Last time, I talked about the views on China's A-shares from the perspective of listed companies. Yesterday, I visited a senior stock investor who has been financially independent for many years. From his perspective, I will summarize for you a high-net-worth investor's understanding and expectations of the rise of A-shares this time.
Let me first say the conclusion. He still has some funds in A-shares, so he did not transfer too much money directly into A-shares. On October 1, he transferred 5 million US dollars to Hong Kong stocks. I did not ask what he bought specifically, but he personally pays more attention to the semiconductor sector (including A-shares). The theory is that the chip industry will be the only way for China to break free from the shackles of development.
In terms of room for growth, he believes that there will definitely be an increase on October 8, not only because Hong Kong stocks can serve as a weather vane for A shares. After all, many Chinese companies are listed on the Hong Kong stock market, and some companies are even listed on both A shares and Hong Kong stocks (H shares). Therefore, when A shares rise, there is no reason why the corresponding H shares will not rise.
As for the room for further growth, he believes that 4,000 points will be easily broken through. After breaking through 4,000 points, the next trend will depend on the upper-level game. He does not even rule out the possibility of breaking through a new high this time, and believes that if there are three consecutive declines, then it will be the best time to increase positions.
Back to the details, the following content is the remarks of this high-net-worth investor who has already achieved financial freedom. It cannot be used as investment advice, nor does it mean that his understanding is completely correct.
On September 19, the Federal Reserve cut interest rates. This rate cut marked the beginning of a shift from monetary tightening to currency easing policy. Global liquidity began to be gradually released and investors' risk appetite began to rise.
On September 24, two tools were announced to increase liquidity in the stock market: RMB 500 billion (allowing these financial institutions to use bonds and stocks as collateral in exchange for highly liquid assets, with funds limited to investing in the stock market) and RMB 300 billion (stock repurchase and shareholding increase re-loans, supporting listed companies to repurchase and increase their holdings through bank loans).
China held a Politburo meeting on September 26. We donât know what was said in the meeting, but we can see that after the 26th, there was a consistency in the rise of A-shares.
How to understand it? After the Politburo meeting on the 26th, everyone from residents to the government hopes that the stock market will rise. Residents hope to ease economic pressure through the rise of stocks, and the government also hopes to ease domestic conflicts and revitalize the domestic economy in this way. In fact, for China at present, there are countless ways to make A-shares rise, and the simplest one is to reduce the selling pressure of stocks on the market.
This is also the plan that is being implemented now. The basis of this plan is that the funds of listed companies will not flow out. However, it is difficult to determine whether this can be achieved and for how long it can be achieved, because it involves the game of multiple parties. You must know that listed companies include not only private enterprises, but also state-owned enterprises.
After the outflow of funds is blocked, the prosperity of the stock market is a normal thing. Major shareholders are restricted from selling, retail investors will hardly sell, and the state will continue to hold to a certain extent. Even if small shareholders leave, it will not cause any fundamental changes. Therefore, he is certain that the first opening day after October 1 will inevitably usher in a definite rise after the FOMO of investors during the seven-day holiday. It is currently 3,336 points, and it only needs two more daily limit increases to break through 4,000 points. In the case of high consistency, 4,000 points may just be the beginning.
When I asked how high it could rise, his answer was that it would depend on the subsequent policies. If the political inclination towards the stock market can be maintained and the party continues to maintain consistency in supporting the stock market, then there would be no problem for A-shares to break through previous highs. According to the current national conditions, this may not necessarily be determined by political factors.
Well, since it is political factors that can determine it, and everyone is united in hoping that the stock market will rise, will it create a long bull trend? Will there be pitfalls in this trend? The answer is yes.
For example, in the past, the central government would worry about the overheating of the stock market, and this worry would be expressed through media reports. The current media direction expresses consistency, and we can mostly see positive reports on the stock market, but if negative reports appear, it may break the consistency, and some friends will definitely ask, itâs a good thing, why are we worried about overheating.
After all, the stock market is a risky market, and the liquidity of funds includes some very complex factors, such as whether overseas funds will come in, whether they will go out after coming in, whether the outflow of funds is stable enough, whether you should leave the market when the profit reaches a certain level, etc. These are all reasons that may cause the consistency to change, but as long as the consistency remains, then the pullback is the golden position, especially three consecutive pullbacks may be the point to get on the train.
Why did he say that? Because he thinks that, first of all, it is very difficult for retail investors to make money in the market, no matter it is a bear market or a bull market, no matter it is the cryptocurrency circle or the stock market, only a small number of retail investors can really make money, and most people can only have "floating profits". The main reason why retail investors do not make money is because most of them are the "last stick". When the FOMO sentiment comes, they sell everything they have to enter the market, but they always think about "making more money". Even if they take profits at a certain stage, they will continue to go ALL IN when the general trend still looks healthy, resulting in "exit liquidity".
Whether an institution can make money depends on what money it can make, how it makes money, and where the money is used. In fact, the same applies to listed companies. If the money earned is all in the pot and used to maintain the ecology of the pot, then there is still a chance, but if you want to transfer it out of the pot, it depends on the exposure.
Going long is politically correct.
But if it continues to be bullish, it may not be correct, because the key lies in the subsequent policies. If the policy level believes that the economic and stabilizing effects brought about after 4,000 points are worth continuing, then new highs may not be a problem. However, if it is found that after breaking through 4,000 points, it will bring new contradictions, and the new contradictions may intensify or extend, then it is very likely that the stock market will cool down.
As for the current structure of stock investors, he believes that those born in the 1990s and 2000s are the main force of A-shares. For those born before the 1980s, they have experienced too much and need too much certainty, so they will have concerns. They will also look at the performance and keep waiting for a pullback, hoping that the pullback will be the time to get on board. The new generation prefers FOMO more, and will rush once the FOMO emotion arises.
Therefore, his point of view can be summarized as follows: if the media does not publicize the overheated stock market to the market, then the A-share market is worth looking forward to. Continuous declines are the time to buy. The stock market will definitely not be smooth sailing. Even in a violent bull market, there will definitely be a range of correction. Just hold on to it.
(This guy is also a firm holder of #BTC. He started to join the circle in 2012 and is also one of the earliest miners)
But if the wind direction changes and consistency is no longer there, according to historical evidence, it is very likely that it will fall first, then have one final rise, and then it will end.
Investing requires caution and you still have to be responsible for your own money. Learning is still the best way for ordinary people to improve their winning rate. Of course, if you are lucky enough, you donât have to worry about anything.
