China connect stocks surged before the National Day holiday! Is a reversal finally coming? Government support is pushing the market.【5 Selected China-related ETFs】

Representing the major index of Chinese stocks, the csi 300 indexsoared 8.5% on the eve of the national day holiday, surprising market participants.Normally, there is a tendency for profit-taking sales before major holidays. The background is a sense of caution against unexpected events during the holidays. Furthermore, the csi 300 index had risen by 16% in the week leading up to the holiday weekend, creating strong pressure for profit-taking sales. Nevertheless, the sharp rise on the eve of the holiday was due to...

suggesting that many investors are expecting a further rise after the holiday.Given the doubling of trading volume from the previous day, it seems that investors, driven by the fear of missing out (FOMO), are on a buying spree of Chinese stocks.suggesting that many investors are expecting a further rise after the holiday.The reason for the high stock prices is that the Chinese authorities have implemented a series of economic and market support measures.That.

Looking back, since the pandemic, Chinese stocks have significantly lagged behind global stocks, including US stocks, and their valuations have also decreased. If this rebound turns out to be the beginning of a more sustained rise, it could lead to a reevaluation of Chinese stocks. This time,Confirming the economic and market support measures introduced by the Chinese authoritiesIn addition,Outlook on the short to medium-term prospects of Chinese stocksSaid.Picking up 5 selected related ETFs listed in Japan and the USした。

Will Chinese stocks continue to rise after the National Day holiday?
The Shanghai and Shenzhen 300 (CSI300) Index, which represents the mainland China stock market, rose by 8.5% on September 30th before the National Day holiday. Rising more than 20% from recent lows, the CSI300 Index entered a bullish market phase. The pre-holiday surge with significant trading volume was also observed in early February and late April this year, both of which led to a further rise after the holidays. This time, there is a sudden surge with trading volume on the eve of the holiday. Based on past trends and supply-demand factors, Chinese stocks are likely to continue rising after the holiday (in the short term).

Reasons for the rise in Chinese stocks: Economic and market support measures
The recent stock market rally was due to a series of economic and stock market support measures announced by the Chinese authorities between September 24th and September 30th.
Monetary easing
Main short to medium-term policy: Reduction of key policy interest rates
◇7-day reverse repo interest rate: Decreased from 1.7% to 1.5%.
◇1-year Medium-term Lending Facility (MLF) interest rate: Decreased from 2.3% to 2.0%.
◇Reserve requirement ratio (RRR) of major banks: Decreased from 10.0% to 9.5%.

●Real estate support measures
Lowering housing loan interest rates and down payments, relaxing purchase restrictions in major cities
◇Lower the mortgage interest rate by 0.5%
◇Lower the down payment for the second residence purchase from 25% to 15%
◇Relax regulations on housing purchases in major cities (Beijing, Shanghai, Guangzhou, Shenzhen)

Market support measures
Plan to establish a stock stabilization fund
◇Securities firms, funds, insurance companies, etc. are establishing swap facilities to allow them to buy stocks using liquidity from the People's Bank of China.
◇Liquidity support for the stock market is expected to amount to at least 800 billion yuan, with a potential additional gradual increase of 500 billion yuan.
(Source: Compiled by moomoo Securities based on various reports such as Bloomberg)

Among the above, Market support measures are likened to a 'bazooka' and may potentially lift the stock market in the short term.。It is expected that financial easing and real estate support measures will support the recovery of the Chinese economy.However, it is expected to take time for the effects to show.In the future, it will be necessary to confirm the progress of economic recovery through economic indicators.。

Furthermore, as reported by Reuters, Chinese authorities plan to further strengthen support measures by issuing special national bonds worth 2 trillion yuan this year. According to the report, these funds are planned to be evenly distributed to stimulate consumption and support local government debt resolution. If economic support measures continue and there is an increase in news flow and economic indicators indicating economic recovery, stock prices may continue to rise in the medium term.

If stock prices continue to rise, there may be catch-up trading.
Looking back, since the pandemic, Chinese stocks have lagged behind world stocks, including US stocks, and valuations have also significantly decreased. If,If this rebound marks the beginning of a more sustained uptrend、China connect may attract attention as a catch-up trend.On the other hand, if the progress of economic recovery falls short of investors' expectations, there may be a possibility of a reversal in stock prices.In the medium to long term, the effectiveness of economic support measures will be closely watched.。

Chinese ADRs performed well in the usa market.
Following the rise of the domestic Chinese market, the performance of Chinese ADR stocks stood out in the US market on October 1st. For example, amidst concerns over the Middle East situation on October 1st, the Nasdaq index dropped by 1.5%, but the Nasdaq Golden Dragon China Index, which consists of Chinese ADRs, rose by 5.5%.

Since the Chinese authorities announced a series of support measures on September 24th, the ranking of price movements is as follows:
(※Composition of the NASDAQ Golden Dragon China Index constituents, price changes from September 24th to October 1st.)