The recent week (November 27 - December 1) reveals an interesting phenomenon: the pattern of the market is two-eighth. In this pattern, we see that the GEM shows certain advantages, although it is only **0.06%, but this is undoubtedly a more positive sign compared to the overall **. However, compared to small and medium-sized technology innovation stocks, the GEM has performed slightly underperforming.
Since the beginning of this year, the A** market has faced multiple fundamental pressures, including a slowdown in the real estate market, weakening external demand, and a decline in investor confidence. More policy stimulus is expected to be introduced in December to address these challenges. Nonetheless, due to negative feedback on the funding side (e.g., sluggish public offerings** and foreign capital outflows), the recovery process of the market may not be smooth sailing. In such an environment, the growth stocks represented by the Growth Enterprise Market (GEM) have been under the pressure of insufficient incremental funds from institutions, and have returned to the ** state after the end of October to the beginning of November.
In the face of the market going forward, changes in U.S. Treasury rates remain a core driver of growth stocks. Recently, the Fed's policy has eased, and the downward trend of interest rates has not changed. At the same time, domestic regulators are highly concerned about market trends, and the gradual intervention of state-owned institutions is expected to boost market confidence and inject new liquidity into the market. In the context of the weak recovery of the domestic economy and the recovery of liquidity, the growth style may become the mainstream of the market.
From a valuation perspective, GEM is currently trading at a price-to-earnings ratio of 28x, which is at the bottom of its all-time range. This shows that despite the recent market**, in the long run, the valuation of the GEM is more cost-effective and more attractive for investment. Valuations have reached historical extremes, suggesting that ChiNext may be on the verge of a valuation recovery, providing an attractive opportunity for investors to enter the market.
Although ChiNext has shown some volatility recently, considering its relatively low valuation level and potential positive factors in the market, such as the easing of Federal Reserve policy and the intervention of state-owned institutions, this sector has high investment value in the future. Investors should pay close attention to market dynamics, grasp the investment opportunities brought about by low valuations, and rationally assess the long-term growth potential of GEM.
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