Recently, the Chinese A-share market has shown signs of recovery after a period of turbulent adjustmentsInvestors have become increasingly optimistic, as various factors suggest a potential resurgence in stock prices.

On November 25, despite a significant dip in the three major indexes during the early trading hours, a surge of funds poured into the market by the afternoon, igniting a revival in investor sentimentBy the end of the trading session, the Shanghai Composite Index closed down slightly by 0.10%, while the ChiNext Index fell by 0.02%. In total, over 3,700 stocks gained, with nearly 170 stocks hitting the daily limit upConcurrently, foreign investment institutions expressed strong confidence in the future performance of A-shares, with several international investment banks issuing positive forecasts, highlighting the medium to long-term attractiveness of the Chinese market.

**A Short-Term Resurgence with Active Capital**

On the same day, the market initially faced pressure, with all three major indexes dropping over 1%. However, after 2:18 PM, a wave of capital influx began, lifting market morale

Notable sectors included solid-state batteries, AI pharmaceuticals, and cross-border e-commerce, with solid-state battery stocks leading the charge, as several shares surged more than 10%, including MGL, Gaorui Co., and others.

This short-term market rally can be attributed not only to active capital positioning but also closely relates to technical metrics, popular themes, and individual stock performancesCICC noted that recently, small and mid-cap indices have outperformed the broader market, with increased momentum in technology and sector rotations, along with market activities such as mergers and acquisitions further stimulating investor interest.

**What Drives Foreign Investment Confidence in A-shares?**

Despite recent fluctuations in the A-share market, foreign investment institutions maintain a generally optimistic outlook on its medium to long-term prospects.

1. **Significant Valuation Advantage**

According to Ma Lei, Chief Investment Officer for China and Hong Kong at Invesco, from a valuation standpoint, Chinese stocks are at a relatively low level

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In October, the MSCI China Index was trading at about a 52% discount compared to the MSCI US IndexMa believes that with improvements in corporate fundamentals, there is substantial growth potential in the A-share market over the next 12 monthsHe specifically pointed out that easing profit margin pressures and enhancing return on equity will boost investor confidence and foster market recovery.

2. **Sector Allocation Recommendations**

Zhou Huantong, a global market strategist at Morgan Asset Management, indicated that A-shares are more attractive than H-shares at this stage, particularly in high-dividend and defensive sectors such as domestic banks and telecommunications

Additionally, technology and consumer sectors are viewed as promising areas, with anticipated positive impacts from policy support and consumption upgrades.

3. **Policy and Liquidity Support**

Goldman Sachs, in its 2025 outlook, maintains a high allocation recommendation for A-shares and H-shares, particularly noting A-shares' higher sensitivity to policy easing and individual capital flowsGoldman anticipates a 13% rise for the CSI 300 Index and a 15% increase for the MSCI China Index by 2025.

**Prospects of Hot Sectors**

In the short term, frequent rotations among hot sectors can be observed

The solid-state battery sector has been particularly outstanding, with the technology gradually entering the industrialization phase, expected to exceed 1GWh in shipments by 2028. As technological breakthroughs and market demand grow, stocks related to solid-state batteries are likely to continue to benefitMoreover, forefront technological fields such as AI pharmaceuticals and brain-engineering are also receiving increasing attention from market funds.

Looking at the medium to long-term, institutions suggest investors focus on several key directions:

1. **High Dividend and Defensive Sectors**

Higher dividend sectors such as domestic banks and telecommunications are favored for their stability and low valuation, especially against the backdrop of uncertain global economic recovery phases.

2. **Consumer and Technology Growth**

With the acceleration of domestic demand stimulation policies, the consumer sector is poised for improvement

Additionally, technology growth fields such as AI and semiconductors show long-term developmental potential powered by technological innovation and market demand.

**Market Prospects and Investment Recommendations**

According to a recent report by Galaxy Securities, A-shares are likely to experience upward fluctuationsWith the gradual release of policy dividends and improvement in economic fundamentals, the medium to long-term opportunities present promising expectations for the A-share market.

From an investment strategy perspective, the market may maintain a fluctuating pattern in the short term, but the likelihood of a rebound across the year is relatively high

By 2025, as policy support intensifies and the economy stabilizes, more growth opportunities for A-shares are anticipatedSpecifically:

1. Focus on the rotation of hot sector themes such as new energy and artificial intelligence.

2. Mid-term allocations should emphasize high dividend yield and defensive assets to mitigate potential market fluctuations.

3. Maintain a bullish long-term view on trends in consumption upgrades and technological innovations, selecting leading enterprises as core allocations.

**Conclusion**

The recent rebound in the A-share market indicates a growing consensus among investors regarding the market bottom, while it also reflects an increase in the vibrancy of market hotspots