China's asset revaluation: Renminbi approaches 7.15, Chinese concept stocks rise for five consecutive days, reaching a new high in five months

From the continuously strengthening RMB exchange rate to the Chinese concept stock index reaching a new high in months, market confidence in Chinese assets is recovering.

As of Tuesday, the onshore and offshore RMB against the US dollar has risen for three consecutive days, both approaching the important level of 7.15. It is worth noting that although the People's Bank of China weakened the RMB/USD midpoint to 7.1188, the actual market trading price has continued to rise, reflecting the endogenous appreciation momentum in the market.

The USD/HKD exchange rate has fallen to its lowest level since May 12, while the one-month implied volatility of the offshore RMB has dropped to a low of 2.88%, indicating an enhanced market expectation for exchange rate stability.

At the same time, the Nasdaq Golden Dragon China Index, which tracks the performance of Chinese concept stocks listed in the US, has achieved five consecutive gains, closing at its highest level since March 20, showing a significant improvement in overseas investor sentiment.

On a macro level, positive signals of improving China-US relations are boosting market sentiment, while domestic policies are also gaining momentum. The State Council has explicitly proposed increasing financial and fiscal support for the artificial intelligence sector, aiming to cultivate new economic growth points.

Behind the warming market sentiment is the expectation that the core logic of pricing Chinese assets may be changing. According to the analysis framework of China Merchants Securities, the Chinese market has been in the fourth quadrant of "liquidity expansion + PPI (Producer Price Index) decline" for some time, which has favored the "dumbbell strategy" that balances high dividends and technological growth.

However, as the market begins to focus on the prospect of PPI bottoming out and rebounding, a shift in asset styles may be occurring. Analysts point out that if policies aimed at improving the competitive landscape of enterprises, such as "anti-involution," are effectively implemented, it will drive inflation in the real economy, thereby triggering a transition of market styles to the first quadrant (liquidity expansion + PPI rise).

The direction of the RMB exchange rate is the core variable in this round of asset revaluation. Analysts at China Merchants Securities believe that against the backdrop of a potential depreciation cycle for the US dollar, China has the willingness and fundamental basis to promote RMB appreciation. Strong export performance provides support for the exchange rate, and China's goal of entering the ranks of high-income countries in the final year of the 14th Five-Year Plan also underscores the importance of a strong currency.

Changes in the global liquidity environment are key. According to China Merchants Securities' analysis, if the US dollar index is weak and the RMB begins to appreciate, foreign capital is likely to increase its holdings of Chinese equity assets. September is seen as an important observation window; if the Federal Reserve lowers interest rates as expected, the narrowing of the China-US interest rate differential will create favorable conditions for RMB appreciation.