Financial policy combinations benefit the market. On the last trading day of September, the Shanghai Composite Index rose by 8.06% to stand firm at 3,300 points. A-shares traded over 2.6 trillion yuan throughout the day, setting a historical record.

At the same time, the international market is also very optimistic about Chinese assets, actively doing long A-shares, Chinese asset ETFs in the US stock market continue to rise, and call option contracts soar.

Han Xiuyi, the designated fund manager of Morgan China A500 ETF, believes that the core assets of A-shares may have ushered in a rare allocation opportunity. Domestically, as the economy recovers and corporate profits warm up, the trend of price returning to value will gradually warm up after the fundamentals turn warm; overseas, the Fed's interest rate hike cycle ends, and with the easing of overseas liquidity pressure, coupled with the attractiveness of A-shares valuation globally, it is very hopeful to see overseas funds increase their allocation of core assets in A-shares.

Is the inflection point of A-shares coming?

On September 30, the A-share market set multiple records. In just over half an hour after the opening, the transaction volume broke 1 trillion yuan, setting the fastest trillion yuan record in history; the total transaction volume of the two cities set a historical record.

Looking at the "battle record" at the close, the top five industries in terms of increase are software development, semiconductors, batteries, instruments, and internet services.

Regarding the surge in A-shares, Chen Guo, the chief strategist of CITIC Construction Investment Securities, believes that this round of the market is a rare market with all three factors of earnings expectations revision, risk-free interest rate decline, and risk preference increase, so it is not a simple oversold rebound, but a reversal.

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Liu Tao, a senior researcher at the Chief Industry Research Institute, said that the central bank's timely introduction of reserve reduction and interest rate reduction measures has four meanings: First, it releases long-term liquidity. After this reserve reduction, it is expected to provide about 1 trillion yuan of long-term liquidity to the financial market; second, it helps to further reduce the market interest rate level. Under the condition of certain capital demand, the reserve reduction, combined with interest rate reduction, reduction of medium-term lending facility (MLF) interest rate, and other monetary policy tools such as open market operations, can play a role in promoting the continuous decline of actual interest rates; third, it improves the current debt situation of the banking system, effectively alleviates the pressure of the reduction of banks' net interest margin, enhances the ability to support the credit distribution of real enterprises, and better serves the real economy; fourth, it conveys a more positive policy signal to the market and society, which helps to boost the confidence of all parties and alleviate many potential market risk pressures.

Fang Dongming, the head of UBS Global Financial Markets in China, believes that the three major regulatory departments and the Politburo of the CPC Central Committee have issued a series of favorable policies, which are far beyond the market's expectations in form and content, and the market has also immediately made a positive feedback. Overall, this marks a clear inflection point for the entire Chinese A-share market. Looking forward to the future market, there will usually be some bullish and bearish entanglement after rebounding 20% from the bottom, some will take profits, and there should also be sector rotation.

Foreign capital has a strong willingness to buy.Reports indicate that according to some overseas hedge fund professionals, the current attitude of foreign capital towards investing in China is "fully buying into China."

Goldman Sachs pointed out in a report that as the A-share market transaction volume exceeded 1.1 trillion yuan for two consecutive days, market sentiment reached a peak within a year. The capital inflow into its overseas trading platform between September 24th and 26th set a historical record, with both hedge funds and long-term investors showing a strong willingness to buy, especially in the fields of banking, non-ferrous metals, battery manufacturers, ChiNext weight stocks, and consumer stocks such as liquor and home appliances.

Xu Ligao, the fund manager of China Equity at Franklin Templeton Emerging Markets Equity Team, believes: "Overseas investors may invest in assets that they are more familiar with in the past. We believe these will mostly be large-cap stocks. Investors may start from a more long-term fundamental perspective when assessing the capital allocation in the A-share market. The Shanghai-Hong Kong Stock Connect is popular among overseas investors due to its convenience in connecting with A-shares. The Shanghai-Hong Kong Stock Connect also covers a sufficient number of stocks."

Looking at the sectors, Xu Ligao said that finance and consumption are currently the two larger sectors and are also the areas benefiting from the current stimulus measures. It is expected that these will be the sectors that foreign capital will pay more attention to.

"The key next is the follow-up of the fundamentals. In addition to the implementation and stability of existing policies, it is very important to further introduce new policies and continue to effectively convey positive signals. If more policies are introduced later, not only in content but also in form, they should convey a firm and confident signal to the market in a language that the market can understand. At the same time, we look forward to the follow-up of fiscal policy, as well as substantial support and care for private enterprises and entrepreneurs." said Fang Dongming.

Looking forward to the fourth quarter, the Chief Investment Office of DBS Bank's 2024 Fourth Quarter CIO Insights "Ideal Timing" pointed out that the unexpected 50 basis point rate cut by the Federal Reserve will increase the possibility of a soft economic landing, and risk assets will still be at the best timing. The combination of interest rate cuts and economic resilience, coupled with technological progress driving productivity improvement, will have a positive impact on risk assets.