Ahead of China’s National Day in 2024, the stock market experienced a remarkable surge, but after the holiday, the market faced a dramatic plunge. This “rollercoaster” experience for investors has also prompted deep reflection on policy, economics, and market dynamics.
As the theme, write a blog post about the stock market surge before last year’s National Day holiday, and be sure to include the subsequent sharp decline after the holiday. Article style: news report.
Stock market surge before National Day: A policy-driven frenzy
Over the five trading days leading up to China’s National Day in 2024, the Chinese stock market surged from a sluggish state into “boiling mode.” On September 30th, A-share markets across the board saw significant gains, with major indices reaching record highs. The Shanghai Index rose 8.06%, the Shenzhen Component Index increased by 10.67%, and the Growth Enterprise Market Index soared 15.36%. The Bilibili BELEX 50 Index even set a historic record for the largest single-day increase, jumping 22.84%. Market sentiment was extremely exuberant, with turnover on the Shanghai, Shenzhen, and Beijing exchanges reaching 2.6115 trillion yuan, a significant increase of 115.59 billion yuan compared to the previous trading day. More than 5300 stocks across the market rose collectively, creating a “sea of red” scenario.
The core driving force behind this recent market trend stems from the concentrated release of a series of unexpected policies by the government and the resulting shifts in market expectations. On September 24th, the People’s Bank of China announced measures including reducing the reserve requirement ratio, lowering interest rates, and decreasing mortgage rates for existing loans, as well as unifying the minimum down payment ratio for mortgages. The Central Political Bureau meeting on September 26th emphasized the need to strengthen counter-cyclical adjustments through fiscal and monetary policies, work hard to boost the capital market, and vigorously guide long-term funds into the market. On September 30th, a cluster of four real estate support policies were introduced. These measures demonstrate the government’s determination to stabilize the market and promote economic growth.
The stock market’s sharp decline after National Day: Calmness and adjustment following the revelry
However, market sentiment took a sharp turn downward after the National Day holiday. On October 8th, A-shares opened strongly with gains nearing the daily limit, but following this significant opening rally, the market experienced violent volatility and ultimately closed higher than it opened but lower than it started. Since then, the market focus has continued to decline; as of October 16th, the Shanghai Composite Index had a fluctuation rate exceeding 15% and cumulatively fell by more than 470 points. From October 8th to 10th, core A-share indices across the board declined, with the Growth Enterprise Market Index falling by 6.21%. The reasons for this sharp decline are partly the digestion of accumulated risks from previous rapid gains, and partly related to adjustments in market expectations regarding policies. Some investors believe that the short-term effects of policies have already become apparent, but long-term results still need to be observed. In addition, volatility in overseas markets has also impacted A shares. On October 9th, the Hang Seng Index plummeted 9.41%, and the A50 futures contract fell 10.4%, further exacerbating the market’s decline.
Reflection on and Prospects for the Market
The sharp volatility of the stock market before and after National Day has prompted deep reflection on policy, economy, and market mechanisms. On one hand, the short-term stimulating effects of policies are evident, but their long-term impact remains to be seen. On the other hand, the rapid rise and fall of the market also remind investors to remain rational and avoid emotional investing.
Whether A-share market can achieve a genuine “long-term bull” trend still depends on whether policies can effectively transmit to the real economy and ultimately drive substantial improvements in economic fundamentals. Investors should closely monitor the specific implementation of policies and changes in economic data, and reasonably adjust their investment strategies.
The sharp rise and fall of the stock market before and after National Day was a game between policy and the market, as well as a test of investor psychology. In this “extreme” market environment, we have witnessed both the power of the market and the influence of policy. How the market will unfold in the future remains to be seen.