To The Moon

1. Market Level vs. Sentiment

The Shanghai Composite at a 10-year high is objectively bullish from a chart perspective.

Yet, the muted retail sentiment (as seen in WeChat “bull market” searches) suggests that investors remain cautious, scarred by past false starts.

In behavioural terms, that kind of scepticism can be healthy — a true market peak usually coincides with euphoria, not hesitation.

2. Valuation Argument

By global standards, Chinese equities remain undervalued: the forward P/E of the CSI 300, for instance, trades at a discount to the S&P 500, Nikkei, and even MSCI EM.

Long-term investors often point to China’s structural drivers: rising middle-class consumption, green transition, advanced manufacturing.

However, policy risks, corporate governance issues, and capital outflow concerns temper that argument.

3. Cyclical vs. Structural Considerations

Cyclically: Stimulus measures, monetary easing, and improving corporate earnings expectations are near-term supports.

Structurally: Demographics, property-sector drag, and geopolitical tensions remain overhangs. These are why valuations are discounted, and why rallies often fade.

4. Institutional vs. Retail Behaviour

Retail chatter about “cashing out” after new highs is typical — retail tends to be short-term driven.

Institutions (particularly domestic funds and sovereign-linked investors) are more likely to accumulate at relative undervaluation, especially given state guidance to stabilise markets.

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✅ Conclusion / Framing

If you already hold Chinese assets: The move to a 10-year high is not necessarily a sell signal. With sentiment still cautious, the probability of an immediate blow-off top is lower. Maintaining core positions while managing exposure with partial hedges could be prudent.

If you are considering entry: The long-term undervaluation is real. However, sizing and horizon matter — China remains a “low-valuation, high-volatility” market. For most investors, it is best approached as part of a diversified EM allocation, not as an overweight bet.

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📌 To your direct question:

Yes, undervaluation supports gradual accumulation, but not an “all-in” moment. The cautious sentiment backdrop actually suggests the bull run may still have legs, but risks mean entries should be staged rather than concentrated.