CICC: The current A-share market is more conducive to a slow bull trend than at any other time in history. – 富途牛牛

Report on the Bull Market in A-Shares and Its Alignment with Sustainable Development Goals (SDGs)

Overview of the A-Share Market Bull Trend

The valuation of A-shares remains attractive compared to other major asset classes and global stock markets. The ongoing restructuring of the international monetary order and the continuous development of China’s innovation-driven industries are expected to lead to earnings realization. Consequently, optimism prevails regarding the continuation of the bull market in A-shares.

According to a research report by CICC, the core driving force behind this bull market is the restructuring of the international monetary order. Since September 2024, despite prior widespread pessimism, the A-share market has experienced a bullish trend marked by volatile upward movements. Key factors include:

1. Policy shifts, notably the ‘924’ policy adjustment.
2. Concerns over the safety of dollar-denominated assets.
3. China’s strong economic resilience and the AI revolution narrative.
4. Sino-US negotiations in 2025 reflecting enhanced national strength.
5. Low-interest-rate environment and strong household demand for asset allocation.
6. Market stabilization mechanisms established by state-owned entities.

Significance of Sustainable Development Goals (SDGs)

The ongoing developments in the A-share market contribute directly and indirectly to several SDGs, including:

• SDG 8 (Decent Work and Economic Growth): By fostering innovation-driven industries and economic resilience, the market supports sustained economic growth and productive employment.
• SDG 9 (Industry, Innovation, and Infrastructure): The emphasis on innovation-driven industrial development aligns with building resilient infrastructure and promoting inclusive industrialization.
• SDG 10 (Reduced Inequalities): The restructuring of the international monetary order and capital reallocation may contribute to reducing global economic disparities.
• SDG 17 (Partnerships for the Goals): Sino-US negotiations and international capital flows highlight the importance of global partnerships and cooperation.

Key Viewpoints and Recommendations by CICC

Fundamentals: Unified National Market and Diversified Industrial Policies

• Promote the construction of a unified national market to regulate local government investment practices and dismantle regional protectionism.
• Encourage orderly exit of outdated capacities to balance supply and demand.
• Diversify industrial policies beyond the ‘new three’ sectors to foster a broader range of emerging productive forces, supporting SDG 9.
• Control the scale of government subsidies to avoid resource concentration and market imbalances.

Institutional Framework: Implementation of New ‘Nine Guidelines’ and Expansion of Financial Hedging Tools

• Continue enforcing the new ‘Nine Guidelines’ to control financing, regulate dividends, and promote high-quality development of securities and fund institutions.
• Strengthen delisting supervision to enhance market metabolism and combat market manipulation.
• Expand financial market hedging instruments to improve risk management and market efficiency.
• Innovate financial derivatives, including stock index futures and options, to provide comprehensive risk coverage.

Capital Flows: Encouraging Domestic and International Long-Term Investment

• Promote the entry of domestic medium- and long-term funds into the market.
• Deepen opening-up measures to attract international long-term capital such as pension funds, insurance funds, and sovereign wealth funds.
• Relax restrictions on foreign investor access and simplify approval processes.
• Expand investment opportunities for foreign capital, especially in emerging industries where China has advantages.
• Enhance information exchange and disclosure standards to reduce information asymmetry and investment risks.

Implications for Sustainable Economic Development

The transformation in fundamentals, institutional frameworks, and capital flows has created a qualitatively improved environment for the A-share market. The restructuring of the international monetary order introduces new external momentum through global capital reallocation, while economic transformation and the rise of new productive forces enhance profitability stability and sustainability.

This environment supports the formation of a “floor-without-ceiling” slow bull market, which has profound implications for:

• Building a strong financial nation (SDG 8).
• Boosting consumption and upgrading industries (SDG 9).
• Supporting high-quality economic development aligned with sustainable growth principles.

Realizing this slow bull market depends on China’s commitment to advancing economic transformation, deepening capital market institutional reforms, and enhancing the medium- and long-term appeal of the market. These efforts will ensure that the bull market becomes a critical pillar supporting sustainable development goals and economic resilience.

1. Sustainable Development Goals (SDGs) Addressed or Connected to the Issues Highlighted in the Article

1. SDG 8: Decent Work and Economic Growth
   • The article discusses China’s economic resilience, innovation-driven industries, and the restructuring of the international monetary order, all of which relate to promoting sustained, inclusive, and sustainable economic growth.
   • Focus on earnings realization, industrial diversification, and market stability aligns with fostering productive employment and economic development.
2. SDG 9: Industry, Innovation, and Infrastructure
   • The emphasis on innovation-driven industries and the development of emerging productive forces supports building resilient infrastructure, promoting inclusive and sustainable industrialization, and fostering innovation.
3. SDG 10: Reduced Inequalities
   • The article mentions the need to dismantle regional protectionism and market segmentation, which relates to reducing inequalities within and among countries by promoting equitable economic policies.
4. SDG 16: Peace, Justice, and Strong Institutions
   • Institutional reforms such as implementing the ‘Nine Guidelines,’ combating market manipulation, and improving regulatory frameworks align with building effective, accountable, and transparent institutions.
5. SDG 17: Partnerships for the Goals
   • The article highlights international cooperation, such as Sino-US negotiations and attracting international long-term capital, which supports strengthening global partnerships for sustainable development.

2. Specific Targets Under Those SDGs Identified Based on the Article’s Content

1. SDG 8 Targets
   • 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading, and innovation.
   • 8.3: Promote development-oriented policies that support productive activities and decent job creation.
   • 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking and financial services.
2. SDG 9 Targets
   • 9.2: Promote inclusive and sustainable industrialization and, by 2030, significantly raise industry’s share of employment and GDP.
   • 9.5: Enhance scientific research, upgrade technological capabilities of industrial sectors.
3. SDG 10 Targets
   • 10.2: Empower and promote the social, economic, and political inclusion of all irrespective of regional disparities.
4. SDG 16 Targets
   • 16.6: Develop effective, accountable, and transparent institutions at all levels.
   • 16.5: Substantially reduce corruption and bribery in all their forms.
5. SDG 17 Targets
   • 17.3: Mobilize additional financial resources for developing countries from multiple sources.
   • 17.9: Enhance international support for implementing effective and targeted capacity-building in developing countries.

3. Indicators Mentioned or Implied in the Article to Measure Progress Towards the Identified Targets

1. Economic Performance and Market Indicators
   • Performance of A-share market indices reflecting economic productivity and earnings realization.
   • Volatility and trend analysis of stock market movements indicating market stability and investor confidence.
2. Industrial Diversification and Innovation Metrics
   • Number and growth rate of emerging industries and sectors beyond the traditional ‘new three’ sectors.
   • Investment levels in innovation-driven industries and technology upgrades.
3. Institutional and Regulatory Effectiveness Indicators
   • Implementation status and enforcement of the ‘Nine Guidelines’ including delisting supervision and anti-market manipulation measures.
   • Availability and usage of financial hedging tools and derivatives as measures of market sophistication and risk management.
4. Capital Flow and International Cooperation Metrics
   • Volume and diversity of domestic and international long-term capital inflows.
   • Number of foreign investors and shareholding limits reached.
   • Quality and internationalization level of financial disclosure and information exchange.

4. Table: SDGs, Targets and Indicators

Source: news.futunn.com