CITIC Securities: Market risks have been significantly released, and the Chinese stock market has entered the hitting zone

CITIC Securities' research report points out that the Chinese stock market has recently weakened rapidly, with a panic sell-off occurring in a single day, leading to widespread pessimism in the market. The reasons include a higher motivation among some investors to secure profits and reduce positions as the year-end approaches, the cooling of expectations for interest rate cuts by the Federal Reserve, increased volatility in the U.S. stock market, and a lack of internal policy support, all of which have contributed to trading fluctuations and weakened confidence. Additionally, the slowdown in the registration of equity products has resulted in insufficient incremental supply in the market, objectively impacting the microstructure of the stock market negatively.

In contrast to the current cautious consensus, CITIC Securities is firmly optimistic about the prospects of the Chinese market, believing that the stock index has entered a hitting zone: 1) Although a 5% pullback in the Shanghai Composite Index seems small, the ChiNext Index has corrected by 12%, the STAR 50 Index has fallen nearly 20%, and the Hang Seng Technology Index has dropped 22%. The duration and extent of the adjustments are comparable to previous bull market corrections, and the panic selling has released trading risks. 2) There has been little discussion in the market regarding the upcoming year-end economic work conference. Considering the current weakening growth reality and the importance of economic growth at the start of the 14th Five-Year Plan, the approaching policy window period is expected to establish new market expectations. 3) The merger of China International Capital Corporation (CICC) marks an acceleration in the deepening of capital market reforms, and the rapid approval of 16 hard technology ETFs on the 21st implies the regulatory authorities' determination and action to stabilize the market. Opportunities always arise amid panic, and CITIC Securities believes that the Chinese stock market will gradually stabilize and launch a year-end offensive, with significant upward potential, making this a good opportunity to increase holdings