On December 10, the A-share market experienced a strong opening, only to see a steady decline throughout the dayBy the market close, there was a predominance of rising stocks, with nearly 2,900 shares in the green and over 110 stocks hitting the daily limit on gainsThe total trading volume for the day reached 2.2 trillion yuan, an increase of 566.7 billion yuan compared to the previous day.

However, the performance of A-shares and Hong Kong stocks fell slightly short when compared to Chinese stocks listed overseasThe three major indices in Hong Kong showed a similar trend of high openings followed by declines, with the Hang Seng Index down 0.5%, the Hang Seng Tech Index down 1.39%, and the Hong Kong Enterprise Index down 0.74% by the end of the trading session.

According to Xia Fengguang, a fund manager at Rongzhi Investment, foreign investment institutions are increasingly focusing on mid-term variables that stem from policy changes

The heightened certainty of policy measures is seen as a significant positive for the medium to long-term outlook of the market.

A chief economist from a financial institution noted the early gains in the stock market but pointed out that it lacked the previous exuberant surge, which they believe is a positive sign for a steady market progression“The conference emphasized the need to stabilize the stock market,” he stated.

Looking ahead at the market trends, several interviewees indicated that it will take the implementation of specific favorable policies, along with further recovery of macroeconomic data, to drive the A-share market towards sustained momentum.

Strong Opening Followed by Decline in A-Shares, Contrasting with Chinese Listed Companies Abroad

Extraordinary policy statements have boosted market confidence

• Nvidia Under Investigation: Here's Why
• Is a Fed Rate Cut Imminent?
• Moderna's Value Infusion: Innovation Driving Growth
• The American Economic Trinity: Gold, Dollar, and Stocks
• European Offshore Wind Development Hits a Bottleneck

The conference outlined plans for next year, which include implementing a more aggressive fiscal policy and a moderately loose monetary policyThere is also an intent to enhance the toolkit of policies and strengthen extraordinary countercyclical adjustments, with special emphasis on stabilizing both the real estate and stock markets.

Moreover, the conference announced plans to stimulate consumption, expand demand, build a modern industrial system, undergo economic reforms, and mitigate risks in the upcoming year.

As a direct result of this news, Chinese assets saw a significant increase in overseas markets the previous dayOn December 9, after 3 PM, Hong Kong stocks surged sharply, with the Hang Seng Index closing up 2.76% at 20,414 points and trading volume surpassing 200 billionVarious Chinese stocks and related indices experienced substantial gains as well, with some rising over 10%.

In contrast, the A-share and Hong Kong markets showed somewhat weaker performance

On December 10, the A-share market opened significantly higher but then declined throughout the day, with the ChiNext Index and the Northern Securities 50 losing over 4% of their valueSimilarly, the three indices in Hong Kong opened high but ended lower, reflecting investor sentiment.

In the A-share market, there was an explosive rise in sectors such as robotics and PEEK concept shares, while consumer stocks collectively roseHowever, sectors such as real estate, large financial institutions, and cyclical stocks—including metals, chemicals, steel, and coal—witnessed collective declinesIn Hong Kong, the film industry's shares continued to heat up, while tech stocks varied in performance with major Chinese brokerage shares seeing sharp declines after an initial recovery.

Xia Fengguang emphasized that the day's trading reflected a typical pattern of starting high and subsequently declining

The larger volume of trades in the early stages indicated that market participants were not as optimistic as expected, leading to a prevailing sentiment of profit-taking.

“This starkly contrasts with the performance seen in overseas Chinese stocks,” Xia notedHe explained that foreign institutions place significant importance on the mid-term variables arising from policy changes, perceiving the recent statements about the stock market and real estate as necessary stabilizers to prevent risksThis approach also elaborates on implementing an increasingly proactive fiscal policy to boost domestic demand and stimulate consumption, indicating that policy preparation is robust.

“Foreign and institutional investors are primarily focused on improvements in Return on Equity (ROE), due to the heightened certainty surrounding policymaking, which undoubtedly bodes well for the medium to long-term future of the market, particularly benefiting indices like the Shanghai Stock Exchange Composite Index and the CSI 300 Index,” Xia added.

How Will Market Trends Develop Moving Forward?

Despite today's situation in the A-share market resembling a pattern of high openings and subsequent declines, the outlook remains generally optimistic moving forward.

“The emphasis on maintaining stability in both the stock and real estate markets, combined with a commitment to a more lenient monetary policy indicates a positive trajectory for market expectations

However, investor confidence needs further support from the implementation of additional favorable policies, and this, together with ongoing macroeconomic recovery, will drive the A-share market toward sustained momentum,” commented a market analyst from a non-bank brokerage.

According to a report from the investment firm, Jujia Capital, the policy statements from the recent conference generally exceeded market expectations, resulting in a positive market responseAs more specific policies are gradually implemented and fundamental conditions stabilize, the overall market valuations are expected to rise furtherThe stock market is likely to perform significantly better than it has over the past two years.

Xia Fengguang further analyzed that the most active funds in the current A-share market are primarily derived from margin trading and retail investors

Consequently, the short-term focus on small-cap and theme-driven stocks has led to significant short-term gains, which are the fundamental reasons behind today's pullback.

“Nevertheless, the underlying trend of the core blue-chip indices is still on an upward trajectoryWith the anticipation of improved profitability due to policy transmission, a gradual realization of cross-year market trends is unavoidable,” Xia stated, adding that current positions remain predominantly optimistic and stable, with no major shifts anticipated.

From an institutional investment perspective, Jujia Capital indicated that investment focus will continue to remain on companies with strong fundamentals and higher predictability.

The firm believes they will primarily target two categories: the first category being cyclical assets, specifically selecting companies with stronger operational resilience