The year 2024 has proven to be a rollercoaster for the market, marked by significant fluctuations and various economic pressuresAlongside complex macroeconomic factors, China experienced a slowdown in domestic demand and a marked decline in export growthParticularly symptomatic of this downturn is the troubled real estate sector, facing mounting investment and sales pressures, leading to a relatively sluggish housing marketIn response, the central government emphasized the importance of cooperation between fiscal and monetary policies during the economic work conference, seeking to boost economic activity and foster a recovery in domestic markets.

As for the equity markets, 2024 showcased extreme volatilityThe first half of the year favored dividend and high-yield stocksHowever, from late May through September, the stock market faced adjustments due to weak domestic economic data and international uncertainties

A pivotal moment occurred on September 24, when a series of policy measures instigated a shift in market sentiment, with technology and innovation sectors receiving strong policy backing and subsequently performing exceptionally well.

The tone of economic policy has been clearly set in this new cycleZhang Liqun, a seasoned economist, remarked that the primary cause of the slowdown in China's economic growth is a combination of internal and external factors leading to demand contractionZhang projects that China’s potential growth rate remains above 8%, largely due to its robust production capabilities and significant human resource poolChina's extensive manufacturing capacity and the ongoing cultivation of talent are expected to sustain its supply-side advantagesAdditionally, a national savings rate nearing 45% underpins funding availability while advancements in technology and innovation indices are enhancements to potential growth rates.

On the fiscal policy front, Zhang indicated that China is poised to enter a phase of recovering growth

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With a concerted focus on counter-cyclical and extraordinary regulatory measures, the aim is to reverse the trend of demand shrinkage and wrestle with downward economic pressures, thereby enhancing people's sense of economic stability and wellbeingExpert analyst Yang Shoujun from Huizheng Financial highlights that the global markets are currently in a period marked by significant advancements in artificial intelligence combined with a slowing economy, forecasting a transition from high-interest periods to a rate-cutting cycle by 2025, augmenting expectations for global liquidity.

The running of consumer data and policies in 2025 will be vital to monitor, especially considering Yang's observation that while consumption and macro data showed a decline in the first half of 2024, indicators such as the PMI and PPI began bouncing back after the policy shift at the end of September, with trends in consumer goods data expected to improve markedly in early next year.

In terms of consumption policies, an extension of previous directives was evident in the central economic work conference, which noted an increase in the issuance scale of super-long-term special government bonds and suggested a potential rise in the fiscal deficit rate

Anticipations point towards stronger consumer goods supply next year, alongside possible increases in income tax thresholdsHistorical trends reflect that such changes typically provide a positive jolt to the consumer market.

Zhao Jian, president of the Xijing Research Institute, asserts that the operational logic of the Chinese economy is undergoing an unprecedented transformation, with adjustments in the real estate market significantly contributing to this changeRegarding the market environment expected in 2025, Zhao emphasizes the presence of numerous challenges to balanced and high-quality development aheadInvestors are urged to pay attention to policy movements and their real impacts on the economy in order to seize investment opportunities.

What lies ahead in industry trends is a question lingering over the marketChief researcher Gu Chenhao of Huizheng Financial posits that the changing labor force dynamics indicate a shift in pillar industries, necessitating emerging industries to take the helm in supporting the economy, potentially including sectors such as artificial intelligence.

Gu maintains an optimistic outlook for market performance in 2025, anticipating a pattern of short-term volatility but overall upward momentum, with prospects to breach the prevailing resistance levels and possibly surpass the 3,500-point mark, contingent on sustained policy support to bolster investor confidence

He highlights investment prospects particularly in consumer electronics such as PCs and smartphones, which are likely to gain traction from advancements in artificial intelligence, alongside burgeoning opportunities in emerging economies.

In this relatively weak macroeconomic context, can the equity market potentially enter a bull cycle? Wu Zhaoyin, macro strategy director at AVIC Trust, highlights that over the past 30 years, the changes in China's stock market have been more influenced by valuations than by fundamentals of profitHistorical analysis reveals that the stock market can exhibit bull runs even amidst weak economic conditions, underscoring the potential for a bullish outlook despite an economic backdrop marked by softness.

Wu underscores this year’s weaker economic data, noting that most capital has directed towards the bond marketHowever, should the rally in bonds conclude, there’s a likelihood of capital relocating back towards equities

Indicators such as shifts in household savings could serve as a barometer for stock market capital flowsAdditionally, Wu highlights that unlike prior instances predominantly driven by institutional players, the current market dynamics are largely steered by retail investors, resulting in rapid transactions and heightened challenges for investors aiming to stay attuned to market rhythms.

Specific sectors worthy of attention include the low-altitude economy and the practical application of artificial intelligenceZhu Keli, founding director of the National Research New Economy Research Institute, articulates that China's drone industry is at the forefront of development, with low-altitude economic prospects promising substantial market potential amidst shifting international business paradigmsHe predicts that the application demands for low-altitude flight could pull a consumption market worth trillions, with an estimated value reaching 1.5 trillion by 2025 and 3.5 trillion by 2035. Zhu further notes that airspace management and safety are fundamental to the progression of low-altitude economic structures, urging regional specialization and intelligent management for differentiated development.

Moreover, Song Ye, managing director of Yaotu Capital, sheds light on the semiconductor investment landscape, observing that innovation sectors such as artificial intelligence and low-altitude economy remain intrinsically linked to semiconductor support, thus unveiling numerous investment opportunities within this realm