2015-05-04

Will Chinese Stocks Crash in May?

In May 2007, Qualified Foreign Institutional Investors lightened up on Chinese stock stocks. Then the government hiked the stamp tax on stocks. The news spurred a bout of bearishness that sent stocks down more than 23 percent (to intraday bottom) over the course of 5 trading days.
Recently, there's evidence that QFII's are again lightening up on Chinese shares, selling down positions as the price rapidly increases. This has at least one person drawing a parallel to the past. In terms of psychology, it is an apt comparison. The Chinese stock market is driven by emotion and psychology, and at some point there will be a terrific correction that will have some explanation, but will mainly be a psychological reaction. This bull market has yet to see a significant correction and the current percentage gains from the ongoing rally have exceeded the gains from 2006-2007. A correction of more than 20 percent is possible.

Long-term view: you can barely make the 2007 drop out on the 10-year chart.

So, many investors worried about the recent "5.30" crash replay will not happen? "Daily Economic News" reporter noted that early in May 2007, had at that time a number of QFII A darling of the stock market publication intensive bearish view, while actively lighten up, followed by A-shares "5.30" fell, In the first quarter QFII lighten up again.

...However, with the Shanghai Composite Index hovering high of 4,000 points up and down, a number of foreign investment bank has issued a bearish voice. On May 14 that year, held in Shanghai CLSA China Forum, a number of QFII participants are of the view, A-share market short-term excessive speed up. Previously, Liu Wei, head of China research at CLSA has said, including CLSA, including many QFII lighten up, then the ratio of cumulative redemptions of more than a month before the May 4% to 19%.

Then the market trend confirms the QFII judgment. May 29, 2007, the Ministry of Finance to adjust the securities (stock) trading stamp tax from 1 ‰ adjusted to 3 ‰, affected, May 30, 2007 in Shanghai and Shenzhen fell, the Shanghai Composite Index fell 281.84 points; deep Component Index fell 829.45 points, fell more than 6%, ST shares and excluding shares not share reform, the two cities there are 859 stocks hit bottom. Since then the stock index adjustment of nearly two months, twice dropping only recover.

...Analysts believe that, look at the moment, the market is also in a strong cattle on the way, the time the node is also the beginning of May, a few days ago it was rumored that Morgan Stanley said A shares would be cool, we recommend investors moved to Hong Kong's voice. Such and such, can not help but to May A-cap stocks more of a worry.

In fact, this year, a quarter of the overall QFII flee obvious. Times According to the "Daily News" reporter to incomplete statistics, in a quarterly data has been disclosed in listed companies, QFII coming out the top ten tradable shareholders list of more than 200 times, the cumulative number of shares at the end of last year from the end of Super 42 billion Shares to the end of the first quarter of this year, 37.5 billion shares, a total reduction of about 450 million shares.

...In the A shares rose background, QFII holding market capitalization of accumulated 71.526 billion yuan from the end of 2014 increased slightly to 72.154 billion yuan at the end of the first quarter, an increase of only 0.88%.

iFeng: QFII一季度再现大减仓 “5·30”暴跌前曾出逃

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