China's Ministry of Finance held a press conference last Saturday, promising to launch more economic stimulus policies, but the policy strength was not as strong as investors expected, which disappointed the market and may cause A-shares to continue to pull back after a sharp rise.


In order to save the Chinese economy, the Chinese government has launched an epic money-printing campaign since the end of last month, offering economic stimulus policies such as interest rate cuts, reserve requirement ratio cuts, existing mortgage rates, and down payment ratio cuts, driving the mainland stock market to surge for days. However, the National Development and Reform Commission of China did not announce further fiscal stimulus measures as expected by the market last Tuesday, which hit market confidence and caused the mainland stock market to stall completely last week.

China's Ministry of Finance disappoints the market with no big moves

Chinese Finance Minister Lan Foan hosted a press conference last Saturday. The market had expected the announcement of large-scale economic stimulus measures to inject a shot in the arm for the stock market. However, according to Bloomberg, the press conference disappointed stock investors and China's stock market may continue to correct after a big rally.

Lan Fuan and other officials from China's Ministry of Finance announced at a press conference that they would support local governments in making good use of special bonds to purchase existing commercial housing, but did not give a specific amount of additional fiscal stimulus measures. Lan Fuan mentioned that there is still a large room for fiscal debt and deficit increase, and these measures may be launched later this month or early November.

The report mentioned that Finance Minister Lan Phoan promised to introduce more support policies and hinted that government debt would be increased to boost the economy, but the press conference did not announce the specific scale of the new stimulus measures. Consumption has always been a weak link in China's economy. The lack of mention of new incentives to stimulate consumption at the press conference may be another reason for traders' disappointment.

Shen Meng, director of Xiangsong Capital, said that the Chinese Ministry of Finance has tried its best, but there is a big gap between the content of the press conference and investors' expectations, and investor sentiment is generally negative. Kenny Wen, head of investment strategy at KGI Securities Asia Limited, also said that he was a little disappointed. Although the Ministry of Finance announced some specific measures, it did not mention the time and amount.

Chinese stock investors are stuck speculating in A-shares

After the Chinese government launched a series of stimulus policies to drive the Chinese stock market soaring, many Chinese Internet celebrities began to advocate speculation in A-shares to attract retail investors to follow suit. Unexpectedly, after the National Day holiday, A-shares plummeted. In the past five trading days, the Shanghai Composite Index fell 12%, the Shenzhen Component Index fell 15%, and the ChiNext Index fell 19%, trapping many retail investors who followed suit.

The three major A-share indices are mixed today, with the Shanghai Composite Index up 0.16%, the Shenzhen Component Index down 0.37%, and the ChiNext Index down 1.31%.

It is worth noting that there is an internet celebrity in Shanghai who calls himself "Love in Late Autumn". He once shouted that the A-share market would rise above 14,600 points. However, after the National Day holiday, the A-share market fluctuated violently and the internet celebrity disappeared. Many Chinese stock investors went to the streets to settle accounts with him.

Another internet celebrity and former fitness coach named "Da Lan" who has tens of millions of fans on Douyin in China has posted dozens of stock market-related works. The titles of the videos include "Public prediction of the A-share market", "Which stocks should newbies buy to make money in stock trading", "Am I really all in?", "Recommending everyone to trade stocks, am I really wrong?", etc., with highly guiding stock trading content.

In a short video on Douyin, Da Lan said excitedly, "Believe me, (the stock market) will explode after the holiday." He also said that gold will continue to fall, and suggested that fans sell gold and all stocks, and even directly recommend specific stocks in his own comment section.

However, as the A-share market plummeted for several days in a row, a large number of netizens who followed the trend suffered heavy losses and flocked to the comment section of "Da Lan" to criticize it. Some said bluntly, "I thought it was an investment, but later I felt it was gambling, and then found out it was a fraud, and finally confirmed it was a donation", "Where is the promised bull market?", "I bought the Shanghai and Shenzhen Stock Exchange in two days and lost 120,000 yuan. I am going to run away tomorrow. I won't play anymore, never again." Some even scolded Da Lan, saying "It's obvious that he is a liar." Some also said, "Many people entered the market after watching the official media."

On October 11, the Douyin Security Center announced that the Big Blue Douyin account had been blocked for inciting netizens to buy a specific stock with all their warehouses, which seriously violated laws and regulations. The platform decided to ban the account indefinitely. In the past month, Douyin has cumulatively dealt with more than 3,600 stock market-related illegal accounts and more than 15,000 illegal contents.