The Chinese A-share market surged on December 6, reclaiming the key 3400 level amid growing optimism from global investors. The benchmark Shanghai Composite Index closed at 3404.08, up 1.05%, while the Shenzhen Component Index rose 1.47% to 10791.34. The ChiNext Index led gains with a 2.05% increase, closing at 2267.06.
This rally marks a significant shift in market sentiment, especially following months of volatility. Key sectors including AI, insurance, education, media, and gaming powered the advance, signaling renewed investor confidence in China's economic trajectory and policy support.
Sector Performance: AI and Financials Lead the Charge
Technology and financials were the standout performers on the day. AIGC (Artificial Intelligence Generated Content) stocks surged across the board, with Yidian Future, Wondershare, and Haitian Rayson gaining over 10%. Meanwhile, Shengtian Network, Sunyard, and Jisi Media hit daily trading limits.
Insurance equities also saw strong momentum. Tianmao Group surged to its upper limit, while New China Life Insurance, China Life, and CPIC gained more than 4–5%. Brokerage stocks joined the rally, with Hualin Securities closing flat at its daily cap and Southwest Securities rising nearly 6%. Giants like CICC, China Galaxy, and Orient Securities posted solid gains.
In the education sector, Zhonggong Education achieved its second consecutive涨停 (limit-up), supported by rising sentiment around vocational training and policy stabilization. Peers such as Doushen Education, Aoling Education, and Kaiwen Education followed closely behind.
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Policy Momentum Fuels Market Confidence
Behind the rally lies a growing belief that China has passed through the most challenging phase of its economic transformation. According to UBS Asset Management’s latest “The Red Thread” report published on December 5, Chinese equities now represent one of the most attractively valued markets globally.
Barry Gill, Global Investment Director at UBS Asset Management, emphasized:
“China is my preferred market — it’s currently the cheapest equity market in the world. Whether it's policy stimulus or corporate capital allocation, there are multiple avenues where China can surprise investors positively.”
The report highlights structural improvements in China’s financial system, including enhanced support for consumers, businesses, and investors. Efforts to reduce risks in the real estate sector and strengthen manufacturing competitiveness have laid a foundation for sustainable growth.
Additionally,桂林 (Gui Lin), Head of Asian Fixed Income Portfolio Management at UBS AM, noted that Chinese USD-denominated high-yield bonds have become one of the top-performing fixed income categories year-to-date. Over the past four years, the market has matured significantly, becoming more diversified and resilient.
Global Index Inclusion Boosts Investor Access
A major development reinforcing long-term foreign inflows is the completion of China’s inclusion in global bond benchmarks. FTSE Russell announced that the phased integration of Chinese Government Bonds (CGBs) into its flagship World Government Bond Index (WGBI) concluded in October 2024.
This milestone means all eligible CGBs are now fully incorporated into the index — positioning China as the second-largest market in WGBI, surpassing Japan. The move enhances accessibility for international institutional investors and is expected to drive sustained capital inflows into both debt and equity markets.
Wall Street Bets Big on A-Shares via Options
Perhaps the most telling sign of shifting sentiment comes from derivatives markets. On December 5, over 200,000 call options were purchased on the Direxion Daily CSI 300 China A Share Bull 2X Shares (CHAU) ETF — a leveraged instrument that doubles the daily return of the CSI 300 Index.
These options give holders the right to buy 20 million shares at $15 per share anytime before mid-May 2025. With an average contract price of $2.64, the total transaction value reached approximately $55 million, indicating strong conviction in a continued upside.
Even more notably, similar large-scale call buying occurred in a triple-leveraged ETF tracking the FTSE China Index — suggesting that sophisticated traders are not only returning but doing so with aggressive positioning.
This surge in options activity is particularly significant given that U.S.-listed China ETFs experienced substantial outflows in November. The reversal could signal a renewed appetite for Chinese risk assets among institutional investors.
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Can the Year-End Rally Sustain?
As markets enter the final month of 2024, attention turns to whether this momentum can evolve into a broader “year-end and early-year” rally. Historical data analyzed by CICC shows that over the past 15 years, more than half of the periods from December to February saw positive returns — especially when supported by improving policy expectations, economic fundamentals, and liquidity conditions.
CICC believes that after nearly two months of choppy trading, A-shares may be emerging from their consolidation phase. With key policy windows approaching — notably the annual Central Economic Work Conference expected later this month — positive catalysts could further lift market sentiment.
Meanwhile, macro indicators are showing strength. The November Caixin China Manufacturing PMI rose to 51.5, up 1.2 points from October and remaining in expansion territory for two consecutive months. Production and new orders reached multi-year highs, with manufacturing output at its strongest since July 2024 and new orders since March 2023.
FAQ: Your Questions About the A-Share Rally
Q: Why did A-shares rebound so strongly in early December?
A: The rally was driven by improving macro data, anticipation of policy support from upcoming economic meetings, and renewed foreign investor interest — particularly via derivatives.
Q: Is this a short-term bounce or the start of a sustained bull run?
A: While short-term momentum is strong, sustained gains will depend on concrete policy actions post-Central Economic Work Conference and continued earnings recovery.
Q: What role are foreign investors playing in this move?
A: Foreign institutions are increasingly active, not only through direct equity purchases but also via leveraged ETFs and options — indicating growing confidence in China’s market turnaround.
Q: Which sectors should investors watch going forward?
A: AI-related technologies (AIGC, AI chips), financials (insurance, brokers), consumer services, and green tech remain top picks due to policy tailwinds and improving fundamentals.
Q: How does bond index inclusion affect stock markets?
A: Full inclusion in WGBI boosts China’s financial credibility and attracts long-term institutional capital, which often spills over into equities through diversified portfolios.
Looking Ahead: A Strategic Shift in Global Allocation
The current market dynamics suggest a strategic repositioning by global investors toward Chinese assets. From valuation appeal to structural reforms and improved market access, multiple factors are aligning to make China increasingly attractive.
While risks remain — including geopolitical tensions and uneven domestic demand — the combination of low valuations, policy support, and improving data paints a cautiously optimistic picture for A-shares heading into 2025.
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For investors watching from the sidelines, the message from Wall Street’s options activity is clear: institutional players are no longer waiting — they’re actively building exposure to China’s next growth chapter.
Core Keywords: A-shares, CHAU ETF, call options, CSI 300, Caixin PMI, WGBI inclusion, year-end rally, foreign investment