The Chinese stock market surged, what to focus on next?

After the epic rise of the Chinese stock market, the sustainability of the future market has become the focus of attention. In addition to the highly anticipated press conference by the National Development and Reform Commission tomorrow, what policy directions and data should investors pay attention to?

Citigroup believes that attention should be focused on changes in fiscal deposits, changes in household deposits, and the growth of money supply. Goldman Sachs analysts believe that the premise for the continued rebound of the stock market is that the M1 growth rate needs to exceed M2.

Minsheng Securities stated that whether policy efforts can stabilize the fundamentals is the key to the market's expectation of continuous improvement, and post-holiday fiscal follow-up is a high probability event. Guotai Junan Securities emphasized that whether this round of market trends is a one-time event or the starting point of a bull market, the key lies in December.

Citigroup: Focus on Three Things; Goldman Sachs: M1 Growth Rate Needs to Exceed M2

Citigroup stated that the data on new loans and the scale of new social financing in September may remain stable, and there may be no upward space for the growth of the monetary base. However, credit data may still provide initial clues for stimulus policies through detailed changes. Investors need to closely monitor three things.

1. Fiscal Policy: The issuance of government bonds is important, but changes in fiscal deposits are even more crucial. Exhausting the annual approved quota is a necessary condition for revising the budget, and fiscal deposits help quantify fund deployment.

2. Household: The focus is on deposits. With the strong rebound in the last week of September, it will be interesting to observe how household deposit numbers evolve.

3. Money Supply Growth: It is expected that there will not be much upward space in September, but if there is an upward trend, the growth of M1 and M2 may correspond to the deployment of fiscal policies.

Goldman Sachs analyst Borislav Vladimirov also emphasized that if the stock market rebound is to continue, then the M1 growth rate needs to exceed M2. August social financing data shows that M1 money supply continues to decline, and the negative scissor difference between M1 and M2 growth rates further widens.

Minsheng Securities: Post-holiday Fiscal Follow-up is a High Probability Event

Minsheng Securities' Tao Chuan stated that whether policy efforts can stabilize the fundamentals is the key to the market's expectation of continuous improvement. The post-holiday press conference by the National Development and Reform Commission is just the beginning, and subsequent press conferences by the Ministry of Finance and other economic ministries are also worth looking forward to.

In addition, the certainty of the Fed's interest rate cuts combined with the uncertainty of the U.S. presidential election implies that the current policy shift domestically will neither stop abruptly nor be completed in one step. The pre-holiday policy rhythm is not pulsatile, and post-holiday fiscal follow-up is a high probability event.

Guotai Junan Securities: The Key to Victory Lies in December

Guotai Junan Securities strategist Liu Chenming stated that in the past 5 trading days, the main broad-based indices and style indices of A-shares have risen by around 25%, which is part of the overall valuation increase, and the speed is exceptionally rare. As for whether this market trend is a one-time event or the starting point of a bull market, Liu Chenming believes that the key to victory lies in December:

If the fiscal tone for 2025 is positive, investors are expected to embrace a cyclical bull market. After a recent rapid rebound, the overall A-share market (excluding finance, oil, and petrochemicals) has risen to 2.2 times PB, with a TTM ROE of around 7.4%.

If the fiscal tone for 2025 remains positive (with a significantly increased target deficit ratio), there may be expectations for an increase in ROE, similar to the past four occurrences. A-shares can still be considered as growth stocks, with the current PB ratio still at a bottom position. Starting from December, it may be the beginning of a cyclical asset bull market.

If the fiscal tone for 2025 remains stable, the market may once again shift back to dividend assets.

In other words, if the central economic work conference at the end of the year does not make significant adjustments to the fiscal tone for the next year, then the overall valuation level of A-shares (excluding finance, oil, and petrochemicals) at 2.2 times PB may not be undervalued. The market may switch back to dividend assets with an ROE in the 10-14% range (middle circle) and a reasonably priced PB ratio