To what stage has the current rally progressed? (AI Translation)

本轮上涨已演绎到何阶段

The article evaluates market sentiment with a focus on the A-share market, considering data from prices and volumes, fund flows, and comparisons with other asset valuations. The assessment reveals the sentiment as rising, characterized by swift, historically significant increases in trading activity and prices. A constructed A-share market sentiment index closely aligns with actual market trends, providing valuable insights during shifts in sentiment, as observed in the recent bullish trend [para. 1].

The current rally's stage is analyzed, noting recent market warm-up after dipping into an oversold state, which led to divided expectations after a price retreat on October 9, 2024. From a volume and price perspective, the rally's development mirrors past bull markets' heights without signaling a reversal. Indicators of market trading activity and price levels have reached historical highs, hinting at strong market sentiment [para. 2].

Financial indicators reveal rising metrics but not yet at their peaks, suggesting the potential for further capital inflows. Notably, leveraged funds show climbing numbers with margin purchasing at historical highs, yet still below their peak. Public fund investments are up but shy of past highs. Incremental capital indicators show no significant change, indicating room for more inflows to fuel the rally [para. 3].

Comparative asset pricing indicates a decline in stocks' relative cost-effectiveness after recent price increases, but it remains mid-level historically. Equity risk premiums have lessened from historical highs, reinforcing the notion of strong equity performance relative to bonds. Additionally, the equity-bond yield spread signals a victorious equity market as bond yields lag behind [para. 4].

Overall, the marked surge in market trading volume and stock prices attributes to flexible funds attracted by policy expectations, maintaining normal historical stock valuations. Though no peak in this rally is apparent, the movement largely results from trading actions rather than new policy or data deviations. The October 9 downturn illustrated profit-taking actions. Future market directions depend on incremental capital inflow and fundamental data post-policy effects. If fundamental improvements, such as addressing weak domestic demands, manifest, greater market upside could exceed expectations [para. 5].

From a detailed market perspective, trading enthusiasm and market sentiment are quantified by sub-indicators like turnover rate and stock momentum. Since September 2024, turnover rates spiked, suggesting heightened market excitement and faster information flow [para. 6]. Stocks trading above average yearly prices point to optimism without reversing signals, signifying steady upward momentum [para. 7]. Lower transaction concentration in leading stocks mirrors a structurally weak market [para. 8]. Despite highs in new stock prices, overall sentiment remains positive with potential for additional capital inflows [para. 9].

Financially, the market's sentiment is reflected through leveraged fund metrics and the increment of public fund stock positions. The substantial rise in margin purchases indicates strong trading tendencies, often revealing an overheated sentiment [para. 10]. Concurrently, gradual increases in equity-biased funds imply steady capital influx and market demand [para. 11].

In summary, while stock valuations are high relative to bond markets, signals such as the transitioning futures premium reflect positive market sentiment regarding future trends. Recent trading dynamics provide a mixed view of declining equity premiums but rising yield spreads favor equities [para. 12]. The interplay of these factors showcases a complex yet cautiously optimistic view of the current A-share market rally.