On December 22, a forecast from an international investment bank went viral in the financial sector: mainstream market stock indices are expected to rise by 38% by the end of 2027. This is not just a simple advocate, but a complete reorganization of the capital landscape.

As traders, we need to look beyond the surface numbers and understand the underlying flow of funds – because this volatility will ultimately be transmitted to all the assets we are concerned with.

**Why 38%? Where does the fuel come from?**

In the past, we were optimistic about certain market assets, simply because of policy support and cheap valuations. But this time, the logic has completely shifted. The key phrase pointed out by investment banks is "the hardcore switch from hope to growth" - in other words, transitioning from being driven by expectations to being driven by actual profits.

How to understand it specifically?

**Step One: Profits are really rising**

Forecasts show that listed company profits will grow by 14% in 2026 and continue to grow by 12% in 2027. This is not just a paper figure, but a real increase in the profit statement, indicating that the fundamentals of the enterprises are undergoing substantial repair.

**Step 2: There is still room for valuation repair**

Although there has been a round of rise this year, the market still gives about a 10% undervaluation relative to the actual earning capacity of enterprises. This is the "price difference" that the market will ultimately fill.

This transition from expectations to performance is the core variable determining the mid-term market trend. Tracking this logic switch will greatly assist us in assessing capital flows.