The Chinese stock market witnessed a notable surge on December 10, catalyzed by optimistic statements regarding "extraordinary" policies aimed at bolstering the economyThe market opened strong, with major indices showing early gainsHowever, this momentum didn’t sustain throughout the trading session, leading to a downward correction as the day progressed.

When the trading day concluded, the Shanghai Composite Index had risen by 0.59%, the Shenzhen Component Index was up 0.75%, and the ChiNext Index increased by 0.69%. Notably, the Northern Stock Exchange 50 experienced a significant gain of 2.35%. On the broader market scale, the majority of stocks saw gains, with almost 2,900 stocks in the positive zone and over 110 reaching their daily limit upThe total trading volume reached a staggering 2.2 trillion yuan, marking an increase of 566.7 billion yuan compared to the previous day.

In comparison to their overseas counterparts, Chinese stocks and Hong Kong stocks performed relatively weaker

The Hong Kong market also opened to gains but then saw declining trends throughout the day, with the Hang Seng Index falling by 0.5%, the Hang Seng Tech Index down by 1.39%, and the State-Owned Enterprises Index down by 0.74% at market close.

Investment fund manager Xia Fengguang of Rongzhi Investment emphasized that foreign institutional investors are particularly sensitive to mid-term variables driven by policy shiftsWith a notable increase in policy effectiveness expected, the outlook for the medium to long term appears positiveAn influential chief economist from the market echoed this sentiment, stating that although the market experienced a rise in the morning, it did not replicate the previous leaps seen earlier, which he considered a positive indication for sustainable market health“The meeting also stressed maintaining a stable stock market,” he noted.

The sentiments around the future market direction hinge on the rollout of more concrete policies, alongside further recovery in macroeconomic data, which are essential elements to sustain the positive market trend in the A-shares

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A key takeaway from the meeting was the commitment to implement a more proactive fiscal policy and a moderately loose monetary stance in the coming year, thereby enhancing the policy toolkit and reinforcing extraordinary countercyclical measuresThe emphasis was also placed on stabilizing both the real estate and stock markets.

In addition, the gathering outlined strategies to invigorate consumption, expand demand, build a modern industrial system, reform economic frameworks, and mitigate risks in the forthcoming yearThis was a significant announcement for financial markets, with offshore Chinese assets experiencing a bullish rally following the meetingOn December 9, after 3 PM, Hong Kong stocks surged sharply, with the Hang Seng Index gaining 2.76%, closing at 20,414 points with trading volumes crossing the 200 billion yuan thresholdProminent Chinese stocks also saw sizable increases, with Manyouma increasing over 74% and several popular Chinese stocks rising by over 10%. The leveraged FTSE China ETF climbed more than 24%, while the MSCI China ETF surged by 7.76%, and the Nasdaq Golden Dragon China Index reported an extraordinary rise of 8.54%, marking a recent peak in single-day gains.

Comparatively, the A-shares and Hong Kong stocks exhibited a more lackluster performance on December 10, continuing to depart from their initial highs post-opening

The ChiNext Index and the Northern Stock Exchange 50 both fell by more than 4% during the dayStocks in the A-share market exhibited varied performances with robotics and PEEK-related stocks maintaining their upward trajectories, while the consumer sector saw a collective uptickIn contrast, sectors such as nonferrous metals, chemicals, steel, and coal stocks faced declines across the board with the ST sector experiencing notable drops.

In Hong Kong, the film and entertainment sectors continued to heat up, while tech stocks fluctuated with varied responses, and Chinese brokerage stocks opened high but pulled back significantlyXia highlighted that the day's typical pattern of high opening followed by declining trajectory hinted at market dynamics where initial trading volumes were robust, suggesting that overall supporting forces fell short of expectations, and taking profits in a favorable environment was evident among traders.

This fluctuation is notably contrasted with the performance of overseas Chinese stocks

Xia elaborated that foreign institutions are more focused on the mid-term policy impactThe meeting's pointed remarks on the stock and real estate markets aimed at risk prevention parallel the accented need for stable affirmations to bolster investor confidenceThis commitment to more aggressive fiscal policies and enhancement of domestic demand and consumption demonstrates a robust reservoir of policy support.

Looking forward, the prevailing sentiment in the market remains optimistic despite the corrective tendencies seen on December 10. Analysts believe the conference's forthcoming measures and the defined focus on stabilizing the stock and real estate markets promise a buoyant atmosphere for investors“The guidelines from yesterday's meeting are decidedly optimistic, with directives aimed at stabilizing both markets and easing monetary policies, boosting expectations for various investors,” said a chief analyst from a brokerage firm

They posited that the subsequent more conducive policies need to emerge in tandem with an improving macroeconomic backdrop to promote a durable upward market trajectory.

Capital Gathering stated that the policies articulated during the meeting exceeded market anticipations, thereby invigorating market sentiments positivelyThey predict that as specific policies materialize gradually and the fundamental conditions stabilize, the market valuation benchmark could see upward adjustments, leading to significantly improved stock market performance compared to the past two years.

Xia analyzed that the current A-share market is primarily driven by margin trading and retail investor fundsShort-term liquidity concentrated in smaller-cap and thematic stocks has substantially influenced the day's surge and retreat“However, the core blue-chip indices maintain a trend of rising bottoms, and improved expectations for earnings due to policy initiatives will gradually unfold into a cross-year bullish market,” Xia concluded, noting a predominantly long-position strategy while maintaining steady portfolio levels without significant alterations.

From an institutional investment standpoint, Capital Gathering indicated their focus would remain on companies with solid fundamentals and higher certainty of returns