Chapter 350 Stock Market Crash 3.0
On the first day when the circuit breaker mechanism was activated, the market cooperated very well and experienced two circuit breaker operations, closing the market early. The emergence of new things really stunned many investors.
It's not just investors who are having trouble adapting to the new rules; even management seems a little lost.
It was reported in the evening that the regulatory authorities informally notified listed companies through the exchanges that before they fully adapt to the new rules, major shareholders are still not allowed to reduce their holdings on the date when the previous rescue ban expires, which is the 8th of this month, until the new rules are announced.
This also fully demonstrates that the regulatory authorities were obviously not adequately prepared for the rapid emergence of circuit breakers, and the market's overreaction made most people not calm enough. You must know that even though the United States has a circuit breaker mechanism, so far, there has only been one circuit breaker in history.
The circuit breaker was accidental, but also inevitable. First of all, from a macroeconomic perspective, 2015 was the year when the economic recovery began, but the corresponding economic situation was also the worst in the past decade or so.
The net profit of industrial enterprises above designated size nationwide recorded negative growth for the first time since 1999. According to the latest annual report forecast statistics, the net profit of A-share listed companies fell by 14% after excluding financial stocks and the two oil companies.
Secondly, although 2015 was a year of stock market crash, the A-share index was actually still rising throughout the year, and this was based on a 59% surge in 2014. The index is still at a high level.
The ChiNext Index remains high, overvaluation of small and medium-sized start-up stocks is still very common, the market value of some of the black five stocks is still high, and market speculation is rampant.
In addition, before New Year's Day, global stock markets and oil prices plummeted simultaneously . U.S. stocks, which opened tonight, also performed poorly. Even Nvidia, which has always been stable, opened lower today.
Judging from the trend, Nvidia, which had closed in the negative for two consecutive days before New Year's Day, gapped downward today, and its stock price trend also began to develop in a weak direction. However, the downward gap of Nvidia stocks is different from that of A-shares, and as the holdings are not high, Gu Junhao did not choose to let Xu Jianbiao reduce his holdings in Nvidia.
It is just to let a few traders try short selling with very small positions to see how far the stock price can be adjusted, in preparation for the subsequent large-scale increase in positions. Currently, there is still more than 160 million US dollars lying on Junshi's proprietary trading account, all of which are prepared for NVIDIA.
International oil prices have plummeted, global peripheral markets have performed poorly, and the market's own index is at a high level. The economic environment has not improved. In fact, the weak market performance has been supported by various potential factors.
From a macro perspective, the overall environment is not good, and from a micro perspective, judging from the fourth quarter reports currently released, most of the performance is relatively poor compared to the same period in 2014 and the first three quarters of this year.
The second argument is the current market liquidity. More than four months have passed since the two rescue operations. The regulators have introduced many policies to stabilize the market, and the current monetary policy is extremely loose. In 2015, the reserve requirement ratio and interest rates have been lowered for five consecutive times. The seven-day reverse repurchase rate has dropped by 160 basis points compared to the beginning of 2015.
BP means basis point in finance and is usually used as a unit of measurement for changes in bond and bill interest rates. 1 basis point is equal to 0.01%.
From the perspective of liquidity, the current market does not support a sharp drop, and from the perspective of various policies, it does not support a large-scale correction, but the sharp drop came as expected.
From a technical perspective, although the time for consolidating the bottom is not enough, from the perspective of wave theory, three waves have been completed. Even if there is a fifth wave of decline, it is usually just a way of exchanging time for space.
From a micro-attitude and technical perspective, A-shares do not support sharp declines and deep corrections, but today it happened as expected and triggered two circuit breakers, which is somewhat strange.
In fact, except for Gu Junhao, most people seemed a little puzzled by the circuit breaker on the first trading day of the new year. Many people seemed a little unbelievable when the first circuit breaker came.
For most investors, the first reaction to the circuit breaker is to quickly liquidate their positions to avoid being unable to sell them later. This is why the CSI 300 Index fell from 5% to 7% in just three minutes after trading was resumed.
The original intention of the circuit breaker policy was to prevent the market from experiencing the dramatic ups and downs after the 2015 stock market crash; but in reality, the circuit breaker policy did not calm investors, but instead increased panic.
It has to be said that the continuous rescue measures introduced by the regulatory authorities and the real money investment of the national team have given the circuit breaker policy a trust basis. Under the inertia of understanding, investors mainly believe that such a large policy will generally be introduced very cautiously and will definitely be very perfect after its introduction.
However, investors have overlooked an unusual phenomenon. Before any major policy is introduced, it will be piloted before being fully implemented. However, the circuit breaker was implemented directly without any pilot.
In fact, when the circuit breaker policy was introduced, there were institutions that questioned it, but they were ignored by the market. When the circuit breaker occurred, this trust turned into large-scale distrust.
It has only been two months since thousands of stocks hit the daily limit and were suspended, but the fear in people's hearts has not been eliminated. It is very understandable that investors amplify panic and cause large-scale selling due to concerns about liquidity.
In fact, during the stock market crash in 2015, many high-level investors would have avoided risks in a timely manner based on the judgment of the trading system, but today's circuit breaker was sudden.
Today , it is really unknown whether ordinary investors or major professional institutions can avoid it . This is basically an unprovoked disaster.
Moreover, for investors who are still highly leveraged, this unexpected disaster may cause their accounts to suddenly die at any time.
The emergence of circuit breakers has made the uncertainty and trends of the stock market even more confusing, and the uncertainty of the market has become increasingly volatile. Under such circumstances, the Shanghai and Shenzhen stock markets ushered in the second trading day of the new year.
On January 5, since the start of the call auction, there was widespread panic in the Shanghai and Shenzhen stock markets, and the selling pressure was infinitely magnified. At 9:25, the Shanghai Composite Index opened at 3196.65 points, nearly 100 points lower than the previous day. The market plummeted by 3.11% before it even opened.
“Fuck, the stock price plummeted 100 points at the opening? It dropped more than 3 points. Is this another circuit breaker today?”
"Fuck, how can I play this game? I'm going to quit, this stock market is not suitable for me, and I will never get my money back."
"This circuit breaker is much more brutal than a stock market crash. During a stock market crash, at least you had a chance to sell at a loss and run. But with this circuit breaker, the stock will be suspended immediately after the price drops, and then it will continue to fall the next day. You can't even run away if you want to."
"Fuck, who came up with this stupid thing? It was boasted so highly before, but it's just a scam."
"What's there to be afraid of? If the stock price drops, it's even better. It's the same even if the stock price is suspended. No one can escape. If you have the guts, let the stock price drop for a month and see if I dare to buy at the bottom."
"It's cold, the market is really cold, hey, why is it so difficult to trade stocks?"
The market is so dangerous that if it is allowed to continue, a circuit breaker may occur for the third time. At this time, the national team, which has not participated significantly in market transactions since September, will have to take action again.
As soon as the market opened at 9:30, the heavyweight sectors collectively attacked, and the steel, insurance and banking sectors collectively moved and began to attack upward. The Shanghai Composite Index began to rise rapidly under the violent protection of the national team again.
Under the violent support of the national team, the Shanghai Composite Index narrowed its decline to 0.5% in just five minutes, and the index rebounded above 3,200 points, achieving a thrilling stop in the decline. However, the polarization on the market was very serious.
The weighty sectors led by banks and insurance have seen the largest gains, but the theme stocks sector is very weak, and there are still many stocks in the small and medium-sized sectors that have hit the daily limit. Overall, the market has not returned to its specific sentiment.
After yesterday's circuit breaker, investors' confidence suffered a severe blow. At 9:45, the Shanghai Composite Index turned positive and suddenly exceeded 3,300 points. Five minutes later, the Shanghai Composite Index was at 3,328.14 points, up more than 1%.
Within 20 minutes of trading, relying on the violent support of the national team, the Shanghai Composite Index rebounded by more than 4%, the trading volume of heavyweight stocks was significantly magnified several times, and the market price rose by more than 1%.
After the crisis of another circuit breaker was resolved, the index stabilized at the opening. Throughout the morning, the Shanghai Composite Index fluctuated sideways and closed at 3309.92 points at noon, up 0.41%.
However, for a market where confidence has been hit, it is naturally not enough to rely solely on the intervention of the national team. Once the support of the national team's funds is lost, the index will dive. When the market opened in the afternoon, the Shanghai Composite Index dived again on a large scale.
At 14:15, the Shanghai Composite Index fell below 3,200 points again, closing at 3,189.60 points, with a drop of as much as 3.2%. The national team had no choice but to take action again, and the Shanghai Composite Index once again achieved a V-shaped reversal at this time.
At the end of the day's trading, the Shanghai Composite Index closed at 3287.71 points, down 0.26%. The K-line showed a false positive line. After experiencing yesterday's terrifying market conditions, the Shanghai Composite Index finally had a full trading day today.
On Wednesday, the national team made large purchases again after seeking market support yesterday. Stocks in supply-side reform sectors such as coal, steel, cement, and nonferrous metals started collectively, becoming an important force in pushing the Shanghai Composite Index upward.
In the afternoon, as the Shanghai Composite Index continued to rise and broke through 3,300 points, the small and medium-sized board stocks and the ChiNext Index, which had performed poorly in the morning, finally could not bear it anymore and began to rebound sharply.
The rise of the small and medium-sized start-up sectors has driven the recovery of popularity. The three major indexes all rose by more than 2% during the day. The coal sector soared by more than 9% today. Nearly 30 stocks in the sector hit the daily limit. No sector in the two cities fell, achieving a comprehensive rise in the market.
Two consecutive positive lines gradually restored the market's popularity; however, the trend of US stocks in the evening was very bad. Affected by the global economic slowdown and the sharp drop in oil prices, US stocks were under obvious pressure.
On the evening of the 6th, the Dow Jones Industrial Average fell 1.47%, the S&P fell 1.31%, and the Nasdaq fell 1.14%. Dragged down by the decline in commodity stocks, the pan-European Blue Chip 300 index closed down 1.3%, and oil prices plummeted 5.6%.
Nvidia, which has always been stable, plunged 4.13% today, with its share price closing at 31.53 yuan. The big adjustment of Nvidia that Gu Junhao had been expecting has finally arrived, and the funds in his hands are starving.
Global factors have led to increased risk aversion in the market, which has also pushed up gold prices. The gold price rose by 1.3% in one day, which has put A-shares, which rebounded for two consecutive trading days after the circuit breaker, under tremendous pressure.
Just at this time, before the opening of the morning session, news came that the specific implementation plan for the registration system will be officially finalized this month, and the China Securities Regulatory Commission also officially released the specific operational plan for the registration system reform.
"We are still too anxious. Alas." Gu Junhao sighed after seeing the news.
The current market cannot withstand any more turmoil. It has just rebounded for two days, and the global investment market has cooled down again. People are so anxious and have not learned the lesson from the first trading day.
You should know that in these two trading days, if the national team had not acted decisively, circuit breakers might have occurred continuously. At the same time, in the foreign exchange market, the RMB exchange rate fell sharply.
However, it is not that there is no good news. At the same time as the registration system was announced, new rules for the online and offline issuance of new shares were also announced. There have been new changes to the rules for new stock issuance, and it is no longer necessary to pay the full amount of subscription funds as before.
Finally, we have returned to the subscription method before the rebirth, and the payment can be made after winning the lottery. This has alleviated the blood-sucking of the market to a certain extent.
On Thursday, January 7, affected by the sharp drop in foreign markets, the depreciation of the RMB exchange rate and the accelerated introduction of the registration system, the Shanghai Composite Index opened at 3309.66 points, nearly 50 points lower, and there was a strong wait-and-see sentiment in both markets.
At the beginning of the transaction, the Shanghai Composite Index quickly fell below 3,300 points, a drop of more than 2%. Although the national team still has some market protection behavior today, it is obvious that big funds no longer have the buying enthusiasm of the previous two trading days.
The trading volume in the two markets shrank sharply and the market sold off severely. Five minutes later, the Shanghai Composite Index closed at 3267.41 points, down 2.81%. The rapid decline of the index caused more panic in the Shanghai and Shenzhen markets.
At 9:40, the Shanghai Composite Index was at 3224.84 points, down more than 4%. At 9:42, the Shanghai Composite Index fell below 3200 points to 3182.41 points, down more than 5.34%.
For 12 minutes, there was no rebound of any nature and panic selling at the individual stock trading desk was very serious. The third circuit breaker arrived as scheduled. The Shanghai and Shenzhen stock markets suspended trading for another 15 minutes. The entire A-share market was shrouded in fear.
Maotai, which has always been strong, fell 3.37% to 205.03 yuan. Wuliangye also fell 3.39% to 25.68 yuan. Small and medium-sized start-up sector stocks once again collectively hit the limit down.
For ordinary investors, today's trading has actually ended here. Yesterday, affected by the rebound of small and medium-sized enterprises, many ordinary investors rushed into small and medium-sized stocks. Even after the market, most institutions have advocated bottom fishing again.
Tianqi Liye went straight to the limit down as soon as it opened. Before the circuit breaker, the stock price had quickly closed above the limit down at 105.75 yuan. Compared with the highest point of 176 yuan, the decline was more than 40%.
Compared with the closing price before the New Year, Tianqi Liye fell by more than 33% within four trading days of the new year, which was a more severe adjustment than most individual stocks.
The atmosphere in the trading room also seemed extremely depressing, especially for the six new traders. As of today, Gu Junhao had not arranged any trading content and only asked everyone to watch the market carefully.
Moreover, during these trading days, Gu Junhao even prohibited any trader from taking any action. This was truly a strange career experience for new traders.
In the four days since I joined the company, I have not traded any stocks, and the entire Junshi Capital seems to have stagnated. Not a single transaction has been made in these four trading days.
At the same time, Gu Junhao did not give any explanation. This behavior made traders who were more familiar with Gu Junhao, including Wang Ruoyu, feel a little uncomfortable.
In fact, Gu Junhao has already selected specific targets for bottom fishing, but the stocks he is interested in are all blue-chip stocks with large weights. The declines in the past few trading days have not been very large, and even if the circuit breaker is suspended, they will enter an adjustment period.
However, for the stocks of Tianqi Liye that have been hitting the daily limit for consecutive days and whose share prices have been nearly halved, you can wait until the circuit breaker to start buying the dips. The lithium battery sector is also a hot sector this year. As one of the leaders, Tianqi Liye's share price has been very strong for a long time.
The reason why no explanation was given to the traders was mainly because this thing really could not be explained. Gu Junhao would not say that the management would urgently stop the circuit breaker mechanism after today's circuit breaker.
The first four trading days of 2016 were deeply memorable for Gu Junhao, who still remembers the feeling of helplessness after the suspension of trading.
Amid investors' inner torment, trading was resumed in both markets. Three minutes later, the Shanghai Composite Index triggered the second circuit breaker without any surprise, falling 7.32% to 3115.89 points.
At this point, after 15 minutes of trading, today's trading ended and all practitioners left work early. Investors in both cities were filled with fear and confusion.
Investors who are extremely bored are posting all kinds of jokes online.
"A friend from a securities firm said: When Mr. Wang next door knocked on the door today, I was already at home."
"The happiest job in 2016 - brokerage; morning meeting at 8:30, tea making at 9, pre-market preparations, bullets ready at 9:20, open with a 5% gap, wash cups at 9:30, go to the toilet, organize bags, get dressed, another 2% drop at 9:45, turn off computer, close the market and go home."
"I took 3,000 yuan with me and lost it all in half an hour. The price took 15 minutes, so I went to the bank downstairs to withdraw 5,000 yuan. Before I could get upstairs, the bank was closed."
"Women should marry traders."
On a normal trading day, the market only trades for 15 minutes a day, which is quite bizarre. Out of anger, helplessness and boredom, the leeks turn into joke tellers and vent their emotions wantonly.
In the evening, at the press conference of the China Securities Regulatory Commission, the circuit breaker mechanism was urgently stopped. This mechanism, which was implemented for only four trading days, became the shortest-lived stock market policy in the history of China's securities.
Within four trading days, the market value of the Shanghai and Shenzhen stock markets evaporated by more than 5.6 trillion yuan, causing great harm to investors.
If the sharp drops in June and August 2015 are called stock market crash 1.0 and 2.0, then the sharp drop caused by this policy can be called stock market crash 3.0.
The circuit breaker mechanism that was urgently called did not make investors feel any excitement, but only left them with endless disappointment.
