Top of China market surge in last week of Sept

Top of China market surge in last week of Sept

Still, I’m writing about the Chinese market because I feel like I need to write something down (no spreading and sharing)

Let’s look at the index chart first. It has been in a steady decline since December 2021, except for number 2, which rose by half compared to the decline. In particular, the rise at the end of April 2022 and the rise at the beginning of February 2024 were excessive compared to the decline. However, it is difficult to say that the overall decline has been changed in those two cases as well. However, the rise in February 2024 began to decline as early May. There were some ups and downs in late March and late April, when I was on a business trip for a month, but it didn’t feel like it would turn back into a big decline. However, the Chinese market since May has been truly bleak. There was a slight rise in the market even as the downtrend unfolded, but there was no room for that.

After the announcement on Tuesday (Sept. 24) of a key interest rate cut and real estate/stock market, market reaction has never been seen. Many people say there used to be such a bull market, and this one is impossible to even compare. First of all, the market size is different, then the transaction price is different. If these were relatively preemptive measures then, then this one is really in the double jeopardy. Jokingly, if the series of actions doesn’t produce the picture that the Chinese government wants, then perhaps they could take action on the stock market, not on short selling, which doesn’t sound like a hoax.

If someone had brought up such an index chart and asked me how the stock was doing, I would have told you not to look back on that stock. To take that risk, you have to show a big profit too, because it doesn’t seem reasonable to hold a stock that has been steadily falling over the past five months for this surge. The high in Shenzhen’s history was 2015-06-15 18211.76, after which it hit 7011.33 low in 2019-01-04. It was over 60% off its high. Then it hit 16293.09 again in 2021-02-18, which is 232% off its low. Then it hit 7683.63 back in 2024-02-25, which is a 53% drop. After that, it hit 9805.92 back in 2024-05-10, and after hitting 2024-09-13 7908.52 last Friday’s high was 9619.77, so it’s up 27.57% in two weeks or 17.71% in four days. It’s best to avoid stocks that are hard to figure out this kind of pattern, but the reality is that you can’t do that because it’s an index chart.

If you knew what kind of character the Chinese market has, now let’s talk about whether this stock market surge can continue.

First of all, why does the market surge when the reserve ratio was lowered? Simply put, lowering the reserve ratio means that the bank’s funds can be released more on the market through loans. The intention is to boost liquidity by increasing the volume of money, and to stimulate the economy further by breaking through the flow of funds that are blocked from such surplus funds. The ideal picture is that such funds are invested in corporate investments to stimulate the economy, which improves corporate profits, which increases corporate value, and increases corporate stock prices. This expectation is why the stock market responded positively and positively.

Interest on real estate loans, however, has also been lowered. Loan interest rates tend to rise naturally when demand is high, but they are lowered? This means that demand for real estate loans is low. The current problem in the real estate market in China is that this measure will boost real estate loans and lighten the atmosphere of the real estate market because there are many problems in which the apartments that were already made or built cannot be built or sold. Then, I can’t help but think that the purpose is not to revitalize the stock market, which is expected to be investment through the aforementioned loans, thereby increasing corporate profits, and thus revitalizing the stock market. There is also a measure to allow the re-loan of equity investment funds as collateral for financial assets, which, after all, opens up a double helgate if the stock market crashes again. Conversely, the fact that this measure came out could be a government’s determination not to tolerate a decline in the stock market. Is it really possible to ban the sale of stocks? Oh, you can’t even buy it if you don’t sell it… LOL

Additionally, the Chinese government had previously hesitated to take direct action to stimulate the economy. Even a direct blood transfusion could potentially cause the money to slide into the real estate market like a black hole and evaporate. If the funds are released in the absence of demand, the real estate market’s suppliers tied to loans will use up all of them through overdue interest payments or loan repayments, and the funds on the market will actually disappear. If the funds are released without the need to clean up bad real estate, they will be poured into the bottomless jar. At the same time, the national finances will only shrink. There are some places where such poor real estate has been sorted out, but overall, nothing much has changed. But why now?

Assuming that bad indicators have been announced as not hopeless by massaging them to some extent so far, even considering those aspects, there have been talks that the indicators to be announced in the future are so bad that it is difficult to wrap them up well even with a massage. Rather, the view that these measures are a desperate measure to cover such areas is gaining convincing power. Again, there is a possibility that these measures will be taken to alleviate something out of control. This means that if these things are not done, they may have decided that they will get out of hand. The government (N) will be in time for the opening of the regular market on Monday, a few hours later