November has brought a continuation of market fluctuations,with stocks showing surprising resilience amidst the volatility.While the Shanghai Stock Exchange's 50 Index dipped by 0.3%,the CSI 300 Index saw a rise of 0.7%.In contrast,the CSI 500 Index faced a decline of 0.8%,and the ChiNext rose by 2.8%,with the Hang Seng Index experiencing a notable decrease of 4.4%.This has led to a curious market phenomenon dubbed the "slow bull," where heavyweight stocks are sluggish while lower-quality stocks thrive.Though this may sound like a market joke,it does reflect the current realities of the A-share market.On the surface,it appears to indicate a lack of pricing power among institutional investors,leaving many unable to anticipate how long this situation may prevail.However,it’s important to note that this period may actually serve as a valuable window for institutional investors,especially those with large capital,to create strategic plans amidst a setting characterized by value,disagreement,and liquidity,indicating a crucial time for action.As the year draws to a close,preparations are being made to position for a fruitful 2025.

Recently,a perplexing divergence in asset class performance emerged,showcasing logical contradictions.On one hand,we observe bond yields hitting record lows,particularly with the ten-year government bond yield dropping below 2% for the first time.This,however,aligns with a depreciation of the Renminbi,which has approached previous low benchmarks.Such asset behaviors suggest a widespread lack of investor confidence in the domestic economy's ability to maintain stable growth.In stark contrast,high-dividend stocks that are affected by interest rates have faltered significantly in performance,turning into the weakest assets in the so-called "slow bull" scenario,representing a counterintuitive deviation from preceding trends.This situation can predominantly be explained by market crowding and the reallocation of funds,which also inadvertently fuels the vibrancy of various themes and concepts in the market.Nonetheless,such logical contradictions are generally expected to be short-lived,factoring in that any change in variables or expectations signals a potential end to the current market dynamics.Concerning future interest rate movements,the presumption that long-term bond yields will remain steadily below 2% seems overly pessimistic,implying that fluctuations within the bond market may not be far off.

Moreover,the topic of index investing has gained substantial traction lately,prompting many to seek insights into our perspectives.Objectively speaking,I believe that over the long term,index investing presents significant challenges to both subjective and quantitative investing strategies,with an increasing share of capital flowing into broad-based index investments.While indices function as passive investment tools,their lack of foresight is evident,particularly highlighted by the recent meteoric rise in stocks like Cambrian and Sylice,which surged dramatically only to be included in the Shanghai 50 Index afterward,igniting discussions within the investment community.This mirrors the past when Tesla,after a countless increase in value and profitability,was admitted into the S&P 500 at the end of 2020.Nevertheless,the foremost advantage of index investing lies in its straightforward rules and low costs.This often-overlooked cost aspect is critical; for long-term investors,even a marginal annual cost difference of over 1% accumulates significantly.For any active manager,this necessitates a need to outperform the index by at least 2% annually to justify their existence,which,candidly,is no small feat.As the variety of index tools proliferates,selecting the appropriate index will emerge as a challenge in itself.Our investment memorandum for this year anticipates further discussions regarding indices we favor leading into 2025.

Lastly,when discussing the market's mid-to-long-term trends,we previously noted that extremely volatile markets frequently result in wealth erasure for most investors.Currently,there seems to be a shared aspiration and goal among both regulators and investors toward fostering a "slow bull" market.But what does achieving such a market mean?A "slow bull" suggests that it can only become a reality when a majority relinquish their obsession with quick gains; it necessitates investors adopting longer time horizons and greater patience to yield satisfactory returns and experiences.This state further implies that all investment strategies,even those resulting in short-term windfalls,will likely converge back to average returns over extended periods.Should unexpected volatility emerge,perhaps even inciting panic,it will require the courage to withstand such fluctuations.It appears the emergence of a much-anticipated "slow bull" phase can only be assessed retrospectively; time will ultimately provide clarity,and we shall await its unfolding.