Three consecutive bullish candles can change beliefs. Last week, many retail investors were panicking and selling their stocks at a loss, but this week, after the ChiNext Index soared continuously, everyone is now wondering whether this is just a rebound or a reversal, especially after yesterday's trading volume broke the trillion mark, there are voices saying "the bull market is coming back quickly." The market is shaped by its own dynamics, and it's hard to predict whether it's a rebound or a reversal. If an unexpectedly strong policy comes out, the stock market might just keep going up, as was the case at the end of April and October last year.

However, we can offer a perspective: keep an eye on the northbound capital. If foreign capital starts flowing back in, the possibility of a reversal is higher.

Generally speaking, the long-term trend of the stock market depends on the fundamentals, while the short-term trend depends on the capital and sentiment. Liquidity and sentiment together form the incremental capital, after all, money won't flow into the stock market without confidence. So, the strength of the short-term stock market rebound depends on the intensity of the incremental capital.

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Let's break it down:

Firstly, the national team: Central Huijin has increased its holdings in the four major banks and broad-based index ETFs in the past two weeks, primarily to provide liquidity and support the stock market, preventing the A-share market from falling below key levels and falling into a liquidity crisis. Therefore, Huijin mainly buys when the index plummets to support it, rather than actively buying to push the stock market up.

Then there's foreign capital: since August 7th, northbound capital has net sold over 170 billion, with another 40 billion in October. Both the duration and intensity of the sales have set historical records.

Some conspiracy theories suggest that the foreign capital sell-off is part of a financial war, and there might be some truth to that, but we believe the main reason is the surge in US Treasury yields. Isn't a 5% yield on US Treasuries attractive? That's why we say this, because foreign capital is not only selling A-shares, but also there has been a significant outflow from emerging markets like India.

We previously thought that after the introduction of real estate and local debt policies, foreign capital would flow back in, but the reality is that foreign capital has been selling all along, breaking previous historical patterns. Now we realize that it might really have to wait until the Federal Reserve ends its rate hikes or even starts cutting rates, and global liquidity enters a new easing cycle, for foreign capital to flow back. Of course, if there are sufficiently impactful domestic policies or breakthrough progress in US-China relations, foreign capital might also flow back.

Lastly, regarding funds, the current fund issuance is very sluggish, and the liability side of funds is even deteriorating, so there's no talk of incremental capital; it can only rely on existing funds to increase positions. According to the recently disclosed Q3 public fund reports, equity funds are at a historical high in terms of position, with hardly any spare funds to increase positions. As for private equity, there is a larger space for increasing positions, but private equity has risk control requirements, and it will only increase positions on a large scale after accumulating a certain cushion of profits, with operations leaning to the right side.

Finally, social security and insurance funds: Social security is also part of the national team, but it has higher profitability requirements than Huijin. Last Friday, the Social Security Fund held a 2023 domestic investment manager symposium, emphasizing the need to strengthen counter-cyclical investment thinking and actively seize long-term investment opportunities in the capital market.Yesterday, the Ministry of Finance issued the "Notice on Guiding Long-term and Prudent Investment of Insurance Funds and Adjusting Performance Evaluation Indicators for State-owned Commercial Insurance Companies," which adjusted the performance evaluation indicator for the operating efficiency of state-owned commercial insurance companies, "Return on Equity (ROE)."

Currently, the certainty of social security and insurance funds entering the market is relatively high, but it is unrealistic to expect large funds to aggressively invest in the short term, and insurance funds prefer stable-style stocks, which may not necessarily benefit retail investors.

In summary, we believe that the elasticity of positions added by foreign capital, private equity, and retail investors is relatively large, but only foreign capital operates on the left side, while private equity and retail investors are on the right side. If foreign capital could "subsidize" institutional heavy stocks daily like at the end of last year, then the net value of funds could recover, private equity would dare to increase positions, and as the market warms up, fund issuance would also rise, and public funds would have ammunition, which could invigorate the market.

However, it is regrettable that there is no "first shot" now; foreign capital is not only not buying but is also selling, which leads to the purchase by domestic capital being offset by the sales of foreign capital, and liquidity cannot be improved.

We have written about the above content in the pre-market information, and here we are just expanding on the analysis in more detail.

Returning to today's stock market, the main bearish factor is that the official manufacturing PMI for October unexpectedly fell below the boom-or-bust line, indicating that the foundation of economic recovery is not yet solid, which affects market confidence and may be the reason for the substantial selling by foreign capital. However, the index strengthened at the end of the day, and the Shanghai Composite Index briefly turned red, which may be due to capital speculation on the financial work conference.

As of the close, the Shanghai Composite Index fell slightly by 0.09%, the ChiNext Index fell by 0.48%, the Hong Kong Hang Seng Index fell by 1.69%, and the Hang Seng Tech Index fell by 2.47%. Today's trading volume was significantly reduced to 0.91 trillion, and the net selling of northbound capital was 4.753 billion.

The potential positive for this week is the financial work conference, while the potential suppressor is the U.S. employment data for September and the Federal Reserve's interest rate hike. We also reminded everyone in our article yesterday not to be overly optimistic, as the market will provide opportunities to buy on the dip.Please provide the text you would like translated into English.