After the National Day holiday, the A-share market experienced two consecutive trading days of significant correction. In particular, on the first trading day after the holiday, the market saw a relatively large pullback, which dealt a considerable blow to many investors' confidence.
Today, the market once again saw a sharp correction in the morning session, accelerating the market's bottoming-out process; by the afternoon session, as some funds entered the market, there was a certain rebound from the lows. Overall, after a full quarter of significant correction in the third quarter and two consecutive trading days of adjustment after the holiday, risks have been released to some extent. Investor confidence will take time to recover, and patience is needed to wait for the adjustment to complete before a new wave of rebound opportunities can be expected.
The sharp pullback on the first day after the National Day holiday does not mean the entire fourth quarter will be a period of adjustment; the fourth quarter may still present certain valuation repair opportunities overall. Whether from the perspective of policy or liquidity, the fourth quarter offers opportunities for an oversold rebound.
Although the US stock market faces headwinds such as elevated US Treasury yields and the possibility that the Federal Reserve may raise interest rates again at its December meeting, the turning point of this round of the US stock market's technology rally does not depend entirely on liquidity, but rather on the inflection point of industrial development. As long as capital expenditure in the AI technology industry does not decline and the industry development trend remains upward, the performance of the US stock market's "Magnificent Seven" tech giants is likely to remain strong.
As the leader of this round of global capital market technology rallies, as long as the Nasdaq does not experience sustained sharp declines, the A-share technology rally is likely not over. However, divergence will be very pronounced. Within the technology sector in the fourth quarter, there will also be considerable divergence: technology leader stocks that can truly deliver earnings and secure orders may resume their upward trend; some technology stocks that are driven by speculation on themes and concepts may continue to decline, giving back all of their gains from the first half of the year and returning to their original levels.
Therefore, investment in the fourth quarter will place greater emphasis on fundamentals. When the market was in a phase of everyone chasing the light earlier, I was one of the few who reminded everyone not to bet on a single sector and to avoid the risk of sharp declines caused by overcrowding in a sector. I suggested that everyone adopt a "three-step" strategy to deal with possible major adjustments: resolutely deleverage, moderately reduce positions, and hold technology on one hand and dividend stocks on the other. Looking back now, this strategy has been effective and could basically weather most of the declines in the third quarter.
In particular, the balanced allocation strategy of "technology on one hand, dividends on the other" played a major role. When technology stocks continued to decline in the third quarter, the dividend sector rose against the trend, especially banks and other dividend sectors, which saw fairly obvious gains, with many bank stocks even hitting historic highs. Many investors find it difficult to hold an empty position or an extremely low position to cope with market adjustments. Filling positions by allocating to banks and other dividend sectors can help restrain one's restless hands and is a relatively good strategy during technology stock adjustments.
The new real estate policy announced on August 28 played a certain supporting role in stabilizing the real estate market. The mortgage interest subsidy policy for residents jointly issued by multiple departments is also being gradually implemented, indicating that greater policy support will be given to the real estate market to promote its stabilization. This is very beneficial for stabilizing the macroeconomy. After the policy was introduced, the real estate sector also saw a relatively large rebound, with some leading stocks even hitting the daily limit, and consecutive limit-up moves also occurred.
However, this does not mean the real estate market has completely reversed; the policy effects still need further observation. The intensity of this policy is relatively strong and has stimulated residents' home-buying demand and market expectations to a certain extent. However, for the real estate market to achieve a genuine stabilization, more conditions are needed, including an economic recovery, improved expectations for the future real estate market, and a recovery in investment demand. It is hoped that more strong policies can be introduced in the future to release more demand; at the same time, local governments with financial capacity can digest some excess inventory through procurement and storage. These measures may play a relatively key role in stabilizing the real estate market. At present, the real estate sector can be seen as a rebound, not yet a reversal, so investment should still be approached with caution.
The National Day holiday, together with the earlier Mid-Autumn Festival short holiday, represents the traditional peak consumption season. Service consumption such as cultural tourism and dining has seen significant growth, though this is mainly a short-term performance brought about by the holiday effect, not sustained demand growth. The continued implementation of the trade-in policy is conducive to supporting consumption growth in related products. What can truly boost consumer confidence is raising residents' income levels. The next step should focus on how to increase residents' wage income and property income.
It is worth mentioning that the real estate market has already seen favorable policies, promoting a stabilization of housing prices; the next step should be to introduce greater policies in the capital market to push this round of market conditions further forward. A bull market can effectively enhance the wealth effect for residents, which is crucial for stabilizing consumption and is one of the important ways to enhance residents' wealth effect. Therefore, enhancing residents' income capacity, income levels, and confidence in the future through various means is the focus of the next phase of policy research.
On the international front, international oil prices have recently risen again, mainly due to the impact of changes in the geopolitical situation. The Middle East conflict shows no sign of ending yet, and the Strait of Hormuz remains insufficiently unobstructed, dealing a major blow to oil supply. As the lifeblood of industry, continuously rising oil prices may push up global inflation levels. This is unfavorable for global economic recovery and will also have a negative impact on business operations.
With inflation resurging, the Federal Reserve has no choice but to prioritize inflation control. The possibility of another rate hike at the October Fed meeting is low, but there is a possibility of another rate hike at the December meeting, which would also have a negative impact on capital markets. Persistently high international oil prices may affect corporate profits and will also have a negative impact on global economic recovery.
Changes in the international geopolitical situation, especially changes in the Middle East, have a significant impact on international oil price trends and also affect shipping to some extent. Recently, both the oil sector and the shipping sector have seen sustained sharp gains, related to changes in the geopolitical situation. International gold prices recently experienced another round of pullback after rising, fluctuating repeatedly and mainly consolidating. This round of gold price volatility is closely related to the Federal Reserve's monetary policy and changes in international oil prices.
Previously, international gold prices briefly fell below $4,000 per ounce. At that time, I pointed out that below $4,000 represented a "golden pit," and falling below $4,000 was a good opportunity to buy on dips. Subsequently, international gold prices briefly broke through $4,700 per ounce; after the Fed decided to raise rates at its September meeting, gold prices saw another round of decline. If prices can fall below $4,000 again this time, it may also bring a new round of allocation opportunities. Because from a medium-to-long-term perspective, international gold prices are still expected to maintain an upward trend.
De-dollarization and the US government's mounting debt both have a positive impact on the long-term trend of international gold prices. Increased safe-haven demand, combined with continued gold purchases by multiple central banks represented by the People's Bank of China, has also increased the actual demand for gold. These factors will positively drive the medium-to-long-term trend of international gold prices. Therefore, I have always recommended that moderately allocating gold-related assets in an investment portfolio is a relatively good investment strategy. Looking at it now, this strategy remains effective. MACD golden cross signals have formed, and these stocks are performing well!