We have always emphasized that the big wave 33 of the SSE is starting or will soon start. The SSE index reached a new high of 3417 points on May 14. According to Wave Yuanba analysis, there are two possible trends here:

1. If a new high above 3417 points is reached before next Monday (+-1 day), it is highly likely to break the new high of 3439 points, indicating that we are currently in the wave structure of big wave 33, and the future trend can only be upwards.

2. If we cannot break the new high of 3417 points before next Monday (+-1 day), it is highly likely that we are experiencing the last wave of adjustment before the big wave 33, which is a plan to fill the gap. The current important gap is the missing point of 3186. After filling the gap, the decision to create a new low of 3040 points will depend on market sentiment and volume changes.


Currently, the SSE 50 is the vanguard of this rebound and has encountered resistance. Only a breakthrough can show the true colors of a bull market. From a right-side trading perspective, considering entry only after a breakthrough is a safer operation. In the decades-long market of the A-shares, 80% of the time is not satisfactory except for the main rising wave. Only after a breakthrough is there certainty.


The answers to the above two plans will be available in May. After the adjustment in May ends, we will welcome the main rising wave of big wave 33.


In the large wave structure, 2440 is the origin. The points from 2635 to 3674 are the first wave after the starting point of wave 3, which is big wave 31. The adjustment of big wave 32 since 3674 will end at 3040. This main rising wave of big wave 33 will start from 3040 (or lower) and will be a super bull market main rising wave, more intense than last year's National Day. Moreover, it will last for 2 years. It is possible that we will break 4000 points by the end of this year, and we might see 5000 points by 2026.


The adjustment of the big wave 32 has either ended or will soon end, depending on the two possible trends mentioned earlier. The big wave 33 is the main rising wave of a super bull market and will rise in a 5-wave structure, interspersed with rapid and fierce adjustments, with many sharp drops in the bull market. However, this does not hinder the progress of the bull market and institutions. If the rise is too fast, it will pause like walking too fast and needing to catch a breath.


The main rising wave of a super bull market is definitely not about small-cap stocks speculating on concepts. Instead, it is about the performance of the super national team represented by public funds. The super national team, represented by public funds and insurance funds, has already prepared for big wave 33 in terms of institutional construction.


According to the 2025 public offering new regulations: strengthen performance benchmark constraints, and active funds need to reduce deviations from underweighted industries. The public offering new regulations require holdings to align with the benchmark index, and financial and consumer sectors in CSI 300 will attract passive allocation funds. By the end of 2024, active funds will be underweighted by 10.1% and 8.9% in banks and non-bank financials respectively (with CSI 300 weights of 13.7% and 10.6%), and incremental funds are expected to flow in.


According to the new insurance regulations, for insurance companies with a comprehensive solvency adequacy ratio >350%, the upper limit of equity investment proportion will be raised from 30% to 50%, expected to release 800 billion to 1 trillion yuan of incremental funds.


The main rising wave of the super bull market must be represented by the SSE 50, with large financials, large insurance, large securities (non-bank financial), electricity, non-ferrous metals, steel, and coal as the main rising sectors.


Detailed directions:

Banks: Zhaoshang Bank (weighted 2.56% in CSI 300), Xingye Bank (1.51%), and Industrial Bank (weighted 1.35%) and other underweighted stocks.


Insurance/Brokerage: China Ping An (weighted 2.76%), Dongfang Wealth (leading in the securities sector), China Taiping, etc., will benefit from the recovery of the equity market and the transformation of agency business.


The allocation ratio of the electricity and public utilities sector is only 0.94%, significantly lower than the CSI 300's weight of 3.53%. There is room for price recovery in sectors like coal and transportation.


Representative stocks: Yangtze Power (leading in public utilities), China Shenhua (high dividend in the coal industry), and Daqin Railway (defensive target in transportation).

The new regulations simplify the stock ETF registration process to 5 working days, and by 2025, the proportion of passive products in newly issued equity funds will rise to 65%, benefiting broad market indices (such as CSI 300, CSI 800) and industry theme ETFs. Benefiting directions include the brokerage sector (benefiting from the expansion of ETF scale) and leading tech stocks (such as Zhongxin International, Hanwei Technology).