What happened when the BGI 50 Index surged by 11%, with trading volume exceeding 10 billion RMB, marking a historic high since the establishment of the index?

Record-breaking Trading Volume! What’s Happening with the SSE 50 Index?

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Record-breaking Trading Volume! What’s Happening with the Beixin50 Index’s 11% Surge and the Many Stocks Hitting the Limit-Up Circuit Breaker?

On November 21st, the A-share market experienced a high opening followed by a decline, with the three major indices showing mixed results. The Beixin50 Index surged over 4%, reaching a peak gain of more than 11% during intraday trading. The trading volume exceeded 10 billion yuan, setting a historical record since the index’s inception. Several stocks listed on the Beixin Exchange collectively experienced significant gains, including Xingchen Technology, Liu Jin Technology, Zhisheng Information, Xujie Technology, Sanwei Shares, and Huayang Transmission**; all of which reached the daily 30% limit-up circuit breaker**. Hai Da’er, Tonghui Information, Huifeng Diamond, and nearly 30 other stocks surged over 10%.

At the close, the Shanghai Composite Index fell by 0.01% to 3067.93 points, the Shenzhen Component Index fell by 0.26% to 9997.09 points, and the ChiNext Index fell by 0.44% to 1984.27 points. The total turnover of the Shanghai and Shenzhen stock markets reached 998.073 billion yuan.

Regarding the reason for the surge in the Beixin Exchange, Xiao Yuhang, a special research fellow of Xinhua Viewpoint Think Tank, believes that it mainly stems from the increased investment by some medium-to-large traders in the Beixin Exchange, resulting in a significant increase in funds. From a technical perspective, the Beixin50 Index has broken through the downward trendline, leading to a technical rebound.

In addition, Xiao Yuhang also expressed that attention should be paid to whether there will be new changes in the policies of the Beixin Exchange, such as relaxing admission requirements. Currently, the trading volume on the Beixin Exchange is relatively small compared to the main board market. Once the threshold restrictions are reformed, it will effectively increase the trading activity on the Beixin Exchange.

According to Interface News, on November 17th, China Securities Index Co., Ltd. announced that qualified securities listed on the Beixin Exchange will be included in the sample space of the CSI All-Share Index, further enhancing the representativeness of cross-market indices. The above changes will be implemented on the regular index sample adjustment day in December 2023.

China Securities Index Co., Ltd. stated that they will continue to track the market operation and timely include qualified securities listed on the Beixin Exchange in the Shanghai-Shenzhen 300, CSI 500, CSI 1000, and other indices to steadily improve the representativeness of the indices, thus promoting the stable and healthy development of a multi-level capital market.

On the same day, the Beixin Exchange announced that it has started preparatory work for the use of the 920 code segment for publicly listed companies' stocks to facilitate investors in searching for and trading Beixin Exchange-listed stocks. The implementation date will be announced separately.

According to the Economic Daily, in terms of liquidity, the People’s Bank of China announced that in order to maintain reasonable and ample liquidity in the banking system, it conducted a 319 billion yuan 7-day reverse repo operation on November 21st through interest rate bidding, with a bid rate of 1.8%. Wind data shows that there was 424 billion yuan of reverse repos and 50 billion yuan of treasury cash deposits maturing on the same day, resulting in a net withdrawal of 155 billion yuan for the day.

In terms of news, the central parity rate of the RMB against the US dollar was adjusted upward by 206 basis points to 7.1406. After the announcement of the RMB’s central parity rate, the offshore RMB quickly rose above key thresholds of 7.16, 7.15, and 7.14 against the US dollar in the short term. As the onshore RMB exchange rate broke through 7.17, the RMB exchange rate achieved an integration of the onshore, offshore, and central parity rates, and the first target of this rebound has been achieved.

Editor: Wang Yuelong, Cover image source: Visual China

Proofreader: Cheng Peng. This article is compiled from public information, Dahe Cailifang, Interface News, and Economic Daily (Reporter: Liu Mingtao).

North Index: Weak and Unpromising

It’s not that the CSI 50 is too strong, but rather that the Shanghai Composite Index is too weak.

During this period, everyone expected the United States to cut interest rates, and the renminbi exchange rate also rose significantly, but many core renminbi assets did not rise.

The Shanghai Composite Index has been hovering around 3050, and the stagnation is too obvious. The long-term yield of US Treasury bonds has also experienced a sharp decline.

The Nasdaq is about to reach a new high.

The S&P 500 is also close to its new high.

Capital markets are quite excited, and the overall increase in the CSI 50 is in line with current market expectations.

It’s really that the Shanghai Composite Index is too weak, as well as the Shanghai 50 and the CSI 300.

There is very little participation from retail investors in the Beijing Stock Exchange. Sometimes, the combined trading volume of the CSI 50 heavyweight stocks is less than 500 million.

In fact, the main players took advantage of the current honeymoon period of the capital market to make a quick oversold rebound.

They want to attract some funds to take over, but there are indeed few people playing in the Beijing Stock Exchange. So after a 11% surge during trading, only about 4.5% of the increase remained at the close.

There isn’t much worth paying attention to in the Beijing Stock Exchange. It’s really just a market set up purely for financing purposes and has no value of attention.

This significant rebound in the Beijing Stock Exchange is almost back to the range of the Shanghai Composite Index, around 3200-3250.

The rebound is about the same as in the United States, a very normal rebound, it’s just faster, rebounding adequately in a day.

The Shanghai Composite Index should theoretically return to the range of 3150-3250 now in order to reflect the current exchange rate and the performance of the US stock market.

The Shanghai Composite Index has lagged behind by at least 100 points, let’s see if it can catch up later.

Although everyone is disappointed with the performance of the Shanghai Composite Index and many blue-chip stocks,

it is still not advisable to blindly invest in some obscure small and medium-sized stocks, or stocks in the Beijing Stock Exchange.

The risks are even greater.

In the short term, the Shanghai 50 and the CSI 300 may be weak, but their valuations are indeed low, and they have to go up in the long run. It’s just annoying to look at it in the short term.

The chips held at the bottom will eventually make money.

But those stocks in the Beijing Stock Exchange, including many small and medium-sized stocks that are currently in chaos, are very likely to be delisted in the future, or their value will decline more and more. It’s really not worth chasing after high prices.

In any case, the Beijing Stock Exchange is a sector even scarier than the STAR Market, and it’s even more challenging to pick stocks from there.

In the STAR Market, you can find 1 or 2 good ones among 50 or 100, but in the Beijing Stock Exchange, there may not be even one. It’s that exaggerated.

Among the 200-plus listed stocks, only the top 30 in terms of market value have some prospects, and the rest are just inexplicable companies.

Even the one with the highest trading volume is only a small amount. Only under the situation of explosive volume in the Beijing Stock Exchange today could such a trading volume occur.

Previously, there was basically no trading volume.

So if you look at it from a short-term trading perspective, there needs to be ample trading volume for sustainability. A single stock should have a daily trading volume of at least 1 billion to be considered relatively active, and for short-term leading stocks, it should be at least 3 billion per day.

The Beijing Stock Exchange doesn’t have stocks with such large trading volumes, it’s not suitable for short-term trading, and the fundamentals are also very messy.

So there really aren’t many opportunities in the Beijing Stock Exchange.

Occasionally, there are some manipulative surges, controlling the high points, but it’s really meaningless.

A Bull Market is About to Begin

Just one day, the SZSE 50 has completed a full bull and bear cycle, exciting!

9:30: SZSE opens high, the market has bottomed out, possibly entering a rebound phase.

9:40: Index continues to rise, funds enter aggressively, market expected to rebound significantly.

9:50: Highest single-day increase in nearly two years, this is not just a rebound, a new bull market is about to begin.

10:00: Market surprise, domestic funds enter aggressively, SZSE triggers a surge in limit-up, this moment is a bull market!!!

11:00: Index surges 8%, the first time since market opening, funds aggressively chase stocks, screens filled with 30cm limit-up, Chinese economy completely reverses, RMB experienced a violent rise last night, the US economy will start to decline in 2024, SZSE will welcome the strongest bull market in history!

11:30: Century-long bull market is within sight, by the morning close, SZSE 50 index surges 9%, stocks filled with 30cm limit-up boards, all funds are making big profits, if you don’t enter now, you will be completely abandoned by the bull market, the biggest wealth boom of the 21st century is just around the corner, charge ahead!

13:00: Charge ahead, the grand scene of a 30% surge in the index is right in front of us, SZSE 50 index only needs two days to recover its historical high, a stock market myth will unfold in the A-share market, charge!!!

13:30: Don’t be afraid, a brief pullback is to allow us to get on board, China’s determination to go long on the stock market is very firm, Rongchuang Overseas has successfully restructured, the black swan of real estate has been eliminated, don’t be afraid, keep charging!

14:00: Don’t be afraid, it’s a technical adjustment, don’t be afraid!

15:00: It’s a freefall!!!

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Selling Used Desktop Parts

I was very relieved to hear this news.

But unfortunately, if I delve deeper, it will be deleted again.

So, let me tell you a true story.

I put my fully equipped second-hand desktop computer for sale on a website, with an asking price of 10,000 yuan.

Every day, people made offers, but the highest was just a little over 9,000 yuan.

Unfortunately, it remained unsold for a long time, and I felt embarrassed.

Then, I had a brainwave.

I removed one of the hard drives.

And guess what? I sold it for a little over 100 yuan.

Even though I had spent nearly a thousand yuan on it a few years ago,

today, we all felt proud.

It just goes to show that something I want to sell will definitely sell.

Tomorrow, I’ll remove another part,

and hopefully, I can sell it for an even higher price.

The surge of the Northern Exchange: A Market Anomaly. (北证暴涨：市场异常。)

I advise everyone to take care of themselves.

What’s unusual in the market today is that the Bei证指数(abbreviation for the Shenzhen Stock Exchange Composite Index) once reached the daily limit rise**, although it closed down to 4.28%, but this amazing surge still shocked people.

Let me experience it: What is the concept of the index reaching the daily limit rise?

To tell the truth, the Bei证 (Shenzhen Stock Exchange) is going like a shanzhai (cheap imitation) coin, going from endless decline to firecrackers sounding off, only taking 10 short days.

Especially today, countless people asked me:

“Old Xie (referring to the author), should we still buy the Bei证50 (Shenzhen Stock Exchange 50)?”

Helplessly, I could only post in my Moments (referring to a feature on the Chinese social media platform WeChat).

“Why did the Bei证 surge?”

The superficial reason is that several 2-year closed-end funds are about to expire, and there is a small essay stating that the Bei证 is about to be included in the Zhong证跨市场指数 (China Securities Index Cross-Market Index) and will obtain liquidity.

But isn’t the deeper reason:

Some funds are taking advantage of the power of group investment to stir up speculation!

Can you guess which funds they are?

What is their purpose?

This reminds me of the big surge before the launch of the Kechuang 50 ETF (Kechuang refers to the STAR Market, a Chinese stock market for innovative technology companies) three years ago.

After three years, the peak of the Kechuang 50 was 1726.19, and today’s closing is 884.89, directly halving the price.

In fact, those who bought stocks on the Bei交所(Shenzhen Stock Exchange) today and those who bought the Kechuang board three years ago are the same group of people. They are all waiting for someone to take over…

In light of this, we must take care of ourselves.

Such a high-quality blogger, why not give a like and follow?

北交所市场容量增长需投资端发力

The biggest characteristic of the Beijing Stock Exchange is its small market capitalization, with only a handful of stocks having a market value of over 10 billion RMB.

In a situation of economic slowdown and limited funds, these small-cap stocks are particularly attractive and can easily be pushed to their daily limit with a small amount of capital.

However, regardless of that, breaking a daily trading volume of 10 billion RMB is still worth celebrating. As of today (November 21st), the total market capitalization of the Beijing Stock Exchange is approximately 315.3 billion RMB, with a circulating market capitalization of approximately 164.7 billion RMB. Calculating based on a daily trading volume of 10 billion RMB, the average turnover rate of the circulating shares on the Beijing Stock Exchange today reached 6%. Compared to a month ago, the daily trading volume of the Beijing Stock Exchange was still fluctuating around 500-600 million RMB, suddenly increasing by 20 times.

The introduction of the 19 measures of deep reform by the Beijing Stock Exchange on September 1st played a crucial role in boosting its trading volume. These 19 measures include various actions from the trading side, investment side, to financing side.

Among them, on the trading side, the fees for stock trading have been lowered, and the freeze period for subscription funds has been shortened. On the investment side, fund managers of public funds have been encouraged to increase their investments in companies listed on the Beijing Stock Exchange. On the financing side, a direct listing system on the Beijing Stock Exchange has been introduced, and companies listed on the New Third Board can apply for listing on the Beijing Stock Exchange in a shorter time.

Recently, positive news about the Beijing Stock Exchange has been frequent. First, the Asset Management Association of China issued a proposal advocating for public funds to actively participate in the Beijing Stock Exchange market. Then, Chairman Zhou Guihua of the Beijing Stock Exchange revealed at a recent Financial Street Forum that special funds for investing in the Beijing Stock Exchange have been set up in Beijing and other places in accordance with the spirit of the 19 measures of deep reform.

At the same time, about 10 new market makers have been added to the Beijing Stock Exchange. The increase in the number of market makers often indicates the influx of new capital.

However, a daily trading volume exceeding 10 billion RMB is not worth excessive attention. The trading scale and activity of the Beijing Stock Exchange are still far behind the Shanghai and Shenzhen markets. In comparison, on October 11th, the daily trading volume of Sailsense reached as high as 13 billion RMB.

In the future, if the market capacity of the Beijing Stock Exchange wants to take another step forward, it will still rely on continuous efforts from the investment side. Currently, the average financing scale of IPO companies on the Beijing Stock Exchange is less than 200 million RMB. If the investment side cannot sustainably increase the market trading volume, it will still be difficult to support a significant increase in the number of listed companies and larger-scale financing for high-quality enterprises.

The Potential of Speculation on the Beijing Exchange

Thank you for the invitation. There are a few reasons:

1. The volume of the Beijing Stock Exchange is small, but it has the conditions for speculation and has great potential. A trading volume of 10 billion is already a historical high. This level of trading volume wouldn’t cause a stir on the Shanghai Stock Exchange.

2. With the market trend and the market-making mechanism of the Beijing Stock Exchange, it has the potential for speculation.

3. The Beijing Stock Exchange has a high entry barrier, and making money is generally beyond the reach of the masses.

Personally, I am optimistic about the speculation on the Beijing Stock Exchange this time. After all, as the market gradually picks up, the Beijing Stock Exchange is easy to manipulate in terms of volume. Therefore, if you can invest in the Beijing Stock Exchange, it would be worth paying more attention to.

The surge in the Beizheng 50 Index: Reasons and Concerns

The Beizheng 50 Index rose more than 9% in early trading and over 11% in the afternoon session, but the gains narrowed to 4.51% at the close, with the total trading volume reaching a historical high. The index has seen a surge of over 25% in the past month.

To understand the recent surge of the Beizheng 50 Index, we can look at it from the following four aspects:

Firstly, from a policy perspective, on September 1, 2023, the China Securities Regulatory Commission (CSRC) issued the “Opinions on the High-Quality Construction of the Beijing Stock Exchange” (referred to as the “Shengai 19 Measures” by the market). At the same time, the Beijing Stock Exchange also released multiple institutional arrangements such as investor suitability, listing requirements, transfer boards, issuance floor prices, market-making trading, and margin trading and securities lending. These reforms aim to enrich the product system and improve the fundamental functions of the market, with both the speed and intensity surpassing market expectations.

Secondly, on November 20, the Beijing Stock Exchange sent letters to multiple securities firms including Haitong and Guoyuan, informing them that they have passed the evaluation test for stock market-making trading. This may further bring in incremental funds to the Beijing Stock Exchange, and the liquidity of the exchange is expected to continue to improve.

Thirdly, China Securities Index Company recently announced that it has decided to include eligible Beijing Stock Exchange securities in the sample space of the Zhongzheng Total Index, which will be implemented on the scheduled index sample adjustment day in December 2023.

Lastly, in terms of valuation and market style, data as of last weekend showed that the average market value of companies listed on the Beijing Stock Exchange is approximately 1.27 billion yuan, with nearly 70% of them having a market value of less than 1 billion yuan. Among the Beijing Stock Exchange companies with a rolling price-to-earnings ratio of less than 20, there are 130 companies, accounting for over half of them. Looking at the entire A-share market, the recent trend has also clearly favored small-cap stocks. Therefore, the sharp rise of the Beijing Stock Exchange is not unexpected.

However, it is worth noting that the market’s fund capacity may be relatively limited, which may result in greater volatility.

北交所开户门槛或降低，接纳神经病炒股者

Lowering account opening threshold for BEJ allows crazy stock speculators There are two rumors

[Rumor: Securities firms are required to have an account opening rate of 80% at the Beijing Stock Exchange? Securities industry insiders say there have been corresponding requirements]

With the tightening of the Sci-Tech Board IPO, venture capital companies with bet agreements have switched to listing on the Beijing Stock Exchange

The Beijing Stock Exchange perfectly matches the current market aesthetic, mainly consisting of small-cap stocks:

The largest weighted stock, Burton Ray, has a market value of 26.1 billion, with a circulating market value of only 6.3 billion,

The second largest weighted stock, Liancheng Numerical Control, has a market value of 8.6 billion, with a circulating market value of only 4.4 billion.

There is no resistance in the rise, but the problem is that there is also no market demand for selling. Basically, it is all funds buying and selling on their own.

Next, let’s see if the Beijing Stock Exchange will lower the account opening threshold and let the crazy speculators from the Shanghai and Shenzhen markets come in to take over.

北证50指数特性和参与方式

Nothing happened, it’s just a normal game.

The SZSE 50 Index has shown its attractive volatility for the third time since its official release. The first time was on January 31, 2023, the second time was on September 4, 2023, and the third time was yesterday, November 21. However, the first two times did not achieve the expected advertising effect, and it was only this time that caught the attention of market participants.

One can only say that the timing of this choice was good, as it happened when the Shanghai and Shenzhen markets were weak and funds were hesitant. However, let’s not promote it as a myth. The SZSE 50 is essentially a one-stroke flow. So don’t expect it to rise for three days, fluctuate for three days, and then fall for three days, like the Shanghai and Shenzhen markets. It doesn’t have the same liquidity as them and is more likely to rise in one wave and then continue to adjust without the conditions for short-term repeated game playing.

What’s more important is that there are currently no on-exchange funds participating in the SZSE 50, only off-exchange funds can be involved. As for individual stocks, it’s simply not feasible. Similar to the trading volume of the Japanese stock market, it’s too small and unsuitable for on-exchange price differences. A large fluctuation range does not necessarily mean it is suitable for speculation. In Hong Kong stocks, there are “magic stocks” that can rise 5% with one buy order and fall 7% with one sell order. The price gap is large and the trading is discontinuous.

Therefore, after the excitement, we must return to rationality. In the case of only being able to participate in off-exchange funds, the only way is to participate through regular investments. Based on the characteristics of this market trend, redemptions can be considered based on the daily increase and the weekly K-line chart. If the daily increase exceeds 5%, redeem a portion. For four consecutive bullish weekly K-line charts, continue to redeem. Then wait for a sufficient adjustment and re-commit through regular investments. Repeat this process.