In September, the Chinese stock market, known as the "bull" of the global market, how to seize the investment opportunities of the bull market?

Starting from the last week of September, the Chinese stock market has seen a strong rebound, with Chinese assets worldwide rising across the board. On September 30, the last trading day before the National Day, with the help of investors' emotions,the Shanghai Composite Index surged by 8.03% to surpass 3300 points, marking the largest single-day increase since October 2008. The total turnover of the Shanghai and Shenzhen stock markets reached nearly 2.6 trillion yuan, setting a historical record, while the trading volume of the Hong Kong stock market reached 447.5 billion Hong Kong dollars.As an investor, it is really exciting and honorable to witness the rise of this bull market.

Recently many friends and relatives have been messaging me, asking whether to enter the market? How much room for further upside is there in this bull market? How can we seize the investment opportunities of the bull market? Originally just wanted to write briefly, but the more I write, the longer it gets.to share and communicate with everyone!

From the current market performance, we can see that the Hong Kong stock market has greater resilience, mainly due to the strong profitability of Hong Kong stocks companies, with valuation at a low level. At the same time, the Hong Kong stock market is more sensitive to the Fed rate cut, and funds react very quickly, driving the Hang Seng Index up to 22,667.74 points, close to the early high of 2023. Looking at the sector performance, interest rate and policy-sensitive sectors perform the best.Real estate agents, investment and asset management, and securities and brokerage sectors lead.front runners.

In addition to the catalytic effect of bullish policies, 'fear of missing out' has also contributed to the stock market's sharp rise.The high market sentiment has also brought about the 'fear of missing out' (FOMO), leading to overly rapid emotional reactions, and even certain 'overdrafts' in technical indicators. For example, the 6-day relative strength index (RSI) of the Hang Seng Index has reached 97.182, the highest level since the end of 2018, while the SSE Composite Index and the Nasdaq China Dragon Index have reached 97.064 and 88.358 respectively, showing short-term 'overbought' signals.

In such a hot market, we may ask a question: How much upside potential is there still in this bull market?

1. Policy Aspect

This round of bull market is mainly driven by policy favorable factors. With the continuous introduction of policy favorable factors in the future, it is still expected to drive the stock market higher. The core change of this round of policies mainly focuses on encouraging leverage in the private sector, especially in the stock and real estate sectors, while emphasizing.People's livelihood and consumer。There are still many potential policy measures waiting to be implemented in future real estate and people's livelihood policies, such as further relaxing property purchase restrictions and reducing mortgage rates for existing homes, increasing subsidies for two-child-related birth, and issuing consumer vouchers.

2. Sentiment Analysis

The Hang Seng Index has risen to 22,667.74 points, and the optimistic sentiment is approaching the high point at the beginning of the epidemic opening in early 2023 (22,700.85). Therefore, in the short term, the market sentiment is running ahead, the market expectations are relatively well incorporated, and the technical indicators indicate a possible 'overbought' in the short term.

3. Fundamental aspect

From the perspective of funding, the current market is dominated by trading and passive funds.Long-term funds have not flowed in significantly.。
1) Dominance of trading and passive funds: Currently, trading funds such as hedge funds respond quickly and are highly active, similar to the previous market peak. At the same time, the increase in passive fund inflows indicates that more ordinary investors are entering the market, driving the rise of major stocks.
2) Limited inflow of long-term foreign funds: Data shows that long-term foreign funds are still flowing out. Many long-term investors choose to reduce their positions to avoid passive losses in the market rebound, and there is no large-scale increase in positions.

In the current market environment, investors can focus on the following directions in the short term:

1. Short-term focus：Distorted state-owned enterprises and previously oversold sectors (such as internet software, food retail, and medical service equipment) are still the market's direction for rebounding games.

2. Cyclical sectors：If the follow-up policies are implemented as expected and the fiscal measures exceed expectations, pro-cyclical sectors (such as consumer, real estate supply chain, and non-bank financial) are expected to see performance opportunities.

3. Rate-sensitive growth stocks：Continue to focus on interest rate-sensitive growth stocks, such as internet technology and biotechnology.

Overall, the strong rebound of the Chinese stock market is the result of the combined effects of policy support and market sentiment. Despite facing short-term technical overbought risks and challenges in policy implementation, investors can still seize market opportunities by focusing on undervalued sectors, pro-cyclical stocks, and growth stocks. Additionally, staying closely attuned to policy dynamics will help make wiser investment decisions amidst future market fluctuations.