A-shares reproduced the scene at the end of July!
This afternoon, the A-share market suddenly ushered in a big dive. By the end of the day, all three major stock indexes were down more than 2%. Stocks almost completely fell, only 600 stocks in the two cities were red, and 3,800 stocks fell. In the early stage, the hot spots were completely extinguished, and semiconductors, liquor, and medical treatment fell heavily. There are three bright spots in the market: first, there was a net inflow of northbound funds throughout the day, second, the volume of the market remained above 1.3 trillion, and third, the yield of treasury bonds fell today.
So, what is the reason for today's dive? Many market participants believe that it is because of a tweet by a senior US senator. He tweeted a set of data on the stationing of US troops in some countries and regions in Asia and Europe, including 30,000 troops in Taiwan. After this news was reported by the Global Times, it quickly spread in the market, triggering an unresistible decline in the broader market. After half past two in the afternoon, a clarification tweet from Taiwan, China, briefly caused the broader market to rebound. However, the short-selling momentum was released again, and after a slight rebound in the broader market, it turned to fall again.
Analysts believe that the fuse for today's decline is most likely the above tweet. However, the root cause of the decline may be more complicated, and the consumption data released yesterday has caused the external market to continue to dive. Endogenous reasons for the economy may be the key factor in the weakening of the market. In addition, some sectors rose too fast and rose too much in the early stage, and the valuation showed a bubble trend, and the pullback of these sectors affected market sentiment to a certain extent.
Tragic diving
At the close, the Shanghai Composite Index fell 2% to 3,446.98 points, the Shenzhen Component Index fell 2.33% to 14,350.65 points, and the ChiNext Index fell 2.34% to 3,224.15 points. From the trend point of view, the main decline of the index is concentrated in the afternoon. The Shanghai Composite Index, for example, fell only 16 points in the morning.
The Hong Kong stock market has a more obvious impact on A-shares, and the Hang Seng Index, the China Enterprises Index and the Hang Seng Technology Index also saw a sharp decline in the afternoon.
From a structural point of view, the hot spots in the early stage were almost completely extinguished, which is somewhat similar to the wave of killings and declines at the end of July. The large consumption sector fell across the board, and liquor, CXO, and medical collectively declined. The concept of semiconductors and energy storage also fell sharply, and the recently active hydrogen energy sector also fell sharply.
However, compared with the wave of killings at the end of July, there is a significant difference in this killing, that is, the attitude of foreign capital. At the end of July, the net outflow of foreign capital was very obvious, but today's market diving, although it affected the direction of foreign capital, it was still a net purchase of 1.474 billion yuan throughout the day. This means that today's decline is not dominated by foreign capital.
In addition, there are two positives. First, the two cities traded 1.31 trillion yuan throughout the day, and the volume increased significantly when it fell in the afternoon. This means that the market is not short of money, but there are still a large number of funds in the process of killing and falling; Second, Treasury yields have declined, with the 10-year Treasury yield falling from above 2.9% to 2.877% today, which is conducive to a rebound in growth stock valuations.
Why did you dive
The trigger for today's dive may have been related to a tweet. According to the Global Times, on August 17, 2021, Beijing time, John Coney, a senior Republican senator in the U.S. Senate, released a post revealing a set of data on the stationing of U.S. troops in some countries and regions in Asia and Europe. Although his post was mainly intended to show that the United States has very few troops in Afghanistan, only 2,000 troops, which is far less than the number of American troops in South Korea, Japan, Germany, and even Africa - it is surprising that according to him, the United States still has as many as 30,000 troops in Taiwan Province of China!
The news quickly spread through the market, triggering a big dive. Subsequently, according to Taiwan's "Sanli News Network", John Coney, a senior Republican senator in the U.S. Senate, posted on Twitter today (17th) announcing the strength of the U.S. military stationed abroad, saying that the U.S. military has as many as 30,000 troops stationed in Taiwan, China. In this regard, the Taiwan military low-key pointed out the erroneous information and did not respond. After the seemingly clarifying report, the market rebounded modestly for a while, but then turned lower again.
The official tweet of the Chinese Kuomintang responded to John Kony's tweet that there are no 30,000 U.S. troops in Taiwan. The last U.S. soldier left Taiwan on May 3, 1979.
Senior Colonel Shi Yi, spokesman for the Eastern Theater, said that on 17 August, the Eastern Theater of the Chinese People's Liberation Army (PLA) dispatched warships, anti-submarine planes, fighter planes, and other multi-service forces to organize joint fire assault and other live military exercises in the sea and air space around the southwest and southeast of Taiwan Island to test the integrated joint combat capability of the theater troops. Recently, the United States and Taiwan have frequently colluded and provoked, sent serious wrong signals, seriously violated China's sovereignty, and seriously undermined peace and stability across the Taiwan Strait, which has become the biggest source of security risks in the Taiwan Strait. The exercise is a necessary action to be taken in accordance with the current security situation in the Taiwan Strait and the need to safeguard national sovereignty, and is a solemn response to the interference of external forces and the provocation of "Taiwan independence" forces. The Eastern Theater will continue to strengthen combat readiness training, have the determination and ability to thwart all "Taiwan independence" separatist activities, and resolutely defend national sovereignty and territorial integrity.
Today marks the 39th anniversary of the issuance of the 17 August communiqué between China and the United States. Foreign Ministry spokeswoman Hua Chunying said that there is only one China in the world. Taiwan is an inalienable part of China's territory. No one should underestimate the strong determination, firm will, and strong ability of the Chinese people to defend national sovereignty and territorial integrity. No matter how much weapons and equipment the United States provides to Taiwan, it is impossible to change the general trend of cross-strait relations, still less to stop the process of China's reunification.
Is the turnaround still there?
In fact, the root cause of the market decline may still be economic problems.
Jiasheng Group said that recently, China's economic and financial data have disturbed the global commodity market, and copper prices and oil prices have fallen. On August 17, China's stock market dived, with the Shanghai Composite Index falling as much as 2%. Weak Chinese economic data released on 16 August led directly to commodity currencies moving lower overnight, while news of Victoria's confirmation of extending the lockdown until 2 September put fresh pressure on the Australian dollar, with the Japanese yen being favored by safe-haven funds, making it the strongest major currency. Oil prices and copper prices have seen sharp corrections to varying degrees.
So, is there a turnaround in the market? Jiasheng Group believes that the market as a whole will continue to maintain a volatile trend, social finance, M2 data is less than expected in the marginal value is better than the growth style, the performance of the steady growth of the leading white horse, the early stage of the raw material price suppressed by the midstream manufacturing may usher in opportunities, the overall style of the market is expected to usher in a balance.
Li Lifeng of Huaxi Securities said that there are three main reasons for today's sharp drop in A-shares: first, geopolitical tensions caused by some uncomfortable remarks in the United States have prompted market risk appetite to fall in stages; the second is the adjustment after the chips on the popular track are crowded and the industry rotation speed is too fast; Third, the Fed's "hawkish" voice has risen again. The September Fed interest rate meeting is approaching, and according to the current statements of Fed officials, they are close to reaching a consensus that if the US economy continues to recover, the Fed will begin to reduce its asset purchase program in about three months.
Li Lifeng believes that short-term adjustment is conducive to releasing the risk of emotional and chip concentration, and the characteristics of the structural market will not change. In terms of style, it is optimistic about the growth track with high prosperity, and it is recommended to pay attention to "new energy industry chain (electrical equipment, nonferrous metals, chemicals, etc.), military industry", etc.; The theme focuses on the expansion of the connotation of "carbon neutrality (green industry)".
CITIC Securities said that the policy has entered an observation period and the structural balance is in progress. At present, A-shares are still in the process of balancing between styles and sectors, and have entered a period of policy observation, the market focus will gradually shift from growth to value, and the growth of internal will change from the high track to the low track.
A large fund company in Beijing said after the plunge that after the early rebound and repair, the index is expected to enter the range of operation, and the market has recently fluctuated due to macro factors, but for the current market environment, the general trend view does not need to be pessimistic, because the basic principle is that the business cycle is supported downward, and the judgment of maintaining the general trend shock remains unchanged. It is expected that in the second half of the year, the probability of marginal relaxation of macro policies is relatively high, and policy support and stimulus plans are expected to be strengthened. Under the policy hedging, there is no need to be overly pessimistic about liquidity, and at the same time, corporate earnings maintain rapid growth, and there is no room for significant adjustment in the market.