"This is Old News" Say Bulls as Chinese Investors Dump Shares

Is it a bull market correction or the beginning of the end?

Geopolitical risk is nothing new. Embassy closings are more political in nature than economic. Threats to tech companies and Hong Kong's status were far more relevant for the stock market, yet the bulls ignored it on the way up. Now on the way down, headline writers are pointing to embassy closings, a news item that would be ignored by the stock market in a time of positive mood. The dip, along with the inability for the financial media to identify a credible explanation, highlights the possibility that market mood is turning again.

iFeng: 一则过时消息成暴跌推手！谁在制造恐慌气氛？A股1天蒸发3.3万亿

It stands to reason that in the face of Sino-US friction, the probability of market weakness is relatively high. However, in the absence of a sharp decline in the periphery, the decline in A shares was somewhat beyond the expectations of most people in the market.

On July 24, under the background of the weak performance of U.S. stocks in the night trading and the re-escalation of international disputes, the A-shares opened lower in the morning, and then the decline increased. The Shanghai Composite Index fell by more than 4% at one point, but still fell 3.86% at the close, falling below 3,200 points. It is worth noting that the bargaining chips of technology stocks have loosened, representing that the ChiNext Index closed at 2,627.84 points, down 6.14%; Kechuang 50 closed at 1,389.31 points, down 7.02%. A-shares evaporated by nearly 3.3 trillion yuan that day, and the actual net sales of northbound funds were 16.357 billion yuan, and the net sales in the past two trading days reached 20 billion yuan.

Judging from the information on the disk, according to the Chinese Ministry of Foreign Affairs, on the morning of July 24, 2020, the Chinese Ministry of Foreign Affairs notified the U.S. Embassy in China that China has decided to revoke the permission for the establishment and operation of the U.S. Consulate General in Chengdu. Stop all business and activities and put forward specific requirements. The above-mentioned measures by China are a legitimate and necessary response to the unreasonable actions of the United States. They are in compliance with international law and basic norms of international relations, as well as diplomatic practices. After the news was released, the market saw a greater degree of slump.

However, it is still an outdated news that really accelerates the market. During the session, a news about Trump's press conference circulated widely in the market. The news stated that there will be explosive news that will shock China and foreign countries. However, the reporter found that this press conference had already been held in the morning Beijing time and there was no explosive news.

So, who is creating the atmosphere of panic? Can the market continue?