On December 13, stock markets in both mainland China and Hong Kong experienced significant adjustments, leading to uncertainty among many investors regarding future conditionsHowever, an examination of the trends since September 24 reveals a prevailing pattern of "reversing the weak expectations and consolidating positive forecasts." The market appears to be engaging in upwards oscillations, aimed at bolstering investor confidence, suggesting that the intention is not to search for a bottom but rather to reach new highs.

Delving into the micro-details of the market, four key forms of "support" for the A-share market have emerged:

Firstly, last Friday saw only 920 stocks rise, yet around 100 stocks hit their daily upper limitThis indicates that speculative trading has not abated despite the broader market's declines.

Secondly, among the top 100 A-shares by market capitalization, only four stocks rose last Friday

Given the scale of declines, the potential for further drops in these stocks seems limited when considering their recent rises, valuations, and dividend yields.

Thirdly, ETF fund shares have increased again over the past weekThis influx signifies that passive capital is still entering the market, and interestingly, larger market fluctuations have driven an accelerated entry of these funds.

Fourthly, the overall bullish sentiment in the market remains intactThe number of bullish stocks in the A-share market has shown an upward trend, indicating that last Friday's drop did not completely disrupt this momentum.

Historically, during periods of monetary policy easing, the likelihood of a bear market is quite low, despite occasional volatilityThis perception creates an underlying floor in the market, evidenced by reluctance among investors to sell off holdings and a gradual increase in low points during market downturns

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Despite last Friday's substantial drop, data indicates that the four forms of "support" persist:

Firstly, trading activity remains robustAlthough only 920 stocks rose, the number of stocks hitting price limits indicates strong interestAdditionally, the frequency of listings on the "Dragon and Tiger List" reached 409 times, up from 398 the previous week, and the capital inflow from this segment rose from 56.3 billion to 77.2 billion yuanSuch trends highlight that speculative activity has not diminished in the face of market corrections.

Secondly, the recent declines may be influenced largely by market sentimentOf the top 100 A-shares, only four saw price increases last Friday, and aside from SAIC Motor, the price gains were modestWhile these large-cap stocks significantly impact indices, the possibility that their price drops stem solely from fundamental factors seems improbable

Thus, the potential for further falls is also limited.

Thirdly, passive funds continue to gain tractionThe last week saw ETF shares grow to 19.604 trillion yuan, indicating an ongoing influx of passive capitalThe previous figures from September 23 show that ETF shares stood at 16.729 trillion yuan, which highlights a remarkable increase of nearly 300 billion in recent weeks alone.

Fourthly, the bullish arrangement of stocks has not been significantly compromisedThough the number of bullish stocks has slightly dipped to 1,907 from the previous Thursday's 1,969, it still exceeds 1,893 observed the week prior.

Looking ahead, the current market appears to be in a phase where various funds have yet to converge towards a unified directionWhile speculative trading remains vigorous, there are still pessimistic voices present.

According to data from Tianfeng Securities as of December 13, the median position of ordinary equity funds is at 89.27%, reflecting a decrease of 0.80% from the previous estimate

Similarly, the median position for hybrid funds stands at 87.21%, down by 1.45%. An analysis of both the broad market and small-cap market dynamics reveals that the positions of common equity and hybrid funds have shifted slightly, suggesting considerable variability in investor sentiment.

Investment in stocks often necessitates two critical components: understanding pricing and maintaining a steadfast belief in one’s strategyRegarding pricing, it is essential to recognize that, overall, index levels and valuations do not seem excessively highHowever, differing interpretations of policies by various capital pools have contributed to recent market fluctuations, sometimes undermining investor confidence in holding stocksYet, sifting through numerous market variables reveals that the future does hold promise.

Economic policies remain positively oriented, indicating that responses are likely to be dynamic and tailored to current realities

It is unwise to extrapolate static forecasts from past conditionsThe continuation of a loose monetary environment is expected to offer strong support until the significant policy hiatus leading up to the National People's Congress next yearBoth economic and price indicators are anticipated to maintain stability.

While the market is focusing on policies to stimulate domestic demand and accelerate administrative supply-side reforms, it is essential to recognize that current consumer policies could serve as a safety netAdditionally, China’s manufacturing sector may not solely rely on administrative commands for supply-side adjustmentsInitiatives such as the Belt and Road Initiative stand to unlock new avenues for growth, especially as Southeast Asian countries continue their industrialization and urbanization processes, highlighting a persistent demand for infrastructure development.

Structuring the economy internally and seeking growth externally may represent a more nuanced understanding of current conditions