Chapter 314 Several Major Factors of Collapse
Since June 15, in just nine trading days, all major trend lines of the three major indexes, including daily and weekly lines, have been broken. The Shanghai Composite Index has fallen by more than 23%, and all major moving averages have fallen below the 60-day lifeline.
Since the market heard rumors of deleveraging on June 15, data showed that the financing balance of the two cities did not decline immediately. From June 15 to June 18, even though the market continued to plummet, the financing balance of the two cities still maintained a net increase every day.
As of June 18, the financing balance of the Shanghai and Shenzhen stock markets reached 2.26 trillion yuan, a record high, which means that the plunge from June 15 to 18 did not eliminate much of the formal leverage increase.
During this period, the focus was more on clearing off-market financing, and the real turning point of the financing business was on June 19, when the financing balance of the Shanghai and Shenzhen stock markets decreased by 5.55 billion yuan.
This is the first time that the financing quotas of the two cities have decreased since June 5. After the Dragon Boat Festival, the amount of reduction in financing balances further expanded. The cumulative preparations in the four trading days this week were 84.88 billion yuan less.
However, compared with the still high financing balances in the two markets and most of the off-market financing, these reduced amounts are just a drop in the bucket.
The reason for the stock market crash is not just the excessive leverage of funds. In addition to the A-share market's wild run this year, the controlling shareholders and senior executives of listed companies who made a fortune in the rally have cashed out at high levels and fled.
This year can be said to be the year with the most intense share reduction in the history of A-shares. Even Huijin Investment Co., Ltd. sold off a large number of its shares in the four major banks at the end of last month, not to mention most private enterprises that have no sense of social responsibility.
After two consecutive weeks of sharp declines, major institutions have begun to change their tone, from their early bullish comments to current comments that A-shares may need a mid-term break. Among them, the comments of Shenwan Hongyuan are the closest to preparation in Gu Junhao's opinion.
Shenwan Hongyuan changed its tune and believed that A-shares might rebound in July after a round of sharp declines. During this rebound, public fund institutions are very likely to gradually reduce their holdings, and then enter a long period of rest and consolidation, which may even last until December.
A survey conducted in response to the continuous plunge in the stock market showed that more than 60% of investors believed that the Shanghai Composite Index will continue to adjust, and the market has shifted from an overall positive to an overall pessimistic stage.
Therefore, even with the emergency interest rate and reserve requirement ratio cuts by the central bank over the weekend, as well as favorable factors such as the entry of pension funds into the market and the completion of self-inspection of brokerage firms' external information systems, it cannot prevent the stock index from falling further.
Under the premise that we have already entered a technical bear market, relying solely on policies without investing real money will not have much effect. If we really want to restore confidence in the stock market, there is no other way except to buy large amounts of funds.
On Monday, June 29, the Shanghai and Hong Kong stock markets opened slightly higher in the morning and then began to fall again. The Shanghai Composite Index fluctuated by more than 10% during the session, crossing 400 points in one day.
Coal, steel, brokerage and nonferrous metals became the main forces behind the market crash. At the end of the day's trading, the Shanghai Composite Index fell again by 3.34%. Only the banking and airport shipping sectors in the two cities turned positive.
ChiNext stocks were once again the hardest hit today. Following a 8.91% plunge last Friday, the index plunged another 7.91% on Monday, losing the 2,900, 2,800 and 2,700 mark in one day.
Today, the spectacle of thousands of stocks hitting the daily limit was staged again. Among the GEM constituent stocks that fell by more than 1,000 points in ten trading days, more than 300 stocks hit the daily limit today.
Concept sectors such as cybersecurity, financial IC and Broadband China, which were previously hotly speculated, all hit their daily limit down. In a nutshell, both retail investors and institutions have been exhausted by the losses.
Affected by the huge shock of the Shanghai Composite Index today, the China Securities Regulatory Commission issued a rare statement on a certain blog during the trading session to appease the market, while foreign media claimed that A-shares are considering suspending IPO issuance to stabilize the current stock market.
This series of reactions have fully demonstrated that both the management and shareholders are panicking.
On the evening of June 29, following the central bank’s double cut policy and the official launch of the 72-hour gold rescue plan, the China Securities Regulatory Commission also announced that it had joined the gold rescue team, and successively released news that the scale of financing business still has room for growth and that the self-inspection of off-exchange financing will soon be over.
In addition, Huijin also announced that it would spend 10 billion yuan to subscribe to four major blue-chip ETFs. In just nine trading days, the process from curbing the stock market to rescuing the market was extremely dramatic.
June 30th, Tuesday, was the last trading day of this month. Thanks to frequent rescue policies and substantial investment from Huijin, A-shares staged a stunning reversal this afternoon.
In the morning session, the Shanghai Composite Index fell by more than 5% at one point, and the ChiNext Index fell by more than 7% at one point. In the afternoon, in addition to the blue-chip stocks' thrilling rise, the three major indexes of the Shanghai and Shenzhen stock markets and individual stocks all staged a big rebound.
Throughout the day, the Shanghai Composite Index fluctuated by more than 10% again, while the ChiNext Index fluctuated by as much as 15%. However, unlike yesterday, the three major indexes all rebounded with large positive lines this afternoon.
The Shanghai Composite Index fluctuated more than 400 points during the session, falling to a low of 3,847 points, and closed at 4,277.22 points, up 5.55%.
The ChiNext Index soared from the lowest 2485.46 points, surging 6.28% in one day, closing at 2848.61 points. Individual stocks saw a rare surge in daily limit prices today.
There are nearly 250 stocks that have hit the daily limit in the two markets. Since June 15, the daily limit surge has been rare. Today's stocks can be regarded as a breath of fresh air for investors who have been hurt by the recent losses.
However, after the end of today, as the private equity fund rankings announced again at the end of this month showed , the net value of Junshi No. 2 remained unchanged, which cast a shadow over countless fans of Gu Junhao.
Recently, the net value of Junshi No. 2 has become a weather vane in the hearts of fans, and many people are regretting why they did not liquidate their holdings in Tonghuashun when Brother T liquidated his holdings.
For example, among the Soha group, only Li Ze was spared from the recent sharp drop, while the rest have lost all their profits for the whole year and some even suffered large-scale losses.
Li Ze, who now has a car, a house and savings, is under pressure from his parents and starts to go on blind dates frequently, which makes him physically and mentally exhausted; but it is also because of this that he escaped disaster.
"Today's surge was so big, a certain team invested real money to save the market, but Brother T didn't come back to buy the dip, will it continue to fall?"
"According to the internet, Brother T's trading team will start work tomorrow. They should be back to buy at the bottom, right?"
"But Brother T is still on vacation, and the trading team can't make decisions on their own. What's the point of going to work?"
"That's true. Let's wait and see when the net value of Junshi No. 2 Fund changes. Otherwise, I will always feel uneasy."
"Oh, I lost a lot of money. I lost 40% of my capital, but it's better than my friend's. His account was liquidated."
"Everyone is like this. I have worked for nothing for several years."
…
Once the falling roller falls, it is difficult to catch it, even the big positive line on June 30th cannot catch it. Entering the first trading day of July, the continued upward trend that investors expected did not appear.
The Shanghai Composite Index ended the first trading day of July with a drop of 5.23% throughout the day . More than 1,300 stocks in the two markets hit the daily limit. After today, most stocks began to close at new lows since this round of adjustments.
On the news front, the CSRC still introduced most of the measures, including that customers who have already opened credit accounts but whose securities assets are less than 500,000 yuan can continue to engage in margin trading, and the requirement that investors who maintain a margin ratio below 130% must add collateral within 2 trading days and maintain a margin ratio of no less than 150% has been cancelled.
Securities companies are allowed to negotiate with clients on their own about the term for supplementing collateral, and there is no need for forced liquidation in the event of collateral default, further expanding the financing channels for securities companies. At the same time, the two major exchanges will also reduce transaction fees by 30%.
At the same time, Zhongjin Exchange also responded that the rumors of QFII short selling were false. However, a series of actions did not restore market confidence. In the following two trading days, the Shanghai Composite Index continued to fall by 3.48% and 5.77%.
As of July 3, the Shanghai Composite Index closed at 3686.92 points, a 31.76% plunge in just fourteen trading days. The continuous limit downs of thousands of stocks dealt a huge blow to the market. At the same time, this systemic decline has seriously affected the social environment.
This weekend, an article circulated after an investor's margin call pushed Zhongguo CRRC, which has fallen from its high point to its current price of 17.13 yuan, to the top of the hot searches again, causing serious public concern.
With such a large-scale social impact, a large-scale rescue of the market is imminent.
