The Spring Offensive of A-shares Kicks Off: Is Renminbi Appreciation the Key to the Bull Market?

The market trading is hot, with the transaction volume of the Shanghai and Shenzhen stock markets exceeding 2.8 trillion yuan for two consecutive days, and both volume and price have risen, confirming the high market sentiment. In this context, whether RMB appreciation is the key password for this bull market has become a hot topic in the market.

The strength of this spring market is not only reflected in the breakthrough of the index, but also stems from the resonance of funds. The daily transaction volume of 2.8 trillion yuan has reached a recent peak, reflecting the active participation of on exchange funds and the accelerated entry of off exchange growth. According to a research report by Dongwu Securities, the current A-share market has comprehensively improved in terms of funding, with cross-border capital inflows brought about by year-end foreign exchange settlements exceeding seasonality. Coupled with the "good start" of insurance funds and the New Year's layout of public institutions, sufficient liquidity support has been formed, and the positive role of RMB appreciation cannot be ignored.

Starting from April 2025, the Chinese yuan will begin a nearly 9-month appreciation cycle against the US dollar, and the offshore exchange rate will remain stable above the 7-yuan mark at the beginning of 2026. The industry believes that the appreciation of the renminbi coincides with the driving factors of the stock market's rise, boosting the market through two paths: improving liquidity and increasing risk appetite. On the liquidity level, the appreciation of the RMB enhances asset attractiveness and drives sustained net inflows of northbound funds. Historical data shows a significant increase in northbound capital inflows during the appreciation cycle; The current strong preference for foreign investment in sectors such as electronics, power equipment, and home appliances is a direct reflection of this capital flow.

In terms of risk appetite and profit expectations, the appreciation of the RMB is often accompanied by a stable and positive domestic economy, forming a positive feedback. Guosheng Securities Yang Liu stated that the exchange rate transmits profits through income, liabilities, and costs: import dependent industries such as aviation and papermaking can reduce costs and improve profits; The domestic demand sectors such as technology and consumption have benefited from the inflow of foreign capital and rising sentiment, enhancing valuation elasticity. The current resonance of "policy force+RMB appreciation+growth prosperity" has strengthened the expectation of a bull market.

However, there is a rational consideration in the market regarding whether the appreciation of the renminbi is the core driving force. Dongfang Securities pointed out that under moderate appreciation, exchange rates are mostly non dominant variables, and are more driven by the rise of the stock market combined with the improvement of fundamentals; But if a positive feedback of "stock market rise+RMB appreciation" is formed, it will amplify the bull market situation. Currently, domestic macroeconomic policies are taking the lead, the Central Economic Work Conference has set a positive tone, and fiscal and monetary coordination is supporting the economy and market; The overseas Federal Reserve's interest rate cuts have eased liquidity concerns, forming the foundation for the spring offensive, while the appreciation of the renminbi has added icing on the cake.