A little reflection on the two bull markets in history
Author|Ding Zhenyu, Editor|Gu Jinfeng
Source: Jufeng Investment Advisory, Good Stock Application
There have been two magnificent bull markets in the history of A-shares, one was in 2005~2007 (the Shanghai Composite Index rose from 998 points to 6124 points, an increase of 513%), and the other was in 2013~2015 (the ChiNext index rose from 585 points to 4037 points, an increase of 590%).
There are many interpretations of these two bull markets in the market, and we will only briefly talk about the points that may be overlooked by the market.
The 2005~2007 bull market has two very important factors:
First, the long-term downturn in the stock market and the rapid development of the economy have formed a huge contradiction that needs to be alleviated;
Second, the rapid development of the Internet has made it more convenient for investors to invest in stocks.
This round of bull market, some people also summarized that the reform of equity division has activated the market, and from the perspective of the "five golden flowers" (coal, steel, automobiles, banks, and electricity) that launched the market, it is closely related to the hot economy at the beginning. The bull market ended with the subprime mortgage crisis in the United States.
2013~June 2015 big bull market, from "money shortage" to "leveraged bull"
The "money shortage" is essentially a deleveraging after the 2008 economic crisis.
At the end of March 2013, the China Banking Regulatory Commission (CBRC) stipulated a non-standard upper limit on the investment of wealth management funds, and banks responded through interbank business and other types of investments, further amplifying interbank leverage and making financial institutions more sensitive to liquidity.
On June 6, 2013, a bank "defaulted" rumors, and Shibor soared 495.8bp in three days overnight. On June 18-20, the National Standing Committee called for adhering to a prudent monetary policy, and the central bank's internal meeting asked banks to change their expectations of permanent easing of liquidity, and trading was delayed on the 19th, and Shibor soared by 578.4bp to 13.44% overnight on the 20th. On June 24, the stock market fell sharply, and the Shanghai Composite Index broke 2000. On June 25, the central bank said it had provided liquidity support, and Shibor retreated overnight. Since then, the market has expected a resurgence of easing.
In May 2014, the China Securities Regulatory Commission (CSRC) issued the Administrative Measures for Initial Public Offerings of Stocks and Listing on the Growth Enterprise Market (GEM) and the Interim Measures for the Administration of Securities Issuance of Listed Companies on the Growth Enterprise Market (GEM), which relaxed the conditions for initial public offerings on the GEM and the establishment of a refinancing system for the Growth Enterprise Market (GEM).
Before 2014, subject to supervision, the upper limit of operating leverage of securities companies was only 2.5~3 times. In August 2014, the regulatory system began to relax, the upper limit of leverage was increased to 5.5~6 times, and the threshold for investors to borrow money to speculate in stocks was greatly reduced, in November 2014, with the central bank cutting interest rates and RRR, the big bull market officially opened, more and more funds poured into the stock market in the form of capital allocation, and the Shanghai Composite Index took only 11 trading days to break through 3000 points from 2500 points.
Later, this bull market ended due to deleveraging, and the rest of the events should be fresh in the minds of participants.
Of course, there are many more factors that affect A-shares, many, very many. As for what is the decisive factor, it will only be known in hindsight.
(Author: Ding Zhenyu Practicing Certificate: A0680613040001)
Disclaimer: The above content is for reference only and does not constitute specific operation advice, and you shall operate at your own risk and profit and loss