In October, the market rebounded after the Chinese holiday. China’s economy continued its recovery. At the same time, the U.S. election as well as the overseas epidemic have also affected the market. However, the new lockdown has had a much smaller impact on the economy than the last time.

The market consolidated in September. Still since the beginning of this year, the A-share market has risen a lot. Had we known that there would be an unprecedented epidemic this year on December 31, 2019, which would significantly impact in the global economy; at the same time, China and the United States would have strains in their relationship; and there would be many strange things happening in the US election season, would we hold any stocks? In fact, Both Chinese and U.S. stocks markets have performed very well. Such good performance was on the basis of an already good year last year.

In August, the CSI 300 index rose slightly, with a year-to-date increase of nearly 18%. In August, the Nasdaq index rose by nearly 10%, and has risen by more than 30% year-to-date. The market cap of several major technology stocks as percentage of total market cap has reached a record high.

In July, the market initially had a rapid rise due to the strong economic recovery in the second quarter and the accumulated “wealth effect” in the previous period. Soon, it became volatile due to changes in the external situation and domestic efforts to cool the market. We also feel that opportunities in the market have proliferated, reflecting the improvement in economic expectations and the price reactions of lagging sectors.

In the February newsletter, we discussed the risks of overseas epidemics, but we still underestimated the speed of its development.