Recently, the word “leek zero after” has suddenly caught fire! The leek is the leek of the leek, not the number 9. mainly refers to the fresh leek born after 1990, rushed into the stock market to take over the plate.
Since the beginning of this year, the U.S. ten-year stock and bond yields jumped, driving U.S. stocks continued to fall. A shares, Hong Kong stocks continue to fall! 12 trading days, the A shares of the two markets fell sharply, the total market value evaporated 8.8 trillion. At the same Time, the preferred stock funds sought after by investors became the hardest hit by capital management. Some in 12 trading days net value can lose more than 27%.
In the most ferocious 2 days, A shares nearly 4 trillion wealth evaporated, 180 million stockholders per capita loss of more than 20,000, 50 million after the base was green after 50 million miserable, really became a “leek zero”. A year ago also expected to speculate in stocks to speculate on the peak of Life‘s dream, completely turned into a bubble.
However, this is actually just a snapshot of the stock market in the recent period, look at the recent performance of the Shanghai index, has fallen from a high of 3700 to about 3350 points; deep index has fallen from 16000 to about 13500. The tragic thing is the GEM. Directly from more than 3400 fell to about 2700 points. The broad market index, of course, does not represent the absolute performance of the stock market!
Some users statistics of the leading listed companies in various industries, market value is basically the largest of those, even the so-called stock market’s most resilient Guizhou Maotai, just 12 trading days have accumulated a plunge of 27%! Buy 10,000 yuan, half a month without 2700!
However, if you look carefully, you will find that Maotai plummeted 27% is still good, many stocks are even more direct waist, go to half …… So, the real stock market is actually more miserable than the broader market. Really too bad too bad ……
One of the most miserable when the end of last year, the beginning of this year, took the salary, year-end bonus, the new rush in the 90s, completely belong to the market hanging, leek was cut by the roots of the frame, many people are crying in the circle of friends, are saying completely unable to see why the stock market will suddenly fall, and the drop so so fast! Who would have thought that the wave of decline in late February, just a beginning, simply comparable to the wave of stock market crash in 2015. Why in the end?
There are many, many reasons, but my own most recognized there are 2 points, and is also the most important 2 points.
The first is the rise in U.S. 10-year Treasury yields, resulting in higher U.S. bond yields, hot money began to flow back out of emerging market countries and back into the U.S. bond market. China bore the brunt of this.
The second is the tightening of China’s monetary policy.
Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, recently said that developed countries in Europe and the United States have adopted extremely loose monetary policy to stabilize their economies, but it has produced some side effects. The high level of financial markets in developed countries in Europe and the U.S., and the real economy seriously run counter to each other, raising concerns about which day the financial markets, especially foreign financial asset bubbles, will burst. It also said that interest rates in China may rise this year, which releases the signal that the authorities plan to tighten monetary policy after the new crown Epidemic is under control in the territory.
Anyone with a little financial knowledge reading this expression knows that tightening leverage represents a shift in monetary policy from easing to tightening! The tightening of monetary policy will inevitably lead to a fall in the prices of assets in the financial markets, including house prices, including the stock market, all …… last year was just an exception!
Last year because of the arrival of the epidemic, resulting in countries around the world desperately trying to print money. Suddenly the currency is over-issued, the money has nowhere to go, which led to a wave of fake bull market in the stock market last year. Under normal circumstances, according to China’s current monetary tightening trend, the stock market is simply no support point for a big rise, and there is no big bull market. Of course, some friends can still find the “reason” for the bullishness of the Chinese stock market from official data and information, such as the earliest and best economic recovery in China. The global economy will pick up speed in the second half of 2021, but progress in the recovery is mixed and clearly divergent across countries, with China’s recovery leading the world. For example, some people believe that China’s various policies on housing and housing do not speculate, squeezing capital out of the housing market and benefiting the stock market. since February, as property prices in several hotspot cities have risen too quickly, extremely stringent regulatory measures have been introduced one after another, and Home buyers around the world have stopped to watch and wait.
For example, some believe that hot money continues to pour into China. on January 24, the United Nations Conference on Trade and Development released its Global Investment Trends Monitoring Report, which showed that global foreign direct investment (FDI) will total about $859 billion in 2020, shrinking by 42% compared to 2019, due to the epidemic. China’s FDI bucked the trend and grew by 4% to $163 billion, surpassing the U.S. as the world’s largest foreign investment inflow.
It can be said that all these reasons can be “strong support” for the Chinese stock market to go up, and if we follow this logic, the rhythm of the market will probably evolve like this: continuous inflow of hot money – stock market continues to rise – – investment activity – “de-investment”. -Investment is active – the loss of “de-capacity” results – soaring housing prices -The stock market continues to rise – hot money arbitrage withdrawal – stock market bust.
If the production capacity is controlled, it will lead to a reduction in exports of low-end products, which will increase Inflation in the United States, prompting the Federal Reserve to passively raise interest rates, leading to the outbreak of the financial crisis and the stock market bust. It is generally said that “inflation is not a bull market”, which is somewhat justified. Whether it is China or the United States inflation, this year will be very obvious, monetary tightening concerns will be like the sword of Damocles hanging high above the market, so that this year’s market twists and turns, like walking on thin ice. In other words, although the central banks are releasing water, the end of the release is a passive contraction leading to a full-blown financial crisis, in line with the philosophical maxim that everything generates power against itself.
Now, as vaccines slowly spread around the world, the epidemic is under control and expectations of economic recovery are getting stronger, monetary policies in other countries around the world are also starting to tighten. Such an operation will inevitably lead to the stock market starting to return to normal. In other words, with the tightening of monetary policy, not only China, but also, if nothing else, the stock markets in Europe and the United States may be ugly this year, with specific reference to 2018, when quantitative easing was to be withdrawn. At that time, the global stock market plunge was one wave after another and did not stop. Everyone should pay attention to the U.S. investment this year because of the rising inflation and the slow withdrawal of quantitative easing process. This could be a big risk for both global capital markets and global investors.
So in the context of tightening leverage and tightening money, Guo Shuqing also said: the next mortgage rates are estimated to rise back up. Simply put, mortgage rates will go up! Obviously, for housing prices this is the most obvious negative. Only, compared to the stock market reaction quickly, house prices will react slowly a beat. That’s why you can’t feel that housing prices may be moving sideways (down) yet.
Of course, this time the Chinese stock market plunge, and the stock market shareholder panic, emotional also has a lot to do with. These subjective factors have exacerbated the speed of the stock market decline. China Clearing has just released a figure showing that the number of investors in the whole market was 181,478,700 at the end of February 2021, breaking 180 million for the first time after exceeding 170 million in July 2020. Among them, the number of natural person investors accounted for 99.77%
What is a natural person investment? It is commonly known as “retail investors”. When more than 99% of the participants in a market are individuals, unity and common progress is the most difficult to achieve. When the market began to rise slightly, many people will be brainless rush in, add positions to add positions; but the market began to adjust, ready to cross the time, even if only a little down, many people will begin to reduce positions, reduce positions, reduce positions …… then, the people who were holding up, see the market fell lower and lower, also hurried to reduce positions. This chain reaction in the recent stock market is reflected in the best …… A shares easily with a few months, or even years of time slowly up that point index, just half a month back to the previous ……
China’s stock market, 99% of investors are retail investors, you simply can not let the people speculate when “calm”, after all, related to their own pockets, their own money. Watching the K-line chart has been falling, which is equal to the chart …… who can bear to cut their own flesh all the time!
There is one example most obvious. China speculation and buy a lot of people are a lot of people, but why many people’s house, 10 years up ten times are still holding in hand, while the stock market speculation, you heard a few people can hold “ten times the stock”? Simply rare. The biggest reason lies in: the stock market price is too sensitive, is infinitely magnified, and constantly fluctuating every day. As long as you gently with the hand a little, on the transaction, not only the price visual impact of a hundred times the price of housing, the transaction speed is also hanging a hundred times the price of housing.
The house is different. The house’s rise, unlike the stock price K-line chart will refresh every day all the time, and the transaction threshold is cumbersome, even if you want to sell the house, from the listing to the final sale, the fastest 3-6 months. During such a long cycle, many, many things can happen. For example, the price of the house has gone up, for example, the school district has increased in value, for example, you don’t want to sell again, etc. etc. Many factors can cause you to cancel the impulse to sell your house again.
Indeed, the financial markets are most ruthless, and the stock market even more so! This time, the deep V move of the NASDAQ index made many people cut their flesh and surrender their chips when it fell, and failed to keep up when it rose. Such losses are irreversible and a big blow to confidence. So, if you can’t control your emotions and can’t control your hands when speculating in stocks. Better stay away from the stock market and stop loss in time! Otherwise more than 90% probability will become a big leek!!!
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