Foreign Media: A Shares Will Surge Next Year

Foreign media reported that HSBC stock strategist Herald Linde said: "as a series of micro stimulus measures began to have a positive impact on the economy, China's stock market began to pick up."

After the central bank recently announced the relaxation of the size of the home buyers, lower down payment and mortgage interest rates, shares of large real estate development companies such as Vanke and Poly Real estate rose by at least 2.8%.

Zhejiang Merchants Securities strategist said: "the new policy is a comprehensive policy of deregulation, beneficial to the entire real estate industry, so the real estate market will turn better in the fourth quarter.

After a good growth in the third quarter, the real estate market may consolidate its current level for some time.

Last month, the survey of 4330 securities investors showed that Chinese investors' confidence reached the highest level since April 2008.

Nearly 60% of investors are optimistic about the outlook for A shares.

It is worth mentioning that China

Investor Protection Fund Limited company data showed that as at September 26th, the balance of trading settlement funds reached 11417 billion yuan as of September 26th. This is the first time that the data has been broken through since the regular publication in April 2012.

China

Ronald, chief China consultant of Vantage Capitals Ltd, said: "the government wants to change people's expectations.

Strong stock market is a prerequisite for China to implement healthy capital market reform.

In a research report released on Wednesday, HSBC stock market strategist expects that China's stock market will have more than 20% more growth by the end of next year.

So far this year, A shares have risen by about 12.6%, closing at around 2383 on Wednesday.

According to HSBC forecast, the MSCI China Index will rise to 72 points (18% rise space) by the end of 2015, the Shanghai composite index has risen to 2800 points (23% rise space), and the Hang Seng Index has risen to 25000 points (11% rise space).

HSBC has put forward 4 reasons for inflation.

First of all, China's risk-free interest rate may decline, which is beneficial to the stock market.

"Targeted easing and new quantitative tools (such as PSL) can reduce borrowing costs and provide liquidity," HSBC wrote in the report.

The second reason is that "the new leadership of China, the blueprint for economic reform and the reform of state-owned enterprises" will reduce the risk premium of stock market.

According to HSBC estimates, the recent stock market risk premium has dropped from 10.67 in mid 2012 to 9.15.

Third, market sentiment is improving and more mainland investors are participating in the stock market.

HSBC said in its report: "the 1 month average market participation rate has surged to nearly 3 year high, including the Shanghai and Shenzhen stock markets."

ETF tracking A shares also performed well. Since September, Deutsche X-trackers Harvest CSI 300 China A-shares Fund (ASHR) has increased by 4.5%, and Market Fund (4.3%) has increased.

HSBC analysts also mentioned some driving factors at the corporate level, including the accelerated depreciation of fixed assets, the reduction of tax burden, and the reduction of interest burden by low cost financing.