Market continued going through a headwind in January. Primary reason including extremely low market confidence and liquidation risk. The subsequent liquidity risk mainly arises from that highly leveraged financial products with excessive risk exposure are gradually being liquidated. In addition to stocks of state-owned enterprises, the large technology sector, which is heavily held in the market, has seen more declines.

For domestic economy, we noticed signs of a weak recovery based on various industry data and companies’ earning performances in Q4. Looking ahead, we expect that the economic activity data, e.g. sales data for various industries during the February Chinese New Year period and March (the first peak season of 2024) will be crucial for investors to make more concise predictions about the real economic situation in 2024.

In short-term period, since the market has already experienced overselling, there might be a rebound in progressing with government-supporting funds continuously entering. However, if the subsequent economic conditions do not significantly deviate from expectations, we believe the likelihood of a substantial market pullback is low. Due to the current low confidence among investors and the limited visibility of various economic data, it is expected that the market will continue to exhibit a weak and volatile trend.