The A-share market in China has recently witnessed a remarkable surge, largely fueled by a combination of favorable policies, a steady influx of incremental capital, and an encouraging recovery in the economic fundamentalsSince September 24, 2023, the market has shown a remarkable upward trajectory, demonstrating the strength of the Chinese economy and the resilience of its stock market.

According to data from Wind, by November 12, the total market capitalization of A-shares reached an impressive 97.03 trillion yuan, showing an increase of 22.05 trillion yuan since September 23. This number is tantalizingly close to the milestone of 100 trillion yuan, with analysts suggesting that, given the positive trends, this threshold could soon be surpassed.

One of the primary catalysts for this growth has been the recovery in stock prices, which has become the core driving force behind the increase in market capitalization

A-share markets have firmly established themselves as the second-largest capital market globally, showcasing 5,366 listed companies with total market valuations nearing the historic 100 trillion yuan mark.

If we examine the events preceding this rise, we see that on September 23, the total market capitalization stood at approximately 74.98 trillion yuan with only 5,348 listed companiesThe subsequent jump to 97.03 trillion yuan represents a staggering growth of 29.41% in market capitalization, while the number of listed companies increased by merely 18. This indicates that the market's strength is predominantly driven by revaluation, rather than merely an expansion in the number of companies.

The indices have reacted positively; for instance, by November 12, the Shanghai Composite Index, Shenzhen Component Index, and the ChiNext Index experienced substantial accumulative increases of 24.48%, 39.97%, and 56.21%, respectively

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Various sectors, including technology and finance, have seen remarkable gains, contributing substantially to the bullish market sentiment.

Furthermore, the volume of transactions in the A-share market has also set several recordsThe period from September 24 to November 12 witnessed a cumulative trading volume of 63.03 trillion yuan, with daily averages exceeding 2 trillion yuanFrom September 25 onward, the market maintained transactions that consistently surpassed 1 trillion yuan for 30 consecutive trading days, and notably, from November 5, trading levels exceeded 2 trillion yuan for six straight days, a streak that exemplifies the market's energetic stateOn October 8, a record was set with a single-day trading volume of 3.48 trillion yuan.

Breaking down the significant players in the market, as of November 12, among the top ten companies by market capitalization, the financial sector remains dominant

The Industrial and Commercial Bank of China leads the field, followed by Kweichow Moutai and Agricultural Bank of China, with nine out of ten companies boasting valuations exceeding 1 trillion yuan.

A detailed analysis reveals that out of the 5,306 stocks on the A-share market that experienced an increase since September 24, 424 stocks recorded gains exceeding 100%. Furthermore, the growing market value of various listed companies offers a clearer picture: 178 companies saw an increase of over 20 billion yuan, and 14 exceeded 100 billion yuanKweichow Moutai alone saw its valuation rise nearly by 400 billion yuan, attesting to its significant presence in the market.

Investment managers, such as Xia Fengguang of Rongzhi Investment, have indicated a shift in how A-share market growth is characterizedRather than being propelled by the increase in the number of listed firms, it is now mainly driven by the revitalization of stock prices

This change sets a positive outlook for A-shares, with predictions of surpassing the 100 trillion yuan mark in the near future.

Analyzing the broader environment surrounding A-shares, the momentum in the market does not merely stem from market dynamics; it is greatly influenced by a supportive policy framework and inflow of fresh capitalSince September 24, various macroeconomic policies have pivoted towards providing robust support, alleviating fears regarding economic performance and market developmentThese measures have boosted market confidence, unleashing significant appreciation in core indices.

Moreover, risk appetite has also risen, encouraging liquidity in the marketData from Wind shows that by November 11, A-share margin financing increased to a record high of 18.31 trillion yuan, marking the highest level since July 3, 2015. The influx since September 24 totaled around 470 billion yuan, predominantly concentrated in the electronic, non-bank financial, and computer sectors.

As we look at exchange-traded funds (ETFs), there has also been substantial capital inflow, with over 140 billion yuan net entering the market since September 24, showcasing interest from both institutional and retail investors alike.

Fundamentally, the improvement in key economic indicators has corroborated the resilience of the market

Recent data has indicated a reverse in the Purchasing Managers' Index (PMI), climbing back into the expansion zone, thus marking the first such increase since May of this yearAdditionally, property sales across China saw a greater than usual seasonal increase in October, hinting at a rebounding real estate sectorCustoms data for October indicated a significant uptick in exports, further substantiating the recovery narrative.

With the government’s emphasis on stimulating domestic demand, analysts project that the country’s GDP growth could stabilize around 5% by 2025. If these optimistic growth trends solidify, especially regarding return on equity (ROE), significant upward movements in key indices like the CSI 300 can be expected as increased confidence leads to both valuation corrections and institutional buying.

In the long-term, sentiment around the A-share market appears bullish