The day before yesterday, after I finished writing an article about the U.S. stock market, I saw that the central government had launched a big move in the financial field.
At a meeting jointly held by the People's Bank of China, the Hong Kong Monetary Authority and the China Securities Regulatory Commission, the country announced a series of major financial policies.
Among these policies, I am more concerned about the stimulus for A-shares. In simple terms, this stimulus can be understood as the People's Bank of China opening the door to funds for institutions to buy stocks.
This measure is undoubtedly a major one, but it is still some distance away from the Bank of Japan's previous act of personally buying stocks and rescuing the market "at all costs."
There are various responses to this stimulus, so I won't comment on the policy itself. What I want to say is that it at least reflects one thing: the central government has realized the importance of the stock market, and is determined to save the market.
In an article earlier this year and in several online discussions, I expressed the following view:
Looking at our country's current economic situation and the measures that can be taken in all aspects, I believe that there is only one way to reverse or slightly slow down this adverse trend: to boost A shares.
To what extent will the A-shares be pulled up?
I very conservatively believe that the Shanghai Composite Index must at least reach 4,000 points. In fact, I think 4,000 points may not be enough. It will have a certain effect if it can reach 6,000 points. Of course, it would be even better if it can exceed 6,000 points.
Not only does the index need to be pulled to a certain height, but the time cannot be delayed too long. I think the lower limit is December 2025. In other words, if the Shanghai Composite Index does not reach the conservative point above before the end of December 2025, what will happen next can only be praying for God to bless China.
It now appears that the central government has begun to shift from purely policy-oriented support to greater financial support.
Will this series of measures be effective? That remains to be seen.
At least the day before yesterday, when the policy was introduced, all major indexes rose by more than 4%, which is extremely rare in history.
However, we cannot rule out the possibility that greater stimulus measures may be introduced if the subsequent performance of the stock market continues to be poor. In short, the stock market must be pulled up.
There are four main types of reactions and actions by investors to the current rally:
The first type is those who have completely given up on A-shares and don’t care about them regardless of whether they are good or bad.
The second type, because of this sudden major change, instantly rekindled hope for A-shares, began to pay attention to A-shares, and were ready to enter the market at any time.
The third category is that no matter what the market will be like in the future, there will probably be a good market trend in the next few days, so hurry in and take advantage of it.
The fourth type is to treat the symptoms but not the root cause. Just quit while you are ahead. In terms of operation, you should quickly check your position list to see if any of them have recovered your investment. If so, you should cash out as soon as possible.
Among these four types of reactions:
The first category is neither more nor less.
The second category may not seem to be numerous now, but I estimate that as the market rises, there will be more and more.
The third category is very typical speculators, and there are many of them.
The fourth category is probably the majority.
If my guess is wrong and A-shares have no market before the end of December 2025, then the second to fourth category participants will most likely not only lose money, but will lose even more.
If my guess is correct, A-shares will have a market before the end of December 2025, and the second to fourth category participants will most likely still lose money.
Therefore, no matter how the market develops next, although the first type of participants block out possible profits, they also block out all risks. At least they can protect their capital, which is the best outcome among the four types of participants.
If the second to fourth types of participants want to have a better outcome, they must be determined to stay away from A-shares completely and give up completely after making their money back.
However, if my guess is correct, and A-shares have a market before the end of December 2025, will there be any participants who can make money?
I think there are people who believe from the bottom of their hearts that there will be this wave of market. Among these people, there are two kinds of views on the next market:
The first category: A-shares have completely bottomed out, and the stock market will move forward in waves from now on.
The second category: I am afraid there will be a more miserable final drop, which is likely to fall below the previous low, and most people who still have hope will be in tears and heartbroken. After this final drop, A-shares will have a vigorous bull market.
I think if it is the first category, then I estimate that there is a relatively high chance that the Shanghai Composite Index will exceed 4,000 points, but it is hard to say whether it can break 6,000 points.
But if it is the second category, then I estimate that there is a good chance that the Shanghai Composite Index will break 6,000 points.
This article was written purely because of my inspiration for this sudden major policy. It is not at all any advice or reference for readers' operations.
However, my views on A-shares have remained unchanged, so to see what we will witness next, we will have to wait until the end of December 2025 at the latest.
