Friends, today's big bullish candlestick has surely set the market ablaze, hasn't it?
Confidence must have surged significantly, right?
Therefore, boosting confidence in the A-share market, with a massive surge in volume, is undoubtedly the best approach.
However, many people have quite a few doubts about today's rebound in the A-share market.
For instance, is it just a one-day event?
How does this rebound differ from the previous ones that were lured by big bullish candlesticks?
Can we continue to see a squeeze higher?
With some of the market's questions in mind, let me share my perspectives: 1.
The A-share market's squeeze higher is very different this time: Many people's first thought about a big bullish rebound is whether it's a luring rally.
After all, there have been many instances of big rallies that lured in the past.
So, what's different this time?
Let's discuss a few points: First, the A-share market's volume surge and the index's highest gain in four years indicate a successful squeeze higher rally; second, this time it's supported by multiple departments with real money, which can be directly interpreted as the central bank wanting to go long on the stock market (this is the most different aspect from before).
The central bank's reserve requirement ratio cut has released at least trillions of funds, and the reduction in the existing mortgage interest rates also affects the lives of hundreds of millions of people.
More crucially, the central bank has allowed financial institutions to leverage up, and the leveraged funds must be used for stock market investments, with an initial 500 billion yuan, and potentially more to come.
Today's main drivers for the A-share market's surge are two core factors: first, the news about the stabilization fund; second, the central bank's swap facilities between securities firms, funds, and insurance companies.
What does this mean?
Financial institutions can obtain liquidity by pledging to the central bank, such as government bonds, then sell the bonds for cash to buy stocks, explicitly stating that the money can only be used to buy stocks.
This is a clear support for financial institutions to leverage up and go long on the stock market, with an initial direct injection of 500 billion yuan, and if done well, there could be a second and third phase, and so on.
The goal is to push the stock market up.
With the central bank putting in so much effort, how could the market not rise?
Therefore, the big finance sector has understood the central bank's intentions, and securities firms have directly exploded today, reaching a consensus on going long.
Originally, after the reserve requirement ratio cut and the reduction in existing mortgage rates in the morning, the market was somewhat skeptical and wanted to pull back, but the central bank's two subsequent speeches immediately excited the market, which was the key to the surge.
Third, there really was capital entering the market, and both the stock and foreign exchange markets collectively saw a significant rise.
Previously, when there was good news, the stock market would rise, but the foreign exchange market would remain unchanged; or the foreign exchange market would continue to appreciate significantly, but the stock market would not respond.
But today, the stock and foreign exchange markets finally resonated with a significant rise.
Today, the RMB exchange rate broke through the 7.03 level, and it might not take long before the RMB exchange rate could break through the 7 integer level, which is a significant positive trend for RMB assets.
For the stock market, A-shares had a massive outbreak, and Hong Kong stocks also had a significant outbreak today.
Tonight, U.S.-listed Chinese stocks and other assets in the U.S. stock market also had a collective outbreak.
This is a global outbreak of Chinese assets, which has not been seen before.
The key is that today's trading volume is close to the trillion-level, which is a situation that hasn't been seen for several months.
The sudden increase of hundreds of billions of volume is obviously not just retail investors chasing in.
It's clear that the main institutional funds have entered the market to add positions, and there's no doubt about that.
In summary, this rebound in the A-share market is completely different from before because there has been a fundamental change, and it is indeed about injecting funds to push up the stock market.
What if the stock market doesn't continue to rise?
The central bank has also provided an answer: continue to release liquidity, which may continue to cut the reserve requirement ratio, or may continue to support financial institutions to buy more stocks.
This is strength.
2.
After the market closed, the China Securities Regulatory Commission (CSRC) continued to release good news.
Can the market continue to squeeze higher tomorrow?
Today's good news during the day is enough for the market to digest in the short term, but the CSRC also has the latest good news tonight; the CSRC is publicly soliciting opinions on market value management, and there are several points that, when looked at, are guiding listed companies to increase their stock prices and reject downward trends.
First, for companies that have been undervalued for a long time, they need to disclose a valuation enhancement plan, including goals, deadlines, and specific measures.
In other words, if a company is undervalued, it must find ways to enhance its valuation and stock price within a certain period.
This is forcing listed companies to increase their stock prices, which will result in a large number of listed companies either cooperating with funds for market value management or continuously releasing good news.
In any case, the goal is to rise.
Second, there should be countermeasures when the index constituent stocks continue to fall in the short term.
What does this mean?
The main index constituent stocks generally refer to some of the larger market value stocks.
Everyone should pay attention to the fifth point, which clearly states that there should be countermeasures when the stock price falls significantly.
It's no longer just about managing the rise; the fall is also managed, which was almost unheard of before.
For example, index constituent stocks like Moutai and Ningwang, if their stock prices continue to fall, measures must be taken to raise the stock price.
This is not only beneficial for index stability but also a safeguard for investors.
This is the biggest piece of good news.
Third, the re-emphasis on first-class investment banks and securities mergers and acquisitions; the CSRC once again mentioned that securities companies should accelerate the construction of first-class investment banks, which is another big good news for the securities sector, and this will accelerate the mergers and acquisitions of listed securities companies.
In addition, the CSRC also encourages leading listed companies to increase mergers and acquisitions and integration of industrial chain companies, which means that in the future, those at the top of the industry will basically be a large, complete industrial chain company with strong competitiveness.
The top can grow and become stronger, and the bottom companies will be absorbed and merged, so as not to face the bottom of delisting.
In summary, the good news released by the CSRC tonight is also very important, especially for the strict constraints on the market value management of listed companies and the decline in stock prices.
It is not allowed for those companies that continue to fall to lie flat.
Only by enhancing valuation and stock prices can the rights and interests of investors be guaranteed, which shows that the voice of investors has been heard.
Looking at the FTSE A50 index tonight, after the day's surge, the A50 index rose by more than 2% tonight, also setting a new high in the past two months, which shows that the bullish sentiment has not ended.
Therefore, the market is likely to continue to squeeze higher tomorrow.
Now that the market has risen a bit, many funds that missed out are questioning and leaving.
The time of divergence is the best time to continue to squeeze higher.
