During this period, the United States has made great efforts to prevent the rise of the Chinese stock market. On the one hand, it has covered up the fact of the US recession by tampering with economic data. On the other hand, it has constantly stirred up trouble around China. First, it instigated Taiwan to make wrong remarks, and then asked South Korea to provoke disputes on the peninsula, trying to create a geopolitical risk.

But he never expected that his own backyard would catch fire first. First, 500 billion foreign capital took the opportunity to flow into the Chinese market, and then at this extremely urgent moment, Hong Kong also took the opportunity to announce a major event.

Establishing Hong Kong Gold Trading Center

At noon on October 16, the Chief Executive of the Hong Kong Special Administrative Region, John Lee, published an important article (The Chief Executive's 2024 Policy Address).

It was announced that Hong Kong will build an international gold trading market and construct an international gold trading center.

In the past, the Hong Kong Gold Trading Center was the most important gold trading center in Asia. Most of the global capital and central banks investing in gold would choose to trade gold in Switzerland, New York, the United States, and London, the United Kingdom.

Moreover, the unit of international gold transactions is calculated in US dollars per ounce. From 2022 to 2024, the People's Bank of China will increase its gold holdings by purchasing them from the Swiss and London markets.

Now Hong Kong is going to build an international gold trading center belonging to China. The intention is very clear, which is to expand the market share of the RMB and enhance the international liquidity of the RMB.

Once completed, it will be of epoch-making significance.

The reason behind this is that gold is another form of credit endorsement for currency. The country with the largest gold reserves has a more trustworthy currency.

In the past, the reason why both the British pound and the US dollar could circulate around the world was because the currencies were forcibly bound to the exchange for gold.

In order to enhance the credit endorsement of the U.S. dollar, the New York Gold Futures Exchange was established in 1975. Subsequently, the U.S. Treasury Department and the International Monetary Fund began to auction gold in New York. As the demand for gold in the United States continued to expand, the New York gold futures market quickly became an important part of the world gold market.

The New York gold trading market has made great contributions to the circulation of the US dollar in the world. The New York gold trading venue is also one of the important places for the Federal Reserve to control the exchange rate of the US dollar against gold through US investment banks.

Therefore, when we look at the Hong Kong international gold trading market, we cannot simply think of it as a simple gold trading matching platform. On a deeper level, it is because the international community needs China to have an offshore gold trading center.

Therefore, the Hong Kong International Gold Trading Market came into being. Later, the RMB will go international through this market and expand its international status, just like the US dollar did in the past.

It can be said that this move by Hong Kong has directly penetrated the lungs of the United States. Once the renminbi and gold are bound internationally, coupled with China's security endorsement, it will continue to erode the dollar's share in the international market.

Is this drop in US stocks a fake fall?

On October 15, the Philadelphia Semiconductor Index fell 5%. ASML ADR is currently down 16.7%, KLA fell 14.1%, and ASM International ADR fell 13.9%.

Nvidia's two-fold long ETF and Applied Materials fell more than 10%.

On the surface, the reason for the sharp drop in the US semiconductor industry was ASML’s poor performance, which dragged down the overall chip stocks.

But there are two core reasons:

1. In order to cooperate with the US sanctions on China's semiconductor industry, ASML lost a large number of orders. At the beginning, China had no choice but to increase the price through various mediations to purchase lithography machines. Subsequently, China stepped up the research and development of localized lithography machines. I personally guess that there should be a small breakthrough this year, which directly led to a cliff-like decline in China's demand for ASML lithography machines after 2024. This is the main reason for ASML's performance explosion.

2. The U.S. stock market has been rising continuously in the past two years, not because of any significant growth in performance. America’s so-called AI technology dream is not even as good as the Internet bubble in 2000.

In the past two years, the valuations of the seven giants in the US stock market have been greatly increased due to AI. The overall valuation of US stocks has reached 35 times the PE, which is significantly deviated from the normal value and is a large bubble.

Moreover, the investment methods of American investment banks are all leveraged. Once a company encounters uncontrollable risks, it will be like the fire at Chibi. The fire will grow bigger and bigger and will be out of control.

Faced with this situation, the Federal Reserve no longer cared about its decency. In order to adjust market expectations, it once again asked Federal Reserve officials to make dovish remarks: the Federal Reserve could appropriately cut interest rates 1-2 times this year.

Foreign investment in A-shares worth 500 billion yuan

This is the first time that data on foreign capital buying A shares through the Hong Kong market has been disclosed after the disclosure mechanism of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect was changed.

According to the latest data disclosed, as of the end of the third quarter, the total market value of northbound funds' holdings increased by 500 billion.

Foreign capital holds a total of 3,341 A-share stocks, with a total holding of 132.312 billion shares and a total market value of 2.41 trillion yuan. This figure has increased by 496.3 billion yuan compared to before August 16.

That is to say, from mid-August to the end of September, the market value of A-shares held by foreign capital increased directly from 1.8 trillion to 2.41 trillion, setting a new high in more than a year.

In terms of increasing holdings, the focus is still on leaders in various fields, such as: CATL, Kweichow Moutai, Ping An of China, China Merchants Bank, China Yangtze Power and other core Chinese assets.

After entering October, although there are signs of foreign capital selling, judging from the rise and fall of Chinese stocks listed in the United States, buying should be greater than selling.

Especially when the U.S. stock market plummeted last night, Chinese stocks collectively surged. Fangdd.com's highest pre-market increase today reached 76%. JD.com, Bilibili, and Huya all showed varying degrees of increases before the market opened.

In short, we cannot be hasty about the rise of Chinese assets, because the United States will also suppress the rise of Chinese assets based on actual conditions, but no one can resist the power of national destiny and trends.

Information source: The total market value of northbound funds' holdings at the end of the third quarter was 2.41 trillion yuan, an increase of 500 billion yuan from August 16 - Shanghai Securities News.

Chinese stocks rebounded before the US stock market opened, ASML fell nearly 5%, Eurasian stock markets fell, Tokyo Electron fell more than 9%, oil prices stabilized, gold rose---Wall Street News

Lee Ka-chiu: Hong Kong will promote the establishment of an international gold trading center and discuss with the mainland the inclusion of gold products in the "connectivity"---Jiemian News.

Work statement: Personal opinion, for reference only