and the upward trend will continue. Since October, market sentiment has cooled somewhat, there has been a slowing down in the pace of incremental fund inflows, but overall, the market has not yet decelerated, and in the past two days, market sentiment has stabilized. Looking at the volume and price dimensions, considering the over 10% drop in growth categories and nearly half of the market experiencing a reduction in volume, the short-term market is more stable with limited room for further adjustment. Recent releases of signals on China-US relations, expectations of China-US interactions at the APEC summit, and the possibility of further interest rate cuts by the Federal Reserve, may boost market risk appetite in the short term. The Fourth Plenary Session has cemented investors' long-term policy expectations, and coupled with a possible phase of the APEC summit, China-US interactions, and actions by the Federal Reserve, short-term risk sentiment is expected to rise, and the "slow bull" market trend in A-shares will continue. Structurally, "big technology" remains the main theme in the medium to long term. Next week, A-share listed companies and US tech giants' financial reports will land intensively. Against the backdrop of the accelerated global AI arms race, the guidance on AI capital expenditure from tech giants will be the focus, heralding a window of simultaneous global tech AI market shocks. 5. Huaxi: Reentering the "slow bull" trend, global tech AI markets resonate together. With recent progress in US-China trade negotiations, the Russia-Ukraine ceasefire, and the Fourth Plenary Session, among other positive factors, global fund risk appetite is returning, with China's stock market leading the way. The Shanghai Composite Index broke through the 3950-point mark this Friday, setting a new high in this round of bull markets, with A and H-tech growth styles significantly strengthening. The Hang Seng Technology Index saw a weekly increase of 5.2%, while the A-shares ChiNext Index and Science and Technology Innovation 50 Index rose by 8.0% and 7.3% respectively. In terms of liquidity, after consecutive shrinkages in daily turnover in A-shares, it surged back to around 2 trillion yuan on Friday, indicating a clear boost in market sentiment from the Fourth Plenary Session's policy signals. In terms of commodities, precious metal prices have significantly retreated from their highs, and international oil prices are rebounding, impacted by the US and Europe's sanctions on Russia. The Fourth Plenary Session has solidified investors' long-term policy expectations. Coupled with expectations of China-US interactions at the APEC summit and potential further interest rate cuts by the Federal Reserve, short-term risk sentiment is expected to be boosted, and the "slow bull" market trend in A-shares will continue. Structurally, "big technology" remains the main theme in the medium to long term. Next week, as A-share listed companies and US tech giants' financial reports are set to land, in the context of the accelerating global AI arms race, the AI capital expenditure guidance from tech giants will be a focus, heralding a window of simultaneous global tech AI market resonance. 6. Huajin Securities: Continue to position in technology and CKH HOLDINGS, some cyclical and core assets. The recent factors causing an adjustment in A-shares may gradually diminish. From the perspective of market indicators, emotional indicators have not fully adjusted, but industry rotation is essentially complete. From a fundamental perspective, risk appetite may rise, liquidity remains loose, short-term adjustments may be coming to an end, and the slow bull trend may continue. Industry allocation: continue to position in technology and CKH HOLDINGS, some cyclical and core assets in the short term. The institution suggests positioning in the short term: first, communications (computing power), electronics (semiconductors, consumer electronics), media (gaming, AI applications), machinery equipment (Siasun Robot & Automation), computers (AI applications, autonomous driving), non-ferrous metals, chemicals, etc.; second, focusing on industries benefiting from the "Fourteenth Five-Year Plan" and the improvement in third-quarter revenue, such as new energy, pharmaceuticals, consumer goods (food, retail, etc.), and military industry (commercial aerospace). This article is reproduced from "Tencent Self-selected Stocks", GMTEight Editor: Li Fo.