The stock market is once again on the defensive. The Chinese stock market closed on Friday morning, with the A-shares as expected, still able to support a sudden surge of 7 points at 2839. What exactly is happening? Three reasons have been identified, and what's next? Please listen carefully and patiently, and I will explain in three minutes.
Firstly: Today, the A-shares once again tested the 2839 level, and then suddenly surged straight up by 7 points at 10:50. Half a day's trading volume reached 330 billion, but there were still nearly 2,900 declines and only 2,100 advances, with 35 stocks hitting the daily limit up and three hitting the daily limit down. Main force funds net sold 5.3 billion. The market is still relatively weak, but the Shanghai Composite Index once again demonstrated its "protective divine skill."
Advertisement
Secondly: Recently, we have repeatedly mentioned that the Shanghai Composite Index at 2839 can still provide support for now. This is because of the defensive actions of heavyweight stocks and indices. Today, the Shanghai 50 and the CSI 300 once again rose to protect the market, with the Shanghai 50 up by 0.75% and the CSI 300 by 0.57%. So, what are the three reasons for the A-shares' sudden surge at 2839 today? Here are the specifics.
The first reason is that the Ministry of Commerce made a significant announcement that subsidies for car purchases and the trade-in of old vehicles will grow rapidly in the next two months. This means that subsidies for trading in old vehicles and equipment updates will boost sales, which will be beneficial for the relevant industries. As a result, it has brought a positive boost to the home appliances, construction machinery, and complete vehicle sectors in today's A-share market, with gains exceeding 1%. This has had an uplifting effect on the A-share market.
The second reason is that on the night before yesterday, Guoxin Securities suddenly suspended trading and announced the acquisition of controlling equity in Wanhe Securities. The acceleration of mergers and acquisitions in the securities industry has led to a favorable expectation in the market for further beneficial policies for securities firms today, which is a Friday. Therefore, it has driven the securities sector to rise from a low open to a gain exceeding 1% today. Among them, Zheshang Securities rose by more than 5%, CITIC Securities by more than 2%, and several others by more than 1%. Securities are known as the flag bearers, so they can help the A-shares at 2839 to surge again today.
The third reason is that, at the same time, the entire big finance sector, in addition to securities, insurance also rose by more than 2% today, and the banking sector index hit a new historical high, up by 0.4%. Among them, Industrial Bank rose by more than 2%, China Merchants Bank by more than 1%, and Ping An Bank by nearly 1%. This means that some commercial banks are making up for the rise again, and the big finance is protecting the market and rising, which is the national team's intervention again to protect the market. Therefore, it has helped the A-shares at 2839 to surge again.
Thirdly: On today's A-share market, sectors such as home appliances, complete vehicles, and construction machinery, which are subject to the trade-in of old equipment and updates, have started to rebound from being oversold. Coupled with the national team's efforts in big finance, banks, insurance, and securities to push the market index, and the recent concept sectors such as Huawei HiSilicon, cross-border payment CIPS, and AI concept glasses, which can continue to be active, the A-shares were able to hold at 2839 and rise again today.
Fourthly: So, the question arises, where will the A-shares go next? Outlook for the A-shares market.
Firstly, since the Shanghai 50 Index can hold the 20-day moving average, that is, the national team is once again protecting the market and promoting big finance, the Shanghai 50 can stabilize, which can hold the Shanghai Composite Index at 2839.
Secondly, the Shanghai Composite Index at 2839 is the support level of the golden section 0.382. Since there are heavyweights protecting the market and some sectors are rising, the Shanghai Composite Index at 2839, which I have repeatedly mentioned recently, can still provide support.However, individual stocks on the market still saw more declines than gains. Although the Shenzhen Component Index rebounded by 0.37% today, it is still in a completely bearish trend, has not yet recovered the 5-day moving average, and the trading volume remains low. Therefore, today's movement is merely seen as a technical rebound, and the Shenzhen Component Index still has support at 80884-8046.
In summary, due to the rise in some heavyweight sectors and the re-emergence of the national team to support the market, the Shanghai Stock Exchange 50 Index is relatively strong, so the Shanghai Composite Index can still find short-term support at 2839, which is in line with expectations. However, other indices are merely experiencing a rebound, and individual stocks continue to see more declines than gains. The Shanghai Composite Index at 2839 can still provide support, with a focus on whether there will be an increase in trading volume and the introduction of more significant policies in the future.