The Chinese stock market's trajectory throughout 2024 has been a roller coaster ride, characterized by a significant dip followed by a strong recovery attributed to ongoing macroeconomic policiesAs we approach 2025, there is increasing curiosity surrounding the potential transformations that could unfold in China's economy and stock marketInsights from industry experts, such as Kou Zhiwei, a partner at Chongyang Investment, suggest that 2025 could be a pivotal year for stabilizing economic growth in China amid its cyclical fluctuationsUnder the directive of "strengthening extraordinary counter-cyclical adjustments," macro policies are anticipated to play a crucial role in bolstering the economy.

Market analysts are beginning to speculate that around mid-2025, the overall profit growth rate for A-shares might experience a positive turnSeveral brokerage analysts believe that after the year-end market dynamics stabilize, the stock index could see a resurgence in the latter half of the year, aligning expectations with improved economic outlooks and policy adjustments

This has led some institutions to adopt a cautiously optimistic stance, advocating for patience rather than impulsiveness when considering investment opportunities.

International trade conditions, alongside strengthened Chinese macroeconomic policies, are projected to significantly affect the economic landscape in 2025. A critical factor in this discourse is the risk appetite of the household sector—when it begins to rebound and lead to more robust consumption and investment trends, it will likely become a focal point for policymakers aiming to stimulate the economy.

In the context of ongoing adjustments to tariffs and domestic income stability, effective macroeconomic policies are essential to mitigate adverse impacts and bolster market confidenceA comprehensive policy framework released on September 24, 2024, addresses various sectors including monetary supply, capital markets, and real estate is noteworthy

Subsequent policy meetings emphasized the importance of adopting a more vigorous fiscal stance while ensuring an appropriately loose monetary policyKou Zhiwei expressed confidence that the continued strengthening of macro policies in 2025 is a highly likely scenario and that the approach could be more proactive in both scale and rhythm.

China's policymakers have introduced what has been termed the "new three arrows"—debt resolution, structural reforms, and stabilizing asset pricesAccording to Guotai Junan Securities, the initial phase involved the substantial reduction of debt burdens and meaningful interest rate cuts aimed at easing financing costs, thus ensuring smoother economic operationsLooking ahead, the priority will likely shift to invigorating domestic demand and reinforcing asset price stability.

From a fiscal perspective, there are expectations that the deficit ratio could rise in 2025, better supporting economic expansion

Nevertheless, the emphasis may also pivot from traditional capital investment to more efficient strategies for boosting domestic demand through social security, incentives for upgrading, and birth subsidiesMeanwhile, the restructuring of real estate policies has transitioned towards establishing stability and halting price declines, though this remains fraught with challenges.

As for corporate profits, there's a pressing intrigue among investors regarding when we might see a real turnaroundMany sectors have resorted to substantial innovations and have made efforts to optimize supply chains in response to prevailing macro challengesIncreasingly, companies are looking to tap into international markets to seek out more expansive growth opportunities.

In 2025, profit growth in A-shares will hinge critically on whether firms manage to recover from prior lossesIndustry reports suggest that a resurgence may not only concentrate on merely avoiding declines but potentially achieving positive growth relative to the trough witnessed in the third quarter of 2024. The likelihood of improved profitability lies alongside a favorable policy environment.

Significant analysis indicates that while overall performance in the A-share market remains subdued, the broader economic forecast should display resilience, with projections suggesting a sustainable growth rate of around 5%. This comes on the heels of anticipated recoveries in both investment and consumption, albeit slightly overshadowed by diminishing export contributions

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Analysts expect that the ebb and flow of profit growth could remain pronounced, reflecting a potential upturn mid-year amidst renewed domestic policies designed to offset adverse tariff impacts and reinforce investments in real estate and manufacturing sectors.

2024 has been marked by volatility within the A-share market, showcasing a complex interplay of gains and losses that have ultimately resulted in a modest annual increaseWith 2025 looming, questions surrounding the market's future direction are rifeInvestment analysts, such as Chen Guo from CITIC Securities, speculate that the first quarter may set the tone for the year, potentially heralding lower interest rates and invigorated trading post the Lunar New Year, guided by historical seasonal tendencies.

Fund managers anticipate that the market could progress through distinct phases in 2025: initially characterized by strong expectations but weaker realities, which will gradually shift towards a climate of increased basic market repairs

As economic realities align more closely with performance, a virtuous cycle of profitability and valuation improvements is hoped to take shape.

As per Guotai Junan Securities, the underlying dynamics propelling market movements could be influenced heavily by falling risk-free rates coupled with a resurgence in investor confidenceThey predict that the latter half of 2025 may witness advancements in economic forecasts buoyed by a recovering stock market trajectoryRecent shifts in capital markets and emerging growth patterns in core industries—fueled by ongoing policy adaptations—are perceived as straws in the wind pointing towards a potential long-term upward trend in both the economy and the stock market.

Nevertheless, as Kou Zhiwei implies, a balanced view toward investment is essential: while a robust underlying valuation exists, solving longstanding economic challenges will require both patience and strategic foresight