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China Fund News Taylor

Brothers and sisters, are you all dizzy today because of the swelling?

Today, the three major indexes rose unilaterally throughout the day, with a turnover of 903.3 billion yuan in the Shanghai and Shenzhen stock markets, an increase of 303.8 billion yuan from the previous trading day. As of the close, the Shanghai Composite Index rose 2.06% to return to 2,900 points, the Shenzhen Component Index rose 3.37%, the ChiNext Index rose 3.51%, the Shanghai Stock Exchange Return Index rose 2.07%, and the Science and Technology Innovation 50 Index soared 4.70%.

A total of 5,050 stocks in the market rose, 90 stocks hit the daily limit, and 255 stocks fell.

The high-dividend asset group further disintegrated, with the six state-owned banks all falling by more than 1%, while telecommunications and electricity stocks bucked the trend and fell.

Let’s analyze the reasons for today’s big rise.

First of all, one of the reasons for the surge was the rumor of brokerage mergers.There were market rumors that the merger of CICC and Galaxy Securities had been approved. Subsequently, the share prices of CICC and Galaxy Securities both moved abnormally, driving the overall rise of the securities sector. Investors joked that after the merger, the names of the two securities companies could be changed to "China Gold and Silver" or "Gold and Silver Securities".

In response, relevant people said: "I haven't heard of such news and don't know why there are rumors."

Influenced by the news, securities and financial stocks collectively exploded, with Huaxin Securities, Tianfeng Securities, Pacific Securities, Jinlong Securities, and Fortune Trends hitting their daily limit.

Second, the Political Bureau of the CPC Central Committee held a meeting on July 30 to analyze and study the current economic situation and deploy economic work in the second half of the year.

The meeting stressed that we should focus on boosting consumption to expand domestic demand, and the focus of economic policies should be shifted to benefiting people's livelihood and promoting consumption. We should increase residents' income through multiple channels, enhance the consumption capacity and willingness of low- and middle-income groups, take service consumption as an important starting point for expanding and upgrading consumption, and support consumption in cultural tourism, elderly care, childcare, and housekeeping. We should further mobilize the enthusiasm of private investment and expand effective investment.

The meeting stressed the need to continue to prevent and resolve risks in key areas. New policies to promote the stable and healthy development of the real estate market should be implemented, and efforts should be made to combine digesting existing stocks with optimizing incremental stocks, actively support the acquisition of existing commercial housing for use as affordable housing, further improve the work of ensuring the delivery of housing, and accelerate the construction of a new model for real estate development. Local package debt reduction plans should be improved and implemented to create conditions for accelerating the resolution of debt risks of local financing platforms. Risk prevention, strong supervision, and development promotion should be coordinated to boost investor confidence and enhance the inherent stability of the capital market.

Market analysis shows that some investors may be looking at this situation from an optimistic perspective and are looking forward to the introduction of more counter-cyclical policies!

Third, the Political Bureau of the CPC Central Committee held its 16th collective study session on the afternoon of July 30 on promoting the construction of modern border, sea and air defense.

Xi Jinping, General Secretary of the CPC Central Committee, delivered an important speech while presiding over the study, pointing out that we must conscientiously implement the spirit of the Third Plenary Session of the 20th CPC Central Committee, deepen the research on major issues of border, sea and air defense, consolidate and improve the existing reform achievements, implement the established reform tasks, strengthen the planning of subsequent reforms, and promote the innovative development of border, sea and air defense construction. We must adhere to the principle of running, reforming and improving at the same time, optimize the leadership and management system of border and sea defense, improve the cross-military and local coordination mechanism, strengthen the construction of relevant legal systems, and ensure that all border and sea defense work is standardized, orderly, smooth and efficient. We must do a good job in national air traffic management and promote the healthy development of the low-altitude economy. We must optimize the construction model of civil air defense and build a modern civil air defense system.

Influenced by the news, low-altitude economy concept stocks moved abnormally in the afternoon, with Sichuan Jiuzhou, Shanggong Shenbei and Zongshen Power hitting their daily limit.

In addition, major stock indexes in the Asia-Pacific market closed higher. The Korean Composite Index rose 1.19%, the Nikkei 225 Index rose 1.49%, and the Australian Index rose 1.76%, setting new historical highs.

On the news front, the Bank of Japan decided to raise interest rates again at its monetary policy decision meeting on July 31, raising the policy rate from 0-0.1% to 0.25%. This policy will be implemented from August 1. The Bank of Japan believes that although the negative interest rate policy was lifted in March, prices and the economy are still on an upward trend due to rising wages and other reasons.

In addition, the Bank of Japan has also decided to reduce the scale of Japanese government bond purchases in the future.

On March 19 this year, the Bank of Japan decided to end its negative interest rate policy and raised the policy interest rate from -0.1% to a range of 0 to 0.1%. This was the first interest rate hike by the Bank of Japan in 17 years since February 2007.

The Bank of Japan introduced an ultra-loose monetary policy in 2013. In February 2016, the Bank of Japan began to implement a negative interest rate policy, reducing the interest rate on commercial banks' excess reserve deposits from the previous 0.1% to -0.1%. The Bank of Japan is the first central bank in the world to implement a negative interest rate policy. The Bank of Japan attempts to stimulate economic growth and increase inflation through this unconventional monetary policy measure.

Finally, I wish A-shares good luck in August! Come on!