Stock market performance is mixed, bond market is also unusual
In previous years, when the “Two Sessions” were held, China’s capital market would show positive changes, but this year was unique in that Li Keqiang’s government work report was released with mixed performance in the stock market and anomalies in the bond market.
The “two sessions” of the Chinese Communist government, which is the collective name for the National People’s Congress (NPC) and the Political Consultative Conference (CPPCC) held by the Chinese Communist government in all years since 1959, were held as scheduled.
On March 5 at 9 a.m. HKT, Chinese Premier Li Keqiang announced that China’s GDP (gross domestic product) growth target for this year is set at more than 6 percent when he released his government work report.
For the first Time since 1994, China did not set a GDP growth target last year due to the 2019 coronavirus disease (COVID19) outbreak. Before the “two sessions” this year, many reports also said that China may not set a target for the second year in a row in order to avoid the continued growth of local debt.
According to the government work report, this year’s fiscal deficit rate is to be arranged at around 3.2%, and 3.65 trillion yuan (RMB) of new local government special bonds will be issued, compared to 3.6% and 3.75 trillion yuan last year respectively.
In addition, Li Keqiang mentioned the need to add urban employment to more than 11 million people, and maintain the urban survey unemployment rate at about 5.5% and consumer price (CPI) increase of about 3%.
In terms of the continuity of the specific direction of the policy signal, the policy objectives of the “two sessions” will generally continue the key objectives mentioned in the Central Economic Work Conference, the State Council executive meeting and other important meetings of ministries and commissions held at the end of the previous year. Every time the “two sessions” are held, it will affect the Chinese capital market.
By analyzing the performance of the market one month before, during and one month after the “two sessions” since 2000, securities research firms found that The market before and after the “two sessions” are up more and down less. Among them: one month before the “two sessions”, the Shanghai Composite Index made positive returns 17 times, accounting for 85%; one month after the “two sessions”, the Shanghai Composite Index also made positive returns 15 times, accounting for 75%. In terms of economic characteristics, it is often found that when China’s economy is under downward pressure, the “two sessions” are often held to bring a positive impact on the capital market.
This time is a bit special, Li Keqiang’s government work report, the stock performance is active. But the three major A-share indices shake, and finally closed mixed, including the Shanghai Composite Index fell 0.04%, closing at 3501.99 points; the Shenzhen Stock Index fell 0.03%, closing at 14412.31 points; the Growth Enterprise Board Index rose 0.70%, closing at 2871.97 points. The combined turnover of the two markets was 876.4 billion yuan.
The bond market, on the other hand, was unusual, with three CDB (China Development Bank) bonds on the Shanghai and Shenzhen stock exchanges suddenly showing a rare surge. The bonds with a face value of 100 yuan traded soaring from 98.6 yuan to over 300 yuan, up nearly 225% at one point.
For such an event, the Shenzhen Stock Exchange (SZSE) issued an emergency announcement at noon, saying that after analysis, the bond’s sharp rise was mainly caused by the abnormal trading behavior of individual investors. “In order to maintain the order of market transactions and protect the legitimate rights and interests of investors, the Institute promptly took regulatory measures to restrict trading during the day for the investors concerned. Investors are requested to pay attention to investment risks and participate in bond trading in compliance with the law.”
The announcement on the official website of Shenzhen Stock Exchange shows that on March 5, due to the large fluctuations in the intraday prices of “China Development 2008” and “China Development 2009”, according to the provisions of Article 6.9 of the Trading Rules of Shenzhen Stock Exchange, the Exchange restricted the trading of “China Development 2008” and “China Development 2009” from 13:52:13 on March 5. In accordance with Article 6.9 of the Trading Rules of Shenzhen Stock Exchange, the trading of “China Development 2008” and “China Development 2009” was suspended from 13:52:13 on March 5 until market close.
Market participants believe that the price of the bonds is obviously extremely unreasonable, and can not be explained by the “oolong finger”, and there are no details of the tips of the Shenzhen Stock Exchange.
Some analysts say that the price of the bond is likely to be a problem with the order process, with only a few lots per transaction, and the price is extremely unreasonable.
“China Development 2009” is a 7-year bond issued by China Development Bank on the Shenzhen Stock Exchange on August 3, 2020, with a size of 2 billion yuan and a coupon of 3.25%.
In addition, “China Development 2008” also rose, expanding to 124% and quoted at 220 yuan.
According to Reuters, a bond trader said, “(The two bonds pulled up in the afternoon) is this a mockery of regulation? It’s all hinting at risk, so probably the trader wants to change jobs.”
“Even if one institution oversold, it actually traded consecutively, is this mutual molestation? Made a taste of recycling ‘second-hand yuan’, 5 yuan a pound,” said a trader in East China.
Another market source said he couldn’t figure out why someone would hang more than 300 yuan to buy “China Development 2009”, “today’s fruit sting.”
Another relevant informed sources revealed that the relevant departments of the China Securities Regulatory Commission has launched an investigation on this.
Recent Comments