He Xun Investment Advisor Ge Junlong: Is the Bull Market Spring Rally Coming? Watch These 4 Major Signals

The four major signals appearing together may indicate that the spring market is approaching. So, what are these four signals? Gu Junlong from Hexun Investment shares that, based on past experience, each market rally often begins with a surge in the brokerage and insurance indices. Today in the morning session, we observed a collective upward push in these two sectors, which suggests that large funds believe the recent market correction has basically bottomed out. Everyone knows that despite the intense geopolitical conflicts lately, big capital is still willing to deploy, indicating their confidence is relatively strong.

The second signal is the significant contraction in trading volume, which has been quite evident. Over the past three months, trading volume has shrunk to about 50%. The largest trading volume in the last three months was around 4 trillion yuan, but in the recent ten trading days, it has mostly stayed just above 2 trillion yuan. When certain signals appear, a quick rebound is very likely to follow, making it a high-probability event.

The third point is that the implied volatility of major indices in the A-share market, mainly the Shanghai and Shenzhen markets, is gradually decreasing. What does implied volatility mean? It reflects the market’s expectation of large swings—lower implied volatility indicates a lower chance of big rises or falls. Considering the current intense conflicts, big funds believe the market won’t continue to plunge sharply. All these factors combined provide strong upward momentum for China’s A-shares.

The fourth aspect to watch is the Hong Kong stock market, especially given the recent intense geopolitical conflicts in the Middle East. For example, Dubai’s real estate market has fallen nearly 31.8% in two weeks, with a large capital outflow. Why? Because the conflict is too fierce. Iran’s indiscriminate attacks are primarily about survival, right? Now, looking at Hong Kong, valuations are relatively low, growth prospects are good, and corporate earnings haven’t been affected by the war. Export data is actually increasing.

Another important point is the recent appreciation trend of the RMB over the past two years. If we look at China’s overall export data, despite last year’s rapid growth, exports still increased by nearly 19% year-on-year in the past one or two months. Driven by strong exports, RMB appreciation is highly likely. When these factors are combined, the Hong Kong stock market appears to have significant investment value. That’s why the Hang Seng Tech Index and the Hang Seng Index have recently rebounded quite noticeably.

(Edited by: Wang Gang HF004)

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