For over 14 years, American tech giants have dominated the global market, maintaining their status while the Shanghai Composite Index fluctuates around half of its 2007 peak of 6124 pointsRecently, some analysts are increasingly viewing the current market conditions as offering “opportunities from drops.” With the launch of Huawei's Mate 60 Pro, there are optimistic signals indicating the awakening of a new cycle for technological innovation and manufacturing in China.

Manufacturing downturn hampers China's stock market

In late August, the Chinese government introduced a series of measures aimed at stabilizing the stock marketsFrom August 25, when the Shanghai Composite Index reached what appeared to be a short-term bottom, a subsequent analysis of the next ten trading days showed that 33 out of 56 sectors in the market experienced gains, with a median increase of 1.2%. This performance lags marginally behind the 1.31% rise of the index itself during the same timeframeThe enthusiasm from investors appears to be moderated, possibly due to the uncertain global economic recovery and ongoing hikes in interest rates in the U.S.

The Federal Reserve's interest rate outlook suggests a 47% chance of a 25 basis point increase on November 2. The U.S. dollar index has climbed from a low of 99.58 points on July 14 to over 105 points by September 7, indicating continuing pressure from potential rate hikesThis trend raises concerns not only for U.S. markets but for the global economy as a whole, potentially stifling recovery efforts.

According to the China Federation of Logistics and Purchasing, the global manufacturing PMI was reported at 48.3% in August, falling below the critical 50% mark

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Among China, Japan, the U.S., and Germany, China had the closest PMI to this benchmark at 49.7%, while Japan's was 49.6%, the U.S. at 47.6%, and Germany lagging significantly at 39.1%. This data suggests that the Chinese stock market is particularly vulnerable to the current downtrend in manufacturing.

Currently, the U.S. stock and housing markets have rebounded to historical highs, while investment assets in China seem to be in a downward cycleOne significant factor for this divergence is China's macroeconomic policies which are primarily guided by administrative actionsThese interventions include controlled deleveraging, peak-to-valley adjustments, and staggered policy tightening, starkly contrasting the laissez-faire approach and stagflation scenarios prevalent in U.S. markets.

For instance, while the U.S. stock market prioritizes investment returns, focusing on maximizing the overall value of stocks for shareholders, the Chinese model emphasizes financing efficiency, expanding the size of capital inflows to maximize IPOs and refinancingWhile this financing-first approach may boost China's GDP figures, it can also lead to excessive investment and increased competition within industries, often referred to as "involution."

For example, Tesla reigns supreme in the U.S. electric vehicle market as a virtual monopoly, enjoying the benefits of its strong market positionIn contrast, BYD, which operates in China, contends with a highly competitive landscapeWhen considering valuations, Tesla is traded at a staggering earnings multiple of 63.5 on NASDAQ, whereas BYD, listed on the U.S

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Pink Sheets, has a much lower earnings multiple of 27, highlighting a significant disparity in perceived risk and reward.

Huawei's return signals a tech innovation bull market for A-shares

Since mid-2015, the correlation between Chinese and U.S. stock markets has significantly declined, manifesting what can be termed a competitive or seesaw relationship.

However inflated the perceived American stock bubble may be, consider this: as of September 1, the Wilson 5000 market index was valued at $45.61 trillion, approximately 170.2% of last year’s GDPThe valuation suggests that the current market is severely overvalued, and using historical metrics, forecasts indicate an average annual return of merely 1.0% over the next eight years for U.S. equitiesComparatively, the total market capitalization of A-shares as of September 6 accounted for 61.8% of China’s annual GDP, implying a relatively more attractive hidden return.

According to economist Hyman Minsky's financial instability hypothesis, bull markets often conceal substantial risksAs of September 6, the S&P 500 had contracted by 7.3% from its historical peak yet remained close to these bullish heightsRecent disclosures from the U.SSEC indicate that Jensen Huang, chairman of NVIDIA, sold approximately 89,100 shares this month, a move interpreted as profit-taking or a hedge against potential risks amidst NVIDIA's more than 200% asset rise this yearMarko Kolanovic, chief global market strategist at JPMorgan, has cautioned that a crisis could likely erupt in the next 6 to 12 months, possibly more severe than the expectations of market players, driven by delayed impacts of interest rate hikes and increasingly negative geopolitical tensions.

Looking forward, the performance of the U.S. market could be closely linked to the fate of Apple, the world’s largest corporation by market capitalization

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