Plate Rotation and Risk Control in A-Share Bull Market

Abstract

Since its establishment in 1990, China's A-share market has experienced many bull market cycles, and each bull market has shown significant plate rotation characteristics. Based on the four major bull markets from 1990 to 2021 (1996-2001, 2005-2007, 2014-2015, 2019-2021), this paper has obvious common characteristics from the first three bull markets. The fourth bull market is a structural bull market. The reason why it is included in the analysis with the first three bull markets is mainly for readers to clarify the differences in plate rotation in the interpretation of different bull markets, and to provide reference for the analysis of the bull market in 2025. This paper systematically analyzes the driving factors, market performance and risk characteristics of plate rotation. The study found that the bull market usually goes through three stages: low valuation repair (finance, cycle), growth premium (technology, consumption), and bubble (stock). In addition, the risk signals of sector rotation include policy shifts (such as deleveraging in 2015), valuation bubbles (PE up to 53 times in 2007) and abnormal capital flows (the balance of the two loans exceeded 2 trillion). The study suggests that investors should optimize the allocation strategy based on policy orientation, industrial trends and global liquidity changes, and establish a dynamic risk control system to deal with the risks of different stages of the bull market. The empirical analysis of this paper provides a theoretical basis and practical reference for understanding the operation rules of the A-share market and formulating investment strategies.