On December 27th, the Shanghai Composite Index (SHCOMP) reclaimed the 2900-point mark, with over 3700 stocks recording gains. Consumer electronics sector stocks showed strength. How do you interpret today's market performance?

Reflections on the Shanghai Stock Index

When did reclaiming 2900 points become a thing?

Not even a significant threshold, it’s still within a volatile downward trend, and consistently below the long-term average by thousands of points.

Reclaiming? More like a delusion.

The Shanghai Composite Index chart from 1991-2023 is startling and unbelievable.

Since the beginning of China’s stock market in 1991, starting from 233 points, it took 16 years after first reaching 3000 points in 2007, and here we are still below 3000. Even Yang Guo got to meet his Xiao Long Nu in that time, yet the A-shares are far from reclaiming their past heights.

Since we can’t reclaim 3000 points, maybe it’s time to redefine “reclaiming.”

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The greatest value of “The Wealth of Nations” is in identifying that the core of a nation’s wealth lies in the productive capacity of its enterprises,
and this is primarily reflected in the stock market (the so-called capital market).

The stock market should be the core accumulation method of national wealth, as is the case in most developed countries.

However, despite China’s economy making great strides in the forty years since its reform and opening-up, a glance at the A-shares market brings both men and women to tears, comparable to the national soccer team.

What happened to the promised rapid economic growth? The miracle of compound interest? The rise of a great manufacturing nation?

What exactly went wrong?

AI Bounces Back, But Takes a Back Seat on December 27th

By Every Economy Reporter Zhao Yun and Every Economy Editor Peng Shuiping

On December 27th, the market saw a day of volatile rebound, with all three major indices posting minor gains, and the Shanghai Composite Index reclaimed the 2900-point level. At the close, the Shanghai Composite Index rose by 0.56%, the Shenzhen Component Index increased by 0.38%, and the ChiNext Index edged up by 0.07%.

In terms of sectors, the top-performing sectors included pork, consumer electronics, computing power leasing, and food processing, while the worst-performing sectors included short dramas, e-commerce, battery cells, and lithium extraction from salt lakes.

Overall, more stocks gained than declined, with 3,700 individual stocks in the market showing gains. The total trading volume in Shanghai and Shenzhen reached 636.8 billion RMB, an increase of 26.9 billion RMB compared to the previous trading day.

Northbound capital returned today, with a net inflow of 5.678 billion RMB throughout the day. The Shanghai-Hong Kong Stock Connect saw a net inflow of 3.724 billion RMB, while the Shenzhen-Hong Kong Stock Connect recorded a net inflow of 1.954 billion RMB.

The rebound in the AI or technology sector today was somewhat expected by many. After all, Hong Kong stocks finally resumed trading, and last Friday, Tencent, Netease, and other heavily affected stocks opened higher in the A-share market before the market opened, providing a clear signal.

However, looking at the overall performance of the day, the rebound seemed somewhat lackluster. The leading sectors were computing power, storage chips, semiconductors, and Huawei’s Euler, which were predominantly hardware-related. On the other hand, sectors representing the software side, such as AIGC, gaming, and media, either showed minimal gains or ended up in the red.

This indicates several issues: the rebound is not widespread enough, and it has not resonated sufficiently with the broader market.

The latter is more evident when looking at the index trends.

In the morning, the gaming and computing power sectors started the day with gains (although gaming quickly retreated), and major indices quickly turned from green to red. It wasn’t until around 11 a.m., under the influence of activity in the securities sector, that the market suddenly turned higher in the final 15 minutes of trading.

During the same period, the food sector also saw activity (as shown by the Wind Food Index).

According to Tonghuashun’s index classification, this includes poultry farming, livestock, pork, food processing and manufacturing, and dairy-related sectors. In other words, the main drivers sustaining market sentiment today were not the forefront of AI like computing power leasing, but rather these sectors. The afternoon market continued to rise, which can be attributed to increased inflow of northbound capital.

The Ministry of Agriculture and Rural Affairs recently released the latest data, indicating a 1.2% month-on-month decrease in the national inventory of breeding sows in November, with a 0.5% increase in the decline compared to the previous month. At the end of November, the national inventory of breeding sows stood at 41.58 million head, representing 101.4% of the normal holding level of 41 million head. Experts suggest that considering significant improvements in production efficiency and other factors, the current pig production capacity is still slightly higher than the reasonable level. Based on the current reduction rate, pig production capacity is expected to return to normal levels in the first quarter of next year.

Huatai Securities stated that whether from the perspective of market capitalization per share or price-to-book ratio (PB), the valuation of pig farming stocks is still at historical lows, with a high safety margin for sector allocation. Historical data shows a strong correlation between the pig farming index and pork prices, with the turning point of the pig farming index typically leading the turning point in pork prices. In 2009, 2014, and 2018, during the bottom of the economic cycle, the pig farming index signaled an upturn 6, 9, and 10 months ahead of pork prices, making it a favorable time to invest in pig farming stocks.

This suggests that the gaming industry is still digesting the potential impact of new policies (though they are still under consultation), and other technology subsectors that have fallen are recovering earlier and more easily. Therefore, there are differences within the AI sector, making it difficult for a broad-based rally. Additionally, the market saw limited growth in trading volume today, which did not provide strong support for a widespread rebound.

Taking the best-performing computing power sector as an example, recent news indicates a positive outlook. Several government departments, including the National Development and Reform Commission, recently jointly issued the “Implementation Opinions on Deepening the Implementation of the ‘East Number, West Calculation’ Project and Accelerating the Construction of a National Integrated Computing Power Network.” The opinions state that by the end of 2025, the comprehensive computing power infrastructure system will be initially established. The national hub areas will account for over 60% of all newly added computing power in the country, with significantly higher utilization rates of computing power resources in these areas compared to the national average.

According to Guolian Securities' estimates, with the current annual demand for data centers in China at 5 million standard racks and an investment of 100,000 to 150,000 RMB per standard rack, the total annual investment scale will reach between 500 billion RMB and 750 billion RMB.

Related listed companies will benefit greatly from the “East Number, West Calculation” project. According to incomplete Wind data, at least 19 concept stocks have received ratings from five or more institutions, and 17 of these stocks are expected to continue to see growth in their performance in 2023 and 2024.

Furthermore, on December 26th, the Beijing Artificial Intelligence Public Computing Power Platform (Shangzhuang) was launched. The initial 500P (P stands for the quantitative unit of computing power, equivalent to 10 trillion calculations per second) of computing power officially went online on that day, effectively relieving the tight demand for computing power from universities, research institutes, and small and medium-sized AI enterprises in Beijing.

On the same day, the Ministry of Finance, in collaboration with the Ministry of Industry and Information Technology, released multiple basic hardware and software government procurement requirement standards.

There are also positive developments in the semiconductor sector. Recently, Shanghai Customs officially released the “Integrated Circuit Industry Supervision and Innovation Implementation Measures (Version 2.0),” which covers all aspects of the semiconductor industry, including chip design, chip manufacturing, packaging testing, equipment manufacturing, and the logistics supply chain. Version 2.0 of the implementation measures replaces the “admission and exit” mechanism with an “enterprise filing” system, providing better coverage of the entire semiconductor industry chain. It encourages corporate group members to freely carry forward and share tax-free goods, which is beneficial for leading enterprises to accelerate their technological breakthroughs.

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Analysis of the Chinese A-Share Market on December 27, 2023

From a candlestick perspective, there was no clear bullish or bearish significance in the K-line of the two indices today, so we will skip this aspect.

In terms of trading volume, both indices saw a slight increase today, indicating that today’s rise wasn’t particularly aggressive.

Today, due to the Shanghai Composite Index staying above its five-day moving average, it didn’t pose as resistance. However, the ten-day moving average still remains relatively high in terms of price and volume.

Similar to the ChiNext Index, if the market fails to increase trading volume to the level required for an uptrend, the declining ten-day moving average will continue to suppress the market.

But as mentioned in yesterday’s review (A-Share Analysis on December 26, 2023 - “Before Dawn 7”), because short-term average volumes are low, a slight increase can easily meet the minimum standard for an uptrend, which is the five-day and ten-day average volumes.

As previously mentioned, in a low standard environment, it depends on your efforts whether you can succeed. If the market continues to have lower trading volume than the required standard for an uptrend, it will be suppressed by the declining moving averages and might even break new lows (just as the consumer electronics sector, which led the gains today, might face quiet times again tomorrow).

In terms of market structure, the reason for the leading stocks today, apart from the consumer electronics sector, is the return of Northbound capital.

For example, the eight sectors of undervalued weighted stocks mentioned in yesterday’s opening chart, including telecommunications, petroleum, and home appliances, which led today’s gains, all benefited from the return of foreign capital.

However, buying these stocks is primarily for acquiring cheap chips and may not result in sustained upward momentum. Therefore, it’s important not to have excessive expectations.

To truly understand the market’s direction, it’s essential to wait for technical signals to emerge.

The top gainer today was the telecommunications sector. Except for China Mobile, which rebounded from its low volume year-end, most other stocks in this sector rebounded after a significant decline.

The telecommunications sector also reached the quarterly high volume level, so it’s worth keeping an eye on.

The second-best performer was the agriculture and forestry sector. Led by Wen’s, which continued to show strength during intraday trading, this sector continued to exhibit strong volume and strength, exceeding the volume of the previous three days.

Wen’s, which accounts for the sixth weight in the ChiNext Index and the second weight in the agriculture and forestry sector, directly influenced the movements of the ChiNext and the agriculture and forestry sectors. Additionally, Wen’s is an example of a stock that has entered an uptrend after hitting a bottom in the ChiNext Index. Its short-term trend is expected to be stronger than that of the ChiNext Index. However, after rising too high, it might experience a second divergence. So, it’s not advisable to chase the price at this level. Half a month later, there will be a small high point to challenge the yearly moving average, and if the volume isn’t enough, it might pull back.

Regarding the petroleum sector, as mentioned in a previous analysis, the yearly moving average with low volume served as support. However, it was later suppressed by short-term declining moving averages and pulled back below the yearly moving average. A slight increase in trading volume might pull it back up. Currently, the quarterly moving average with high volume is not far above, and a certain technical indicator is beyond the extreme overbought level of 5%. Statistically speaking, there is over a 90% probability of short-term consolidation and convergence in both sectors and indices.

As for the semiconductor sector, the volume isn’t sufficient for an offensive move; instead, it’s experiencing a normal fluctuation within a consolidation phase. This interpretation is consistent with the view that sectors like electronic components are not in an offensive posture either. Therefore, if today’s performance in the semiconductor, electronic components, IT equipment, and other related sectors cannot be sustained, the market is likely to continue its pattern of sector rotation and repair without significant volume.

For instance, the sectors that performed well yesterday mostly lagged behind today. In your trading strategy, it’s important to remain patient and not rush into decisions.

A Sudden Surge in A-Share Market: Is State Capital Entering?

In the afternoon today, the A-share market suddenly witnessed a surge in buying activity. Stocks like Construction Bank surged rapidly, injecting significant momentum into the market, leading to an increase in the indices. At the close, the Shanghai Composite Index was up by 0.54%, the Shenzhen Component Index increased by 0.38%, and the ChiNext Index rose by 0.07%. Trading volume expanded slightly, with net inflows of nearly 6 billion yuan from Northbound capital. Optical electronics, food and beverage, and consumer electronics sectors saw the most gains, while the utilities and photovoltaic equipment sectors faced declines.

So, what exactly happened? Given the current market situation, the possibility of state capital entering the market cannot be ruled out.

On December 1st, the national team made a move. That afternoon, news suddenly emerged that on that day, the National Team entered the market to purchase ETF products from various public fund companies. It is reported that the purchased ETF products mainly track indexes of central enterprises. Subsequently, the market quickly rebounded.

Since October, the national team has been active. On October 11th, China Investment Corporation (CIC) made a move for the first time in 8 years, increasing its holdings in China Bank, Agricultural Bank, Industrial and Commercial Bank, and Construction Bank by a total of over 4.76 billion yuan, and stated its intention to continue increasing holdings of the four major state-owned banks in the secondary market in its own name within the next 6 months.

On October 23rd, CIC announced that it bought ETFs on that day and expressed its intention to continue increasing holdings in the future. According to Wind data, on October 23rd, 170 index funds or enhanced index funds increased their shareholdings. Based on the net asset value and changes in shares on October 23rd, 170 ETFs increased their total assets by 9.342 billion yuan in a single day, with 13 ETFs seeing their assets grow by more than 100 million yuan.

In recent times, the domestic bond market has been on a continuous rise, which may have stimulated stocks related to state-owned banks, which have a bond-like property. According to data from Bloomberg, China’s foreign exchange regulatory agency reported that foreign capital increased its net holdings by 251 billion yuan (about $33 billion) in the world’s second-largest bond market last month, reaching a historically high level. The scale of net increase is nearly six times that of October. Last year, 616 billion yuan flowed out of the renminbi bond market, setting a record.

Recently, the turmoil in the red sea has started again. Is it possible for the shipping industry to experience another rapid surge?

For those who like to play the stock market, COSCO SHIPPING Holdings may be worth a look. After all, it has a monetary fund of 200 billion yuan supporting a market value of 150 billion yuan for this shipping giant. As long as it doesn’t incur losses, it’s a profitable investment.

No matter how you look at it, investing seems like gambling.

In fact, investing is gambling, it’s just a matter of probability and odds.

In most cases, investments with higher probabilities have lower odds of loss, while investments with lower probabilities have higher odds of loss, which is in line with the rules of the casino.

Of course, there are a very few high-probability, high-odds-of-success fat sheep that we spend our whole lives searching for in the world of investing (for those who like to argue, please check the comment section).

Conclusion

In the end, no matter how you look at it, investing seems like gambling.

Investing is essentially a form of gambling, with the key factors being the probability and odds of success.

In most cases, investments with a high probability of success have lower odds of significant gains, while investments with a low probability of success have the potential for higher returns. It’s all about weighing the risks and rewards and making informed decisions based on your own financial situation and goals.

Disclaimer: The above is the author’s personal thoughts and summaries and does not constitute any investment advice. Please consider your own circumstances and risk tolerance before making any investment decisions.

Good News: A-Shares Have Risen

Bad News: Only Recovered to 2900 Points

In the past, dropping below 3000 points would cause widespread panic, and recovering to 2900 points is now considered good news.

Previously, the Securities Daily said: “Stand up, A-Shares' backbone.” This was an article from January 2022, nearly two years ago. At that time, the A-Shares were above 3400 points. The intention was to boost confidence in A-Shares. Unexpectedly, two years have passed, and the backbone of A-Shares has not stood up; it remains soft and lying on the ground.

Today, all three major A-Share indices closed higher. At the close, the Shanghai Composite Index was up by 0.54%, the Shenzhen Component Index increased by 0.38%, and the ChiNext Index rose by 0.07%. However, the CSI 300 Index fell by 1.76%. The total trading volume in Shanghai and Shenzhen exceeded 6368 billion yuan.

Over 3700 individual stocks rose, and Northbound funds net bought 5.678 billion yuan throughout the day.

Is ten days enough?

However, many people remain pessimistic. But there is a saying:

“Major market bottoms are usually formed when the market is extremely pessimistic, and major market tops are usually formed in the midst of extreme market enthusiasm.”

Perhaps you don’t need to worry about when to enter or when to buy low. After all, there will always be another market bottom in A-Shares for everyone to seize.

In any case, I wish you all can make good profits in the last few days of this year!

Risk Warning: The content in this article represents specific viewpoints, and there are risks involved in investing. Trading should be done cautiously. Zun Jia strives to provide accurate and reliable information, but cannot guarantee its complete accuracy. Zun Jia is not responsible for any gains or losses resulting from reliance on or use of third-party information for trading.

From Bearish to Bullish: A Fresh Perspective on REITs

1 Bearish Outlook!

The financial world loves fancy English words like REITs, but in simple terms, REITs are stable income-generating assets. For instance, highway projects generate toll revenue annually, industrial parks or logistics parks collect rent from businesses each year, and affordable housing projects earn rental income annually. If you own a rented property, you can also consider it a REIT.

In the past couple of years, A-Shares' REITs were very popular due to their substantial gains. Many REITs surged by 10% upon listing, followed by another 10% increase in 2021 and further gains in 2022. Regardless of the bond and stock market performance, it seemed like REITs were immune to market volatility, consistently rising.

During that time, several articles were written, including some cold-water-pouring pieces with titles like “Let the Retail Investors Go!” outlining a bearish outlook.

The bearish logic is straightforward and revolves around two main points:

Firstly, it’s about price judgment. REITs offer relatively stable returns, with a compound annual growth rate typically ranging from 3% to 4% (the National Development and Reform Commission requires property-based REITs to distribute cash dividends of no less than 3.8% annually). However, many REITs surged by 20% to 30% in just one or two years since their listing. This rapid rise essentially wiped out the future income expected over the next 5 to 10 years. This kind of price surge is obviously unsustainable.

Secondly, it’s about analyzing the fundamentals of A-Shares' REITs. Some REITs provided overly optimistic long-term assumptions, especially when it came to revenue growth. For instance, certain highway projects projected a steady 6% annual increase in toll collection for the next 10 years. While some projects did achieve this growth in recent years, these assumptions are still considered overly optimistic. Any failure to meet these expectations could lead to disappointment and a decline in stock prices.

So, what happened next?

2 From Bearish to Bullish!

Austrian writer Stefan Zweig once wrote in “Marie Antoinette: The Portrait of an Average Woman,” “All gifts from destiny are tagged with a price in secret. Excessive greed will ultimately pay the corresponding price.” In 2023, REITs completely collapsed, plummeting by 30% and retracing nearly 40% from their peak.

As assets with historically stable income, their decline exceeded that of stock funds. Now, looking at it from a bearish standpoint, there seems to be a significant opportunity with REITs.

The logic remains straightforward. We can start with a pessimistic assumption. Take highway REITs, for example.

This year, toll revenue is undoubtedly lower due to a reduced number of vehicles on highways caused by widespread infections in the early months of the year. However, let’s assume this year’s revenue as the base for future growth, emphasizing the pessimistic scenario. When predicting future toll revenue growth, we can use the most pessimistic assumptions, potentially even zero growth, reflecting a stagnant economy.

Calculating based on these assumptions and using data from brokerage experts, the long-term yield of A-Shares' highway REITs looks like the chart below:

Simply focus on the red box. Even under extremely pessimistic conditions of 0-1% annual growth, the A-Shares' 8 highway REITs still yield positive returns, averaging around 4%, with some even nearing 8%. Considering that bank deposits and bond funds currently offer annual returns of only 2% to 3%, REITs are becoming increasingly attractive.

3 Human Psychology Prevails!

Do these calculations matter? I’m sorry, they don’t. Value investing is long dead, and no one wants to discuss data or logic. Even the arguments of the bearish camp have been thoughtfully refuted: a pessimistic scenario isn’t defined by zero growth or economic stagnation, but by negative growth, worse than Japan’s; or, the A4 paper could obliterate an entire industry, rendering any discussion irrelevant.

These reasons are quite effective during bear markets and can be used to justify the bearish sentiment towards any asset, whether it’s REITs or stocks. But what I can’t understand is why optimism prevails during bull markets?

In the 2021-2022 REITs bull market, the subscription ratios for newly listed REITs were less than 1%. In other words, if you subscribed for ¥1 million, you could only confirm subscriptions of less than ¥10,000. This was the reality during a time when the impact of the pandemic and mask shortages on fixed asset projects like highways was far more significant than it is now. Additionally, policies such as anti-monopoly measures targeting A4 paper were more stringent back then. However, many people believed:

“Don’t worry, assets like highways and industrial parks will grow at the same rate as GDP, steadily increasing by 5% to 6% each year. As debt-based products, they offer consistent returns without the volatility of stocks.”

Even I, the bearish one, was harshly criticized and labeled a financial novice by netizens, all while others flaunted their gains.

In the end, human nature remains unchanged. People can be optimistically bullish or pessimistically bearish, depending on the circumstances. In the short term, when the economy is performing well, exports are strong, and the stock market is rising, short-term conditions can be misinterpreted as long-term trends. The same applies in the opposite direction.

As Benjamin Graham said in 1940:

“Even when the motivation to purchase common stocks is purely speculative greed, human nature is still inclined to clothe this unlovely impulse in the guise of logical and carefully reasoned analysis.”

Graham was referring to bull markets, which are essentially the events we witnessed in 2020-2021. Now, in the bear market, we’ve simply flipped this statement. Finally, the GEX Index is at 2.47. If you have any questions, feel free to discuss them in the comments section.

Shifting from Bearish to Bullish: A Fresh Outlook

When we look at the index, the rebound here appears weaker than expected. Typically, a false break below a support level quickly retraces after making new lows. However, if the index moves sideways after a new low, there is a risk of it breaking down again. The silver lining here is that this is not the beginning of a major bear market but a prolonged decline, so if it does fall again, there’s a higher likelihood of a swift bottoming process.

Breaking support at a high level and moving sideways often leads to a probable new low.

Currently, we are still in a sideways movement after breaking support, but the advantage is that we are at a lower level.

This is the challenge the index faces right now; it depends on which direction the index chooses in the coming days.

Now that we’ve discussed the index, let’s talk about sectors, which look much more promising. Some sectors haven’t rebounded yet, but opening up the sector list reveals that many stocks have already started on a rebound path. This indicates that informed investors have already positioned themselves ahead of time. This is why I’ve been optimistic about the recent market conditions.

In structural bull markets, while most stocks may decline when the index falls, not all stocks will hit new lows when the index does. It’s highly likely that while the index is declining, some strong stocks are simply shaking out weak hands. Once the shakeout is over, all it takes is a single day of positive index movement, and these stocks will capitalize on that momentum to continue their upward trend.

Let’s take this stock as an example. This is one of the stocks I’ve been trading recently. I won’t mention its name to avoid followers; just focus on its technical pattern. You can see that while the broader market retraced and hit new lows, this stock, although declining, maintained a healthy moving average pattern. I often say that once a trend is established, it tends to persist. Therefore, I believe this stock’s recent decline is merely a shakeout rather than distribution.

Furthermore, my indicator system provided a buy signal towards the end of the shakeout. You can see in the chart below that the first bottom signal on the left was accurate. These signals are the result of my years of collecting common characteristics of major shakeouts by institutional investors. So, as long as the first signal is accurate, the second signal is highly likely to be accurate as well. In fact, I entered my position at the lowest point.

As illustrated in the above example, once a stock enters an uptrend, it’s not afraid of the broader market continuing its bearish trend. Every market decline provides us with better buying opportunities. So, as I’ve been saying, in structural bull markets, opportunities are not in short supply if you can read the signs.

Finally, I plan to create a group to exchange ideas with friends and share some insights on trend analysis, technical analysis, and the psychological game of the stock market. I want to help those who have been following and interacting for the past six months improve their survival skills in the brutal stock market. (I won’t share core techniques, so if that’s what you’re looking for, please refrain from joining. After all, it’s how I make a living.) I only accept those who are persistent, reasonable, enjoy thinking and pondering, consider the stock market a hobby, and want to make money in the stock market through their own abilities. I won’t tolerate arrogant freeloaders, self-proclaimed market gurus who make mystical predictions, scammers who like to advertise, or naive newbies who worship anyone they see as a stock market god. I don’t plan to charge any fees; all communication will be based on interest alone. So, if you consider yourself a master or someone with ulterior motives, I won’t entertain you.

I’m a somewhat niche person and not very sociable, so I plan to form a small circle with a few people where we can chat about stocks every day, or perhaps play a game together like “King of Glory.” I hope we can interact as friends, and I’m not in a hurry to accept new members. After all, when there are too many people, things can get complicated, and there’s a risk that scammers might slip in, which is not what I want to see. So, if you’re interested, please start a private chat to communicate. If there’s no interest, just consider this message never existed.

Market Analysis: From Bearish to Bullish

Today is the futures market delivery day, and the market is experiencing narrow fluctuations. All three major indices have turned green, and this performance… can be considered okay?

This aligns with our assessment from yesterday in the “circle,” where we concluded that “there is no need to be discouraged; boldly add positions."

At that time, I approached the situation from the perspective of the “counter-cyclicality” in the game theory. Domestic investors were simply pushing down prices, essentially following the principle of “the early bird catches the worm."

So, this left foreign investors with two choices: either bottom fishing or pushing down prices.

To be more specific, if foreign investors bottom fish, domestic investors continue to sell, resulting in portfolio adjustments.

If foreign investors push down prices, domestic investors step in to buy and lower their average holding costs.

Of course, there’s also a scenario where foreign investors choose to remain neutral, in which case domestic investors are likely to follow suit.

Regardless of how you look at it, the risk is significantly smaller than the potential rewards, which is why I chose to add positions yesterday.

Looking at today’s market, although the outcome is quite similar, there are differences in the process.

Domestic investors, as usual, began by pushing down prices to test the waters, while foreign investors chose to “bravely” bottom fish. However, please note that the bottom fished by foreign investors did not come from the shares sold by domestic investors.

This resulted in an unexpected situation:

The number of stocks hitting the daily price limit down was higher today compared to the previous trading day, with 88 stocks experiencing a decline of more than 5%.

Foreign investors were indicating with their actions that they have their strategies just as domestic investors do. Their message: “We won’t fall for your tricks."

While domestic investors may have been selling in vain, foreign investors have opened up a new battlefield.

As a result, we see that the technology sector is flourishing, with a variety of hot topics. Even sectors like poultry, pork, and food and beverages are showing strong performances, and individual stocks are generally rising.

However, when considering this comprehensively, it implies that the relay sentiment may face a risk of receding further, with a significantly increased probability of short-term stock flash crashes.

After all, the trading volume remains at a low level of 600 billion CNY, which is far from optimistic.

But from my perspective, some positive signals have started to emerge, and it’s time to take action.

01

Signal 1: The National Team Steps In Again

Looking at the capital flow, foreign investors started the day as net sellers. However, as the national team intervened to boost the indices, foreign investors switched to a bottom-fishing mode, resulting in a net purchase of over 5.6 billion CNY by the end of the day.

Of particular note is the late surge in banking stocks, although it’s unclear which entity was behind this operation.

Whether it was the Social Security Fund or China Investment Corporation (CIC), the signals were clear: “Hold this position!"

Domestic institutional investors were smart enough to not continue selling, and their net sales of 8.7 billion CNY today marked a new low in recent sell-off volumes.

Based on this, we can anticipate a potential rebound from this position.

02

Signal 2: Tech Stocks Make a Comeback

Today, the technology sector rebounded across the board, especially in consumer electronics, semiconductors, and some new materials.

On the news front, companies like Apple, Huawei, and Xiaomi have all launched new products.

Apple is launching the Vision Pro2 as early as January, and yesterday, the Wall Street Journal estimated sales of 500,000 units.

It’s worth mentioning that based on this news, Yashi Optoelectronics, a stock we uncovered, has seen six consecutive daily limit-up performances.

Huawei, on the other hand, sold out a not-so-affordable smartphone.

Additionally, today Huawei officially announced the Wenjie M9.

While there’s a lot of buzz about it, in my opinion, there’s nothing extraordinary about it. Moreover, the prices aren’t cheap, starting from 469,800 CNY for the base model and going up to 569,800 CNY for the pure electric version.

Xiaomi is gearing up for a new car launch on Thursday.

Coincidentally, the pricing has even left Lei Jun saying, “It’s a bit expensive!"

How should we interpret this?

In my view, some netizens put it well: “If we don’t work harder, we won’t be able to afford Wenjie, Xiaomi, or BYD; we’ll have to settle for BBA!"

The expectations for consumer electronics seem to be maxed out, and coupled with strong valuation killing pressures and sector rotation demand, today’s across-the-board tech stock rebound was triggered by these news events.

As a counterpart, previously hyped small-cap stocks, represented by those “dancing in dragon and phoenix costumes,” are starting to crumble.

This is a very positive development for several reasons:

Trading small-cap stocks doesn’t require a substantial amount of capital.

The technology sector has numerous races to absorb enough capital, and when a trend starts, it’s bound to lift the entire market.

03

Signal 3: Gaming Sector Strengthens

Especially in the gaming sector, both Chinese and foreign companies showed strong performances today, from internet giants to domestic A-share companies.

From a news perspective, gaming companies are actively repurchasing their shares, even buying back and canceling shares, to send a message of confidence to the market.

In addition, there have been media reports about NetEase possibly renewing its collaboration with Blizzard, both domestically and internationally.

However, it’s worth noting that NetEase, the party involved, hasn’t responded yet, which likely means that this deal is highly probable.

From a capital perspective, the question arises: Are they raising the stakes to sell or to escape from their positions?

I believe it’s both.

On the one hand, the impact of the “Opinion” is long-term and not just a short-term maneuver.

On the other hand, it’s a friendly gesture to recover some losses.

Regardless of how you look at it, as long as there’s capital involved, it will accelerate the market’s recovery.

04

Based on these signals, we can see that the market has entered a new state:

Optimistic investors, like me, feel that a reversal could happen at any time but remain cautious.

Pessimistic investors may feel that every moment is the bottom, yet nowhere is the bottom.

Indeed, as long as there are capital-concentrated sectors and stocks, there is the possibility of strategic maneuvers, price suppression, flash crashes, and so on.

The logic isn’t complicated: in the absence of incremental capital, it becomes increasingly difficult to raise the prices of concentrated holdings.

Funds have a strong incentive to exit and then lie in wait for the next opportunity with lower “expectations.”

But I have to say that I like this kind of market. It means:

With in-depth research and attention to fundamentals, clean chips, and significant barriers to the core business, there are opportunities for profits.

Just like the case of Yashi Optoelectronics we uncovered based on the Apple VR headset.

Of course, if you’re a cautious player, you can continue to wait for a better opportunity to add to your positions.

05

Of course, the market isn’t all rosy. There was significant news today: China Tourism and Shanghai Airport have updated their duty-free agreements, significantly reducing sales commission rates.

The previous comprehensive sales commission rate of 42.5% has been changed to category-specific commission rates of 18% to 36%.

In other words, the airport is providing more discounts to China Tourism, trading prices for volume to maintain revenue growth.

If the market were in an incremental phase, the new agreement would clearly favor China Tourism and be neutral to Shanghai Airport.

However, both of these stocks opened high and closed low today: Shanghai Airport went from +1% to -2%, and China Tourism went from +2% to -0.6%.

This indicates that the market doesn’t endorse the logic of offering duty-free goods at lower prices, and a price reduction simply confirms the trend of declining consumer spending.

06

In line with this, various major institutions have released their market outlooks for next year.

I’ve compiled them and posted them in the “circle” for those who are interested.

What struck me the most was a candid remark by JP Morgan in their report, stating:

In the next few months, China is expected to intensify its easing policies. If stimulus measures are absent, economic growth will significantly slow down.

This is the current situation: everyone knows there’s a problem, but the current situation is similar to the historical scenario where the physician Bian Que visited Lord Cai Huan: the ailment is in the skin, the flesh, the muscles, the bones…

But there hasn’t been a timely response. So, what should we do?

Conclusion

Readers familiar with me know that I’m a pragmatist who embraces the value investing valuation system, appreciates Soros’s emphasis on the “reflexivity” in games, and is accustomed to looking at problems from the perspective of Livermore’s trading strategies.

Therefore, when I analyze a certain event, I examine it from multiple dimensions. This sometimes leads to feedback from readers saying: “Lao Xie, your conclusions are too vague and ambiguous."

In fact, in my view, what we need to do is not predict but prepare:

Establish strategies for both rising and falling markets (always hovering between position size and stop loss).

Furthermore, maintain a pessimistic view of information and even consider the opposite. Realize gains when there are gains to be had and liquidate positions when there are bullish signals.

Keep one principle in mind: It’s better to be wrong than to miss out, incur small losses, and earn big profits.

I have this experience:

Every day, there are big V traders predicting market movements for the next day, week, or month.

Every day, there are big V traders discussing the specific valuations of stocks… but I have never, ever, seen them consistently profit.

Lastly, please join my “circle”; together, we’ll make steady progress.

Wishing you well on your journey to financial freedom. I am Xie Xiaobai, a high-quality blogger. Such a great blogger, how can you not like, follow, and share?

Market Analysis: From Bearish to Bullish

Today, the trading volume was quite low, and the index’s upward movement was primarily driven by heavyweight stocks with large market capitalization. Although 3,700 stocks saw gains, the overall profitability effect wasn’t significant.

The return of northbound capital injection added some activity to the market, but the trading volume remained at 700 billion CNY, and there were no clear signs of growth stocks performing well. The technology sector, however, showed increased trading volume and surged.

In terms of profitability, it’s still not sufficient, indicating that the market is in a bearish adjustment phase, and we shouldn’t be overly optimistic.

If the market continues with this trend of low-volume upward movement and small gains, it’s important not to rush into adding positions. Controlling your portfolio size is crucial in such circumstances.

The extent of suffering in this bear market has been more severe than most people anticipated. Therefore, taking it slow and not going all in, reducing trading frequency, is a prudent approach.

Global markets have continued to rise since the Christmas holiday, with Hong Kong stocks also rebounding.

Leading gaming stocks are slowly emerging from the shadow of negative news.

However, the major rally in Hong Kong stocks will still depend on the Federal Reserve’s interest rate cuts in the United States.

Currently, valuations below 18,000 points in the Hang Seng Index are not expensive, but if it were to climb back above 18,000 points in the future, adding positions recklessly would not be advisable.

The pace of adding positions in Hang Seng Index funds should also be carefully managed, as it’s a long-term strategy.

One short-term change we can observe is that the market hasn’t dropped below 2,882 points and is starting to show bullish candlesticks.

If the market continues to rebound from this point, breaking recent highs at 2,935 points, we can expect at least a move above 3,000 points. This would be a basic technical rebound where trading volume and profitability are visible, paving the way for a move towards 3,150 points, with more investors seeing a noticeable recovery in their accounts.

So, there are many points to watch in the future.

Only add positions during market downturns, and diversify your investments. Don’t buy when the market is surging with green candles; it might not necessarily be a profitable rebound but rather a weak one with further retests.

If you participate with full confidence in every rebound, you’ll experience several rounds of retracement, and your psychological state may suffer, leading to significant financial losses.

Maintain a cautious and optimistic attitude, and not being afraid to add positions during downturns is already a good practice. Riskier trades are generally unnecessary.

Looking at the CSI 100 Index is more insightful than the Shanghai Composite Index, as it has experienced significant declines and is approaching levels seen in 2018.

However, it hasn’t stabilized yet, and there are no clear buy signals. It’s possible for inertia to push it down further or for it to trade sideways for some time. So, it’s easy to regret adding positions too quickly.

We need to see these important indices stop hitting new lows and observe leading industry stocks becoming active to naturally form a market bottom.

The end of a bear market isn’t determined by technical analysis but rather by a consensus among investors that they should start buying at a certain point. When people start making profits, new lows stop occurring, and the number of losing investors decreases while the number of winning investors increases, capital gradually flows in.

As more people make money, the capital pool grows larger, and the bull market emerges almost imperceptibly. When everyone realizes that the stock market can be profitable, the bull market may become fragile.

So, until a bottom is truly established, and as long as new lows and a lack of profitability persist, it’s possible for another downturn or a prolonged sideways trend.

Bottoms are formed organically, and we can’t predict them. What ordinary investors can do is observe and control their portfolio size.

Avoid easily losing your valuable chips, and you’ve done well. Most investors don’t have much room for trading.

If you can remain patient, continue to slowly build positions in index funds, and sell when the market gets more enthusiastic, it’s already a great strategy. Catching hot stocks or chasing limit-up boards are generally risky endeavors.

In the future, we will still be operating within the rhythm of the bear market. The most optimistic scenario is a bear market oversold rebound, unrelated to a bull market.

So, there’s no need to get too excited. To transition into a bull market rhythm, there will be many factors to observe. I hope you don’t forget this while trading in the future!

TV Drama “Blooming”: Dow Jones Took Almost 100 Years to Reach 3,000, While the Shanghai Composite Index Went from 100 to 1,000 in Less Than a Year.

“Without foreign capital causing trouble, A-shares are completely disappointing on their own, and institutions have been quiet at the year-end. Today, it seems like a hopeless decline throughout the day with no resistance. With only a few trading days left before the holiday, hopes of recovery are fading.”

“Anyone involved in the Chinese stock market knows the problems it faces, and even the authorities are aware, but they refuse to change. There’s nothing you can do about them, and that’s why some people dare to do whatever they want.

After all these years, discussing the Shanghai Composite Index is pointless because you never know where its bottom is, and you can never decipher its logic. It falls when the economy is booming, and it falls when the economy is slowing down.

Now it seems that both the stock market and the real estate market are on the brink. China’s total economic size has already surpassed that of the world’s second-largest economy, with a per capita GDP exceeding $12,000. In theory, the stock market and real estate market should be thriving.

But trading stocks leaves people eating simple meals in the dark, while the number of listed companies continues to increase, turning the stock market into an ATM for some.

The real estate market has already crossed its peak and is now heading downwards, becoming a burden on the Chinese economy.

This is where the wealth of most Chinese people, including the middle class, is being plundered!

In this regard, I believe the U.S. should bear an undeniable responsibility.

Let it be destroyed, quickly."

“Proceed with caution and cherish what you have; rising is luck, while falling is the norm.

As long as the mechanism in A-shares remains one where companies profit at the expense of investors, the fate of retail investors being harvested like leeks will not change.

Don’t panic because of a fall.

Don’t get too excited because of a rise.

Whether it’s up or down, it’s all part of the harvesting process.

Entering the A-share market is like diving deep into the sea.

We don’t know where the shore is.”

Yesterday, I mentioned auspicious numbers, and a comment suggested that the Shanghai Composite Index actually conveys: Love it? Save it? Farewell!

Today, the Shenzhen Composite Index looked at the trading volume and replied with: 919,174!

Looking forward to tomorrow’s mysticism.

Wednesday, Hong Kong stocks opened, with a net inflow of 5.7 billion from Northbound funds, and the entire A-share market rebounded.

However, with a total turnover of 630 billion, the trading volume is still quite low.

There are still 2 trading days left, and it’s uncertain whether it can regain the 3000 mark.

A 3% increase over 2 trading days, there’s still time. If there’s a goal, reaching above 3000 points shouldn’t be too difficult.

However, even if there’s a goal, it’s quite challenging for the Shanghai Composite Index to finish the year in the positive.

Whether there’s a goal or not, we can’t possibly know.

The stock market closes for New Year’s Eve, one less day at work. I still don’t understand why we didn’t have a day off on New Year’s Eve before.

The main board rose, but the ChiNext Index experienced a pullback, the trade-off is quite evident.

The US dollar has fallen below the 101 mark. The decline of the US dollar has an impact on the entire financial market. Will gold also experience a surge?

Unknowingly, 2023 has come to an end.

It’s time to summarize and look ahead again.

Let’s get ready these days. Let’s make the top ten predictions again, and then get them all wrong…

December 27 Buffett Index

The A-share market value is 84.72 trillion yuan, and the GDP is 121.02 trillion yuan. The Buffett Index = 0.700, which is less than 0.8, within the allocation range recommended by Buffett.

Total volume: 636.8 billion.

Overall fund flow: -10.12 billion.

Northbound funds: 5.678 billion.

Rise and fall statistics: 1,397 declines, 3,762 advances.

It seems that 2900 points are indeed an important level that the authorities must maintain. What’s the purpose? To prevent negative news from clearing out? But wouldn’t that keep bottom-fishing funds from entering?

Or is there a matter of national interest involved here? Preventing foreign capital from coming in to take advantage of the situation?

The Federal Reserve hasn’t cut interest rates yet, and it will take some time for the US dollar to strengthen. Could it be that there are insiders currently controlling the market, waiting for foreign capital to enter on a large scale and then push it down to 2500 points as a gift?

End of Year Reflections on the Stock Market

After the appearance of the mysterious number yesterday, today the main market index returned to 2900 points. Over 3700 stocks saw gains, which is a slight improvement. However, for most investors, this gain may not have a decisive impact.

1. For those deeply trapped in losses, this gain does not offer much relief.
2. For those looking to increase their positions or continue bottom-fishing, this gain hasn’t provided a favorable trading rhythm or space.
3. For most people, the future market trend remains a mystery, and confidence is lacking.

This is the biggest problem now. While emotions have eased somewhat today, and there has been significant inflow of northbound funds, these aforementioned issues still present a challenging puzzle.

But how should we view this moment? Just like the time we are in—nearing the end of 2023 and soon welcoming the Chinese New Year in 2024.

The stock market is likely in a similar situation, nearing the end of a bear market and a difficult period. After this phase, a turning point may be on the horizon.

Lately, we often see people asking why domestic funds keep selling? I think this is a complex question.

Some argue it’s due to market weakness, leading to significant redemption pressure on funds, forcing institutions into passive reduction of positions, resulting in continuous outflows.

Others say it’s because of economic pressures in reality, leading to a lack of confidence in the future, which results in continuous selling and exiting the market.

Of course, there is data indicating that the number of fund closures by institutions has been relatively high this year, mainly due to the continued market decline. Some funds fell below the liquidation threshold and had to be closed, leading to selling.

Some may say that all the capital has gone short, so who would want to go long?

There are thousands of reasons, but only one outcome: whether it’s domestic or foreign capital, for whatever reason, both have been in a continuous outflow situation in the second half of the year.

In the first half of the year, northbound funds saw significant inflows, but in the second half, foreign capital started to flow out, domestic capital continued to flow out, the exchange rate continuously depreciated, and economic recovery didn’t meet expectations, and so on.

All of these are factors contributing to the challenging situation this year. However, there is hope for improvement in the coming year. All things have cycles, the economy has its cycles, and the stock market has its bull and bear phases.

Thoughts on A-Share Market and Global Geopolitics

If the national team is giving money in such a good phase of the A-share market and you still can’t make money, it’s really advisable to quit. Isn’t it great to have a little extra money for something else?

Yesterday, I saw a comment from a netizen that was particularly interesting. When I read this sentence, it made me burst out laughing.

(The meaning of letting people make money in the stock market is that you need to pick good companies, have patience, and grow with the company. As long as you have this ability, the stock market can make you money. But if you treat it as a casino, then I don’t think you’re a qualified citizen. Whether you make money or not is up to your own abilities. If you can’t make money, don’t complain, or else we should just give money to everyone.)

Rough words, but they make perfect sense.

A-share is currently one of the safest stock markets globally. It also has the highest upside potential. This is because if we wait for the stock markets in Japan, South Korea, India, and Germany, among others, to burst their bubbles, it will mean the beginning of a hard landing for the U.S. economy.

Why did I emphasize several times yesterday that there is not much time left for A-shares and A-share retail investors? The reason is simple. When the Chairman unleashes the stock markets of his son, his henchmen, and his allies, a huge amount of currency will appear in his hands. This kind of currency will flow like a tide wherever it pleases. But don’t think it’s a good thing. We should be cautious.

If our country’s stock market is at a “high level,” then they are “welcome” no matter how much they come.

If our country’s stock market is in the “midst of the mountain,” then we can also welcome them. Because at this time, their arrival is equivalent to assistance, and it is not purely about harvesting retail investors.

What’s scary is if, after Chairman finishes harvesting his son and his allies, our country’s stock market is at a low point. Then it will be troublesome, as it will be like our national team helping others control positions and wait for others to harvest us. This kind of thing is absolutely impossible and not allowed to happen.

So we will never wait for him to finish harvesting his own leeks and then push the market higher.

There should be a hedge. When the U.S. starts harvesting as it lowers interest rates, we will start pushing up.

The above is about tactical needs.

Next, let’s talk about the progress of the hot war internationally. Right now, Israel hopes that the U.S. will get involved quickly, or else it knows its end will be very tragic. Israel was previously arrogant and cruel to the surrounding countries, so when it is defeated, it will face retaliation, possibly even more brutal retaliation.

So, the one most afraid of failure in the world is not the United States but Israel.

And next, Israel did something very bold. It launched a surprise attack on a senior Iranian military commander. He killed him. Now Israel is in real trouble, as it is willing to go to great lengths to get its big American brother involved.

So, it is forcing two major powers into action: First, it is forcing Iran into direct involvement. Second, it is pressuring the United States to get involved.

It seems that its goals have been achieved. The world, especially the Middle East, is likely to become very lively in the coming days.

After analyzing the above situations, let’s get back to the topic of the A-share market.

A-shares certainly have many problems, but they are forced by external forces. Because of external forces and China’s growing national strength, A-shares are sure to rise.

Now, there’s a vicious cycle going on. Some domestic public intellectuals and lackeys are licking the Americans, while the Americans are trying to please China. I can’t help but laugh as I type this.

Today’s China is no longer the China of 100 years ago. Any Tom, Dick, or Harry can’t just come and bully.

China’s national power and influence have reached unprecedented new heights. It even surpasses the Soviet era during the Cold War.

Many people still have the illusion that Chairman can turn the tide. This is almost impossible. It will be good enough if Chairman can land smoothly this time, and even holding North America is questionable.

In the current global situation, Chairman has lost his ability to command his NATO allies. Japan and South Korea are also pretending not to hear and not participating in any military actions in the Middle East.

In addition, Japan’s recent turnaround and the initiation of the financial Pearl Harbor incident further weakened the United States. Now, the United States is essentially one against three, facing Iran, Russia, and China simultaneously. It’s a bit like a Russian nesting doll.

The key issue is that the United States must play its trump card now, but the major Eastern powers still have three cards left unplayed. First, Iran has not directly entered the scene. Second, Russia has not directly entered the scene. Third, the final trump card, China, has not directly entered the scene. I believe that Western powers do not currently have the strength to force China to play its trump card. So it will end the Middle East war after Iran or Russia enters the scene, or it will continue to consume the U.S. and Israel. Remember that in the end, what is fought in a war is actually manufacturing and resources when both sides' military forces are evenly matched.

Now, the U.S. wanting to singlehandedly defeat both China and Russia is, in my personal opinion, unrealistic. No country in the world has the combat power for that.

What this means is the collapse of the U.S. military position and the collapse of its financial hegemony. To achieve a hard landing, it needs to harvest its own son and allies.

So, A-shares are absolutely safe now. As long as we don’t speculate and don’t chase highs, and find a good company, don’t disturb the roommates, it’s truly a matter of lying down and winning. This should be the dividend of the international situation and China’s rise.

Many friends say they haven’t enjoyed the benefits of reform and opening up. Hasn’t this second wave of dividends arrived now?

Finally, I want to emphasize something that a netizen said recently, which I wholeheartedly agree with.

“The meaning of letting people make money in the stock market is that you need to pick good companies, have patience, and grow with the company. As long as you have this ability, the stock market can make you money. But if you treat it as a casino, then I don’t think you’re a qualified citizen. Whether you make money or not is up to your own abilities. If you can’t make money, don’t complain, or else we should just give money to everyone. - A patriotic person with a stance”

Wishing you all good luck, looking forward to meeting you at the peak.

There are no charts or data here, just plain talk… That’s right, just pure speculation.

(Repost with proper attribution.)

Year-End Reflections and Market Update

Good news! There are only two trading days left, and 2023 is about to come to a close. It’s almost the end of the year.

Here’s more good news: In 2024, the Lunar New Year falls on a workday, but for A-share markets, it’s a holiday.

For professional investors, fund industry professionals, and securities industry personnel, this is good news. Everyone gets an extra day off.

But I believe what everyone wants more is for the market to rise. Let’s hope for a better market in 2024.

Today’s market activity is quite interesting. I’m just guessing, but maybe a certain team has made a move…

As we approached the midday close at 11:18 am, brokerage firms suddenly surged, and stock trading software experienced a sharp increase, turning bearish sentiments bullish. The market returned above the key level of 2900 points.

In fact, the technology innovation board had already been strong in the morning session. After all, it hit a new low for the year yesterday, which was quite embarrassing. Approaching the end of the year, it had to make a recovery.

Northbound funds also suddenly bought in as we approached the noon session, with accelerating net inflows in the afternoon, totaling a net purchase of 5.678 billion yuan for the day. Foreign investors returned to the market after the holiday and started buying.

Looking at industry performance, the three major telecom operators, agriculture, forestry, animal husbandry, and fisheries (with significantly increased demand for preserved meat products), petroleum, and semiconductors (a significant increase in the import of photolithography machines in November) led the gains, while the internet and water utilities were among the biggest decliners.

When reviewing the market last night, I was surprised to find that two hydropower stocks had actually hit historic highs!

I checked again, and yes, it’s indeed a historic high. In this market, being able to achieve historic highs against the trend is beyond imagination, and it turned out to be public utility stocks, with nuclear power and hydropower as the outstanding representatives.

I can’t help but sigh, where is the so-called value or growth, cyclical or thematic? Everything is cyclical!!!

When everyone was chasing after new half-doctor stocks a few years ago and micro-quantitative trading in recent years, who could have predicted that water and electricity stocks, which most people looked down upon, would quietly hit historic highs?

Enough said. Let’s strive to learn because if we don’t, we’ll only be able to afford a BMW in the future…

Today, my viewpoint is clear and straightforward, with no ambiguity:

For the remaining two trading days, let’s hold 2900 points steady!

Steady, and we can win!

Follow our public account (HeiMa FengHua) to grasp market trends, uncover the truth behind financial events, and stay informed. Follow me, and time will give you the most authentic answers!

Macro Data for Today

1. Total trading volume in both markets: 636.8 billion CNY.
2. Net inflow of main funds: -8.84 billion CNY.
3. Net inflow of northbound funds: 5.678 billion CNY.
4. Net inflow of southbound funds: 1.242 billion CNY.

The market opened in a bearish tone, but towards midday, the securities sector saw a violent surge, turning the three major indexes green. In the late afternoon, around 2:00 PM, there was another strong push, allowing the market to reclaim the 2900-point level. Over the past few days, foreign capital has been on holiday, and domestic stocks have been in turmoil, causing embarrassment. Today, with foreign capital returning and a net inflow of 5.6 billion CNY, the domestic capital market’s confidence is still relying on foreign funds to boost. It’s quite frustrating.

After the market closed, one question has been bothering me: who was behind the sudden surge in the securities sector? This question is crucial as it determines who has the power to lead the market. Based on the timing, the surge in the securities sector and the acceleration of northbound funds inflow occurred almost simultaneously, making it impossible to determine the sequence. However, looking at the trend of the securities sector, after surging around 1.4% at noon, it encountered continuous selling pressure in the afternoon, falling back to less than 0.5% at one point. It then experienced a second round of surges to stabilize. During this period, foreign capital inflow did not decline, while domestic capital, mainly the main forces, saw a significant reduction in net inflow. Looking at the rankings of domestic main capital inflow, the top position was occupied by the semiconductor sector, with the securities sector not even in the top five. From this, it can be confirmed that the midday surge was the work of foreign capital. As for the second surge around 2:00 PM, the acceleration of northbound capital inflow was faster than the market’s rise by a full 4 minutes. It can be determined that today’s rise mainly relied on foreign capital inflow, while our domestic capital forces were either idle or suppressing the market. It’s a sad state of affairs.

A-shares have now become a fence-sitter, swaying with the inflow and outflow of foreign capital. Domestic capital, lacking a systematic approach, is either inactive or causing market declines. It’s quite disheartening. In a market where private companies go public with the ultimate goal of cashing out and queuing for IPOs, there has never been fertile ground for value investing from the beginning. Now, with added layers of regulatory uncertainty, it’s even more challenging for investors. Although the market rose today, I am not optimistic about the future. Fencesitters, at the mercy of the wind, how can they control the direction of the wind with just one horn?

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Sentiment Index

Short-term: 37.13 ↑

Long-term: 38.95 ↑

Recent Leaders

• CSI Energy

• CSI Coal

• Nasdaq ETF

• Nikkei 225 ETF

• Germany ETF

• France CAC40 ETF

• Gold ETF

Recent Advantages

• CSI Oil and Gas

• CSI Military Industry

• CSI National Defense

• Aquaculture ETF

• Central SOE Win-Win ETF

• Power ETF

Recent Disadvantages

• Securities Companies

• Infrastructure Projects

• CSI Food

• CSI Financials

• CSI Liquor

• Insurance Themes

• New Energy Vehicle ETF

• Chemical ETF

• Medical ETF

• A50 ETF

• FinTech ETF

• Intelligent Manufacturing ETF

• Carbon Neutral ETF

• Securities ETF

• Software ETF

• Gaming ETF

• CSI 500 ETF

• Tianhong Hang Seng Medical ETF

• Securities ETF

• CSI 300 ETF

• Growth Enterprise 50 ETF

Recent Laggards

• Tourism ETF