The Chinese stock market closed on Tuesday morning, and today the A-shares once again plummeted suddenly, falling 28 points, with over 4,600 individual stocks declining. What exactly happened? Two reasons have been identified. Watch carefully and patiently, and I will explain it in three minutes.
First: Today's sudden plunge in A-shares, a drop of 28 points, with a half-day volume of 350 billion yuan and over 4,600 stocks turning green, while only over 600 stocks rose, with the main force capital net selling 17.4 billion yuan. A-shares had just rebounded for three days, and today they suddenly dived again. It's really tough for A-share investors.
Second: Due to the Federal Reserve's expectation of interest rate cuts in September and December, the US dollar index is weakening, and the peripheral stock markets and commodities are basically rising across the board. Therefore, last night, the three major US stock indices all rose, with the Nasdaq up 1.39%, the S&P 500 up nearly 1%, and the Dow Jones up 0.58%. The US stock market has rebounded strongly for 10 consecutive days, which is quite beautiful.
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Third: At the same time, today at the opening of the Asian market, the Nikkei 225 index opened high and rose by more than 2%, and the South Korean stock market also opened high and rose by nearly 1%. Last night, commodities such as spot gold, spot silver, and copper also basically rose across the board. That is to say, the peripheral stock markets are booming.
Fourth: At the very least, today's Hang Seng Index and Hang Seng Technology Index only fell slightly by 0.27%. Since the bottoming out on August 5, the Hang Seng Index has rebounded continuously, encountering resistance at the 60-day moving average. Today's consolidation of the Hang Seng Index is in line with expectations.
However, today's A-shares have experienced another catastrophic day of decline, which is truly puzzling. So, what exactly happened? There are two reasons.
The first reason is that the central bank released the August LPR quote this morning, with the one-year and five-year interest rates remaining unchanged, which means no interest rate cuts. Although there are no short-term interest rate cuts, it does not mean that there will be no cuts in the second half of the year, so this is basically in line with expectations, but at least there is some short-term pressure.
The second reason is that today, a certain team continued to lift bank stocks. Bank stocks have low valuations, low price-to-earnings ratios, strong profitability, and strong dividend capabilities, so they belong to the high dividend sector with low valuation. From a medium to long-term perspective, I have repeatedly said that the bank stock market is a slow bull market.
However, in the A-share market, the continuous lifting of bank stocks, in a severely reduced A-share market, will form a serious seesaw effect. Today, the four major banks set new highs again, with Industrial and Commercial Bank of China surpassing China Mobile to become the new king of A-shares, causing a capital squeeze effect. Therefore, today's bank stocks stood out alone, but it led to a decline in small and medium-sized thematic stocks in the market.
Fifth: At the end of the day, the stock index, CSI 1000, Shenzhen Component Index, and ChiNext Index all fell by more than 1%, the Shanghai 50 fell by 0.49%, the CSI 300 fell by 0.71%, the STAR 50 fell by 0.96%, the Shanghai income fell by 0.97%, and the Shanghai Index fell by 0.98%. Today, A-shares have experienced a uniform decline across the board, which is really unexpected. (At the beginning of July, I repeatedly said that this year is still a bear market cycle).Sixth: Outlook for the A-share market in the future.
Firstly, today's double innovation index, Shenzhen Component Index, and others have already fallen by more than 1%, with 4,600 individual stocks declining. Today marks a stock market crash-like decline, which implies that the adjustment trend of the A-share market is still ongoing.
Secondly, the ChiNext Index is looking at the 0.191 golden ratio support at 1567, which is now at 1573. However, the Shenzhen Component Index has broken a new low at 8261, which is nearly 200 points away from the 0.191 golden ratio point of 8088, and the CSI 1000 is still in the adjustment space, away from the 0.191 golden ratio point of 4499.
Lastly, only some of the heavyweight stocks in the A-share market are being lifted, while small and medium-sized thematic stocks continue to be weakly adjusted. Therefore, I repeatedly emphasize that this year is still in a bear market cycle. Up to now, more than 4,700 individual stocks have closed with a negative half-year line, and the A-share Shanghai Composite Index is expected to return to the vicinity of 2841.