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text/ ba jiuling (wechat public account: wu xiaobo channel)

the last trading day of august started off somewhat unusually.

at 9:50, just 20 minutes after the opening, the chinext index rose by 2%. the number of stocks that rose in the three markets of shanghai, shenzhen and beijing exceeded 4,000. hong kong stocks also flourished. at that time, the hang seng technology index rose by 2% during the session.

the lively scene attracted a crowd of onlookers. like bears suddenly awakened from hibernation, they rubbed their eyes and muttered to themselves, "what? spring is here?"

in the afternoon, the market ushered in a more violent upward attack, and real estate stocks collectively exploded. many stocks such as gemdale group, vanke a, binjiang group, and cinda real estate hit the daily limit.

the chinext index once rose to 4%, sweeping away the recent shame of "the market value of the six state-owned banks exceeded that of the chinext", while the former went in the opposite direction of the market. bank of communications fell nearly 6%, china construction bank fell nearly 5%, and industrial and commercial bank of china, agricultural bank of china, bank of china, postal savings bank of china and others followed suit.

the outflow of money activated the market of other stocks. as of the closing, the shanghai composite index, shenzhen component index, chinext index and beijing stock exchange 50 rose by 0.68%, 2.38%, 2.53% and 1.69% respectively; a total of 4,679 stocks in the two cities and the beijing stock exchange rose on that day; the turnover of shanghai and shenzhen reached 876.6 billion, nearly 270 billion yuan more than the previous trading day; no stock fell by more than 9%.

why did the stock price rise? will it rise further? after the market closed, people gathered on the internet to discuss the issue.

a statement called "75% probability of rising in september" solves both problems at once.

it turns out that some sharp-eyed stock investors have discovered that since 1999, the shanghai composite index has had eight four-consecutive-negative monthly lines in history. in the following month, there were six increases and two decreases. dividing 6 by 8, some stock investors have concluded that this means there is a 75% chance of a rise in september.

xiaoba took a closer look and found that it was indeed the case:

from september to december 1999, the shanghai composite index fell for four consecutive months, and rose by 12.32% the following month;

from july to october 2001, there were four consecutive declines, and the next month it rose by 3.48%;

from september to december 2002, there were four consecutive declines, and the next month it rose by 10.47%;

from june to september 2003, there were four consecutive declines, and the next month it fell by 1.38%;

there were four consecutive declines from april to july 2004, and a drop of 3.18% in the next month;

from may to august 2012, there were four consecutive declines, and the next month it rose by 1.89%;

from june to september 2015, there were four consecutive declines, and the next month it rose by 10.8%;

there were four consecutive declines from july to october 2022, and an increase of 8.91% in the next month.

in other words, this rise at the end of august was the result of everyone's enthusiastic bottom-fishing and rushing into the market to "gamble on probability."

some investors even vividly likened it to the "autumn harvest uprising" of the a-share market.

i'm just a fool in the stock market. i'm afraid you have seen a lot of "rules" like this one. you can use them as jokes, but we have to return to rationality in the end.

based on this, people have selected the three news events that are most likely to kick-start the a-share market.

▶▷ the first one is the "central bank flooding the market with money" theory.

on august 29, the ministry of finance rolled over 400 billion yuan of special treasury bonds, and the central bank bought an equal amount of special treasury bonds from primary dealers on the same day. this move was directly regarded by the market as "central bank flooding the market with money" and "quantitative easing."

unfortunately, this is another beautiful misunderstanding.

as the name suggests, "continuation" indicates that the special treasury bonds issued by the ministry of finance this time are not incremental treasury bonds, but a renewal of the special treasury bonds issued in 2007.

the purchase by the central bank is not surprising. this part of the bonds was all pocketed by the central bank when they were initially issued, and was continued to be bought up by the central bank when they were rolled over after maturity in 2017.

therefore, the central bank's move this time is reasonable. from the balance sheet perspective, there have been no changes to either the ministry of finance or the central bank.

however, the replacement of old bonds was interpreted as "bond purchase" by the "long-dry" market. in the opinion of xue qinghe, president of zhibenshe, this may be because people believe that the central bank's renewal of treasury bonds may further enhance expectations of the central bank's bond purchases - the central bank's bond purchases mean releasing more liquidity, which is naturally good for the stock market.

▶▷ the second event is the "rmb surge theory."

as early as the afternoon of august 29, both the offshore and onshore rmb against the us dollar broke through the key psychological level of 7.10, with a daily increase of more than 300 points. on august 30, the offshore rmb against the us dollar rose slightly in the short term, with a cumulative increase of more than 110 points during the day.

as of the time of writing, the offshore rmb was trading at 7.089, the strongest since june; while the onshore rmb was trading at 7.091, the highest level since june 2023.

as of this month, the offshore rmb has risen by more than 1,400 points against the u.s. dollar, completely wiping out the losses since the beginning of this year.

for the market, the appreciation of the rmb seems more like the "midnight gown".

on the one hand, as the fed's interest rate cut in september is getting closer, the depreciation of the us dollar has become a consensus, and the possibility of rmb appreciation has greatly increased. on the other hand, if the rmb exchange rate rebounds, it will be beneficial to attract foreign capital to flow into rmb assets.

not long ago, stephen jen, ceo of british hedge fund eurizon slj capital, added fuel to the fire of appreciation.

“the biggest risk in the market right now is that currencies are not priced correctly, and the renminbi could play an outsized role in that,” he wrote in a recent study.

the reason why jen's words are so important is because of his other identity: in 2001, when he was still an economist at morgan stanley, he proposed the "smiling dollar theory", which holds that the us dollar will strengthen during periods of sharp decline or strong growth in the us economy, but will weaken during periods of broad global growth.

as an authority on the depreciation of the us dollar, he calculated that chinese companies may have accumulated more than $2 trillion in overseas investments in the past four years, and when the federal reserve lowers interest rates, the attractiveness of dollar assets will weaken and may stimulate a "conservative" $1 trillion of funds to flow back to the country.

so how much will the rmb appreciate by the money flowing back into the country? jen’s answer is “5%-10%, at most 10%”.

after this view was reported by bloomberg on august 27, it became fuel for the surge in the rmb.

as one of the important rmb assets, the chinese stock market naturally has the opportunity to soar.

coincidentally, all the "good news" of the day seemed to come from bloomberg.

▶▷ event three is the rumor about the reduction of existing mortgage loans.

on august 30, bloomberg quoted people familiar with the matter as saying: "china is considering allowing homeowners to refinance up to $5.4 trillion in mortgages to reduce borrowing costs for millions of households and stimulate consumption."

translated into language we can understand, this means that existing mortgage loans will have the opportunity to be converted into mortgage loans calculated at the current interest rate, which is equivalent to immediately reducing the interest rate on existing mortgage loans.

in yesterday's market, real estate took off in the afternoon and bank stocks continued to plummet, which seemed to confirm the market's reaction to the news.

in fact, bloomberg often releases some so-called "rumors" from insiders, but the authenticity is questionable.

it's just that this time the rumor hit the nail on the head. after all, many people have been "suffering from existing mortgage loans for a long time."

on the same day, a set of data released by the central bank illustrates some issues. according to the "statistical report on loan directions of financial institutions in the second quarter of 2024", at the end of the second quarter of 2024, the balance of personal housing loans was 37.79 trillion yuan, a year-on-year decrease of 2.1%, which means that the "early loan repayment wave" has begun to emerge again.

of course, for the stock market, once the news of reducing inventory becomes true, it will help activate consumption and stimulate investment, which is naturally a good thing.

xue qinghe summed up this series of mentalities as "animal spirits" - market rumors can often cause prices to fluctuate.

however, investors who have been dormant for a long time are more worried that their accounts can no longer withstand any disturbances. for this reason, we have invited some professional experts to write some precautions for you. let's take a look.

big head has something to say

zhu zhenxin

dean of asymptotic investment research institute

chief economist

i wasn't surprised.

the overall market is now in the bottom area, so a rebound after oversold may occur at any time. this is similar to the previous few times. the core logic of the rise is still that valuations are at historical lows. in the medium term, the upside is greater than the downside risk.

at the same time, since the current situation is still a rebound rather than a complete reversal, the market is still in a bottoming out and oscillation stage rather than a real bull market, so the rise lacks sustainability.

the ultimate sustainability depends on economic fundamentals and valuations. although both are currently at the bottom of the medium term, the economic recovery is still weak, deflation has not been completely reversed, and there are no obvious signs of strengthening in corporate performance. therefore, the market can only rely on valuation rebound, and a truly sustained bull market must be supported by solid fundamentals, and no such signals have been seen yet.

my advice is don't listen to other people's advice. investment strategies vary from person to person, and what works for others may not work for you. for example, if a left-side bottom-picking strategy loses 20% first and then earns 100% of its profit, it is a good strategy for people with a high risk preference because they can hold on to it, but it is a bad strategy for people with a low risk preference because they cannot stand a 20% loss and will not be able to earn the 100% profit later.

xue qinghe

president of zhibensha

deputy director of the macro strategy institute of the chief center

this round of rmb appreciation is mainly affected by the expectation of the federal reserve's interest rate cut in september. under the influence of expectations, the interest rate gap between 10-year treasury bonds between china and the united states has narrowed, promoting capital inflows. the foreign exchange market has already priced in in advance, the us dollar continues to weaken, non-us dollar currencies have risen, and the rmb has also risen.

from last year to the first half of this year, due to the large interest rate gap between china and the united states, a large amount of foreign exchange was not converted into rmb. the narrowing of the interest rate gap will drive this part of the funds to flow back.

therefore, the expectation of easing external liquidity and capital inflows are one of the factors that promoted the stock market rise this time.

the future trend of a-shares will still be related to the fed’s interest rate cuts and the uncertainty of the us election.

from september to the end of the year, with the federal reserve cutting interest rates, external liquidity easing, continued recovery in exports, and the return of external funds, the market will adapt to the negative impact of real estate. hong kong stocks will usher in a round of gains, especially the hang seng technology index.

the shanghai composite index may stop falling and stabilize, and rebound slightly, but the rise is limited. this is because from 2016 to now, the shanghai composite index has fluctuated between 2500 and 3500 points. there are no big cycles, only small cycles. moreover, the annual moving average continues to decline, and the pressure of the upward cycle increases.

ma hongman

well-known financial commentator

founder of "ma hongman finance"

you may have noticed that since june, there has been a wave of increases at the end of every month. this may be due to the performance data of fund companies, and the market sometimes has some "miraculous" inertia. apparently, this inertia continued until august.

overall, i think this market is mainly a pulse-like oversold rebound. macroeconomically, the pmi will be released on august 31. i predict that the absolute value is still shrinking and there is no obvious substantial change. everyone should still be cautious.

as for other stimuli in the news, especially the "rumor of a reduction in interest rates on existing mortgage loans", i think there is one thing to note, that is, if this news comes true, it will be bad news for both the banking sector and the real estate sector.

◎ first of all, the benefit of this policy is that for people who previously had high outstanding mortgage loans, their monthly disposable funds will increase after future interest rate cuts. however, it remains uncertain whether the increased funds will drive economic growth by expanding consumption.

◎ second, it is definitely bad news for banks, because the reduction in interest rates on existing mortgage loans means a decline in the returns on banks' high-quality assets.

◎ third, for real estate companies, the real benefit is the transaction of new homes. the reduction in existing interest rates does not directly drive new home transactions, so the logic of this increase may be falsified later.

xue hongyan

vice president of xingtu financial research institute

in view of the fact that a-shares continued to fluctuate and bottom out in the previous period, and the trading volume repeatedly hit new lows, the market surged on august 30, releasing a relatively positive signal, and there is a high probability that it will become the starting point of a new round of rising market.

considering the fundamental factors, the market has the conditions for a new round of growth.

◎ first of all, the minefields and negative news in the interim report are about to be exhausted. in the short term, performance will no longer be a suppressive factor for the market. accordingly, the market began to trade policy expectations.

◎ secondly, the probability of the policy being released in september is relatively high. with the appreciation of the rmb and the slowdown in the growth of developed economies, the probability of my country's export slowing down is increasing. the slowdown in external demand will intensify the urgency of stabilizing domestic demand.

in terms of monetary policy, the federal reserve is likely to cut interest rates in september, opening up space for further interest rate cuts in my country; in terms of fiscal policy, fiscal spending needs to catch up, and it is highly likely that policy intensity will be gradually increased.

◎ third, as the world enters a cycle of interest rate cuts, the pressure on the rmb exchange rate to depreciate has been relieved, and rmb assets are expected to see capital inflows.

in addition, the fed's rate cut may trigger a reversal of the yen carry trade, and the us and japanese stock markets may face adjustment pressure. under the seesaw effect, as a global asset valuation depression, rmb assets are also expected to usher in a new round of allocation funds to increase positions.

in short, favorable factors are accumulating, and the probability of a-shares continuing to strengthen in the next period of time is relatively high. at this time, holding stocks and waiting for appreciation is the best strategy.

jia zeliang

ceo of yishi family office

▶▷first, china's macro data in july were weak, and there were no policies that significantly exceeded expectations. therefore, i hold a neutral view on the performance of china's stock market in the coming months.

▶▷second, we are more optimistic about mid-cap stocks than small-cap stocks. with the introduction of policies supporting consumption and real estate, mid-cap stocks will be in a favorable position. however, due to the increase in regulatory risks, we are not optimistic about small-cap stocks.

▶▷third, the us stock market has become more volatile due to geopolitical factors, but thanks to the fed's interest rate cuts and the growth in profits from artificial intelligence, the us stock market is still expected to have room for further growth. japan is the stock market i am more optimistic about in the asian market. for investors in the chinese stock market, i suggest diversifying risks to different regions as much as possible. in addition, gold is also a good choice.