沪深300 第一部

Shanghai Composite Broke 26-Year Support

Current Market Mood: Fear

Here's a story worth noting from China: the San'an Optoelectronics tanked because a fund manager who owns a lot of the company went "missing." He was on vacation. Rumors that he disappeared sent the semiconductor sector lower in China and weighed on technology stocks.

iFeng: 失联传言搅动半导体“一夜惊魂”，蔡嵩松朋友圈紧急表明“在休假”

On the evening of September 20, there were rumors that "the top fund manager surnamed Cai lost contact this week", and this rumor pointed to Cai Songsong, the top fund manager of Lion Fund. For a time, the market was hotly debated.

In this regard, Cai Songsong responded in the circle of friends late at night that he was "on a normal vacation", and then the Lion Fund confirmed the matter to a reporter from the Financial Associated Press. At the same time, Cai Songsong responded to the relevant people of the Financial Associated Press that he was indeed on vacation.

...As of the end of June, the management scale of Lion Fund's non-public offerings was 65.984 billion yuan, and the management scale of Cai Songsong alone was close to half of this figure. If the debt base of 17.090 billion yuan is excluded, the total scale of the company's stock funds and hybrid funds is 48.254 billion yuan, which is only 1.58 times the total management scale of Cai Songsong.

Previously, industry insiders have analyzed that the contribution of the "Cai Songsong effect" to the scale of Lion's Fund may have hit the "ceiling", and the contribution of other equity veterans and rookies is relatively insufficient. The hidden worry behind this development model is that once Cai Songsong's career changes or his performance continues to decline sharply in the future, the benefits of Neo An will be affected, which is a practical problem for the company's leadership.

...In terms of heavy holding stocks, as of the end of the second quarter, the top ten heavy holding stocks of products managed by Cai Songsong were: North China Creation, Weir, Zhuoshengwei, China Micro, Shengbang, Zhaoyi Innovation, Sanan Optoelectronics, Beijing Junzheng, Shanghai Silicon Industry, SMIC.

Except for the stock prices of North Huachuang and Zhongwei, which rose to varying degrees in the second quarter, the rest of the heavy-holding stocks fell in the range of 14.30% to 29.00% in the second quarter.

It looks like the stock is tanking for the same reason as the rest of the sector: it's a bear market. Yet this is a top story in the finance section of iFeng. The market is full of clueless bulls (including professionals) who have no idea what they're doing.

China Financials

China financials look cheap or with potential bullish patterns. The wildcard here is like with Japan: is there a nomainal breakout coming that will be fueled by currency depreciation?

Here is the U.S. China Financials ETF, CHIX, sucking wind. It could have a long way to rally if China's markets rise and the currency rises.

At this stage I'd prefer nominal exposure with a currency hedge. I think the current bear market rally around the world would have to transform into an actual bull market, complete with weaker USD and emerging market outperformance, for a pure long China trade to pay off with low risk. That said, looking at something like Shenwan (a stock I liked way back in the 2014 time frame), my sense is a nominal bull market will deliver enough gains to offset currency devaluation. Financials usually get destroyed in currency devaluation/high inflation scenarios, but maybe Chinese banks are so weak and priced cheap for their risk, that high inflation/currency deval would lift that risk.

Now It's Serious: PBoC Forced to Comment on Shanghai Comp Breaking 3000, 25-Year Support Busted

Major multi-decade trendlines are failing across markets.

iFeng: 央行回应金融市场波动：主要受投资者预期和情绪影响

We have noticed some fluctuations in the financial market recently, which are mainly affected by investors' expectations and sentiments. At present, our country's economic fundamentals are sound, the potential for endogenous economic growth is huge, and substantial progress has been made in preventing and defusing financial risks. The financial system implements the decisions and arrangements of the CPC Central Committee and the State Council, coordinates epidemic prevention and control and economic and social development, supports logistics smoothness and promotes the stability of industrial and supply chains, and minimizes the impact of the epidemic on economic and social development. In accordance with the principles of marketization, rule of law, and internationalization, steadily advance and complete the rectification work of large platform companies as soon as possible, and promote the healthy development of the platform economy. The People's Bank of China will increase support for the real economy with a prudent monetary policy, especially to support industries severely affected by the epidemic, small, medium and micro enterprises, and individual industrial and commercial households, support agricultural production and energy supply and increase supply, and launch technological innovation and re-lending and inclusive benefits. Special re-loans for the elderly, an increase of 100 billion yuan in re-loans to support the development and use of coal and enhancement of energy storage, increased re-loans to support agriculture and small businesses and special re-loans for civil aviation, maintain a reasonable and sufficient liquidity, promote the healthy and stable development of the financial market, and create a good currency financial environment.

Boilerplate. The point isn't what they said, it's that they said anything at all.

Elsewhere, the familiar "don't worry, please keep buying" message for the holders along with "where's the bottom?" for the nervous bulls.

iFeng: 李大霄：跌破3000点不是世界末日 恒指率先见底的希望最大

On April 25, the three major A-share stock indexes opened lower and moved lower. In the afternoon, the Shanghai Index fell below 3,000 points intraday. After 21 months, it returned to the "2" stock index and the ChiNext index fell by more than 3% intraday.

In this regard, Li Daxiao said that falling below 3,000 points is not the end of the world. When the market is rising, there will also be periods of adjustment.

He believes that policies to stabilize growth are being introduced one after another, and the market reaction will be reflected later. Therefore, we should not be overly pessimistic about the market, do a good job of responding, change from offense to defense, choose equity products that match our risk tolerance, and calmly respond to market fluctuations. At the same time, don't lose faith in good stocks, avoid stocks with high valuations, and be careful with leverage.

Li Daxiao said that the Hang Seng Index is currently the most hopeful for the market to bottom out, and the second is the Shanghai Stock Exchange 50. When conditions are ripe in the future, A-shares may rebound with good stocks as the main force. With the stabilization of the economy and the intensification of steady growth, stocks related to steady growth will return to their proper value.

Li Daxiao is like the Jim Cramer of China:

Li Daxiao’s share tips attract hundreds of thousands of views within hours of appearing on Chinese social media. The celebrity stock guru, who posts short, quirky online videos, is known to move markets when China’s army of retail investors follow his advice.

But Mr Li’s unshakeably optimistic outlook on Chinese equities has prompted scrutiny from authorities and a public backlash following the market rout caused by the coronavirus outbreak, with some investors blaming the star stock picker for their losses.

In one particularly ill-timed call, Mr Li in mid-February insisted the Chinese market was on the brink of a bull run, just days before stocks plummeted. Last year, his forecast that the Shanghai Composite index would hold above 3,000 points was repeatedly proved wrong as the US-China trade war whipsawed the market.

iFeng: A股跌破3000点何时触底？孙建波：高估值压力已基本解除 长期建仓机会显现

n April 25, the three major A-share stock indexes opened lower and moved lower, and the Shanghai index fell below 3,000 points, the lowest since July 2020. As of press time, the Shanghai Composite Index, Shenzhen Component Index, and ChiNext Index all fell by more than 3%, and more than 4,400 stocks fell.

Regarding the sharp drop in A-shares today, Sun Jianbo, chief economist of China Reading Capital, told Phoenix.com Finance that on the one hand, since the fourth quarter of 2021, the valuation of track stocks and high-valued white horses has been challenged. This challenge requires individual stocks to return to normal valuations.

On the other hand, Sun Jianbo believes that when the market falls below 3,000 points, the pressure of high valuation has basically been relieved, but for the market outlook, Sun Jianbo believes that it may further decline, and the reason is the decline. Panic inertia superimposes the current confusing economic environment.

As for where the "bottom" is, Sun Jianbo predicts that it may continue to drop to around 2700, and then there is a high probability that it will stop falling and stabilize. At the same time, Sun Jianbo pointed out that panic declines are often opportunities for long-term positions. He suggested that you should look for industries and companies with better growth in the next 3-5 years, and "build positions at lower prices during a panic decline.

Coronavirus is a big distraction for the world. The virus is real, but the overreaction allowed for a 2-year life extension on a bull market headed for the end. It is also now covering up weakness in China. As I've put it before, losing all the gains since March 2020 only gets the bear market to the starting line. All the damage from inflation and supply chains will make the ensuing bear market and recession far worse than it would have been otherwise. China is in the same boat as everyone else, and in worse shape with a currency that needs propping with falling reserves. 

It's possible China has already blown through some of those reserves with tricks if they believed the U.S. dollar bull market wouldn't last, in which case the depreciation will pick up steam. USDCNY has erased more than a year of losses in one trading week. It's taking a breather today after hitting a resistance area, but that's still a great bullish setup.

A-Share Short Targets

Two big ones.

Chinese Snowball Derivatives Meet Hell

August 2021: China regulators step up risk control over popular Snowball derivatives - sources

China's securities watchdog has tightened scrutiny on a popular derivative product dubbed Snowball, three sources told Reuters, as regulators seek to rein in risks in an opaque, $60 billion market.

Snowball, which offers a risky bet on stock market volatility and delivers double-digit, annualised returns barring a market tumble, has gained popularity among yield-hungry investors.

Pennies in front of the steamroller: selling volatility.

"Snowball products are often marketed as a type of fixed-income products, and investors are not fully aware of the risks. This worries regulators," a source said.

Here we go.

Some rival products offer annualised returns of as high as 20%. The benchmark Shanghai Composite Index SSEC. has gained 1.49% so far this year.

"You make money in a volatile market. You make money in a bullish market. But if you buy the product at the start of a bear market, you lose," Wang Yichao, managing director of Guotai Yuanxin Asset Management Co, told a roadshow on Snowball on Thursday.

About that: not quite a bear yet, down 15-percent from the recent high to the recent low. Do you want to bet on that trendline holding though?

This article in iFeng says snowball products are being blamed for recent market weakness: 雪球“背锅”市场大跌？业内：一切销售正常，不宜妖魔化！真相如何？

"Recently, the sales of Snowball products are normal. The index snowball at the retail end has not been knocked-in in a concentrated manner. There is still a lot of room for the knock-in line. The possibility of the index falling sharply at this position is relatively low, so we I think the overall risk is still controllable." A person from the innovative finance department of a large securities firm in Shanghai told a Chinese reporter from a brokerage firm.

Another brokerage sales person said that there is no special response from customers to Snowball products at present, and the company is also continuing to issue Snowball products.

"I have heard some unfriendly remarks, but those are all speculations of people in the non-derivatives industry. In fact, derivatives play a role in calming fluctuations in the market." said a derivatives person at a brokerage.

"Because the snowballs that open at the high point are basically 12 to 24 months in duration, the probability that the index will not rebound for such a long time in the future is very small, so as long as customers have a certain amount of patience, they can also get the set price at the beginning of the period. Profitable. Of course, I personally think that this kind of knock-in situation is basically difficult to occur, and it is an extremely unlikely event." The above-mentioned person explained.

A market source said that it is not appropriate to over-beautify snowball products, but it is also not appropriate to demonize them. Snowball structure products have certain risks, which mainly depend on the accuracy of investors' prediction of the market. According to him, there are two main types of risks in snowball structure products: one is the risk of knock-in caused by falling market prices, that is, the risk of principal loss; After the Snowball product was knocked out in advance, it was difficult to find the risk of assets with higher yields.

Another article: 雪球产品被传“爆炸”，是否该为市场急跌“背锅”？

2. Has the index plummeted snowballed "because of the blame"?

An asset manager of a brokerage firm in East China said that the reason cannot be attributed to a certain type of product, the scale of derivatives will not be very large, and the impact of snowball on the market will not be so great.

Yu Mingming, chief of the gold working group of Cinda Securities and deputy general manager of the research institute, pointed out in previous research that Snowball is not a beast. Acting on the convergence of the stock index futures discount rate will not have a significant impact on the direction of the index.

Mr. Jia, who is engaged in market work in the financial leasing industry, often comes into contact with options in his work, and has also been concerned about Xueqiu products for a long time. He analyzed that: "Look at Xueqiu's contract and know that if you type in, the product will be a fixed income product. It has become a futures index product that rises and falls with the index.”

In his understanding, the knock-in means that the over-the-counter put option has been exercised, and the product itself has no leverage.

Specifically, it is inevitable that the most important Greek letter of Snowball products - Delta.

According to Yu Mingming's analysis, Delta is the change between the product price and the underlying price. For ordinary vanilla options, the delta range is between [-1, 1], but exotic options no longer follow this principle. The figure below shows the Delta of the snowball structure. Distribution chart, in which the horizontal axis is the percentage of the underlying price, and the vertical axis is the delta value. As can be seen from the figure, when the underlying price is near the knock-in boundary of 0.85, the delta is the largest, about 1.6, and as the underlying price rises, the delta Rapid decline, when the underlying price exceeds the knockout boundary of 1.03, the Delta tends to 0, and the price of the snowball is no longer sensitive to the underlying price.

Maybe the "snowball derivatives" won't all melt to zero in a bear market. Or maybe they will, but won't cause major knock on damage. At the very least however, they show the type of reckless risk-taking that is found at speculative tops. My bet is that trendline on the Shanghai Composite won't hold.

卖空A股

iFeng: 历史罕见！茅台、宁德时代一同被大举减仓！基金最新持仓大曝光

Chinese Traditional Medicine Prices Are "Soaring Like Rockets", Some Up 800pc

Chinese medicine prices are soaring thanks to inflation, coronavirus, some natural disasters and global government destruction of the economy and supply chains.

iFeng: 价格像火箭一样蹿升！有中药材一年上涨超过800% 发生了什么？

Multiple factors have caused the price of medicinal materials to rise

According to data from the Chinese herbal medicine information platform "Yaotong.com", since 2020, the Chinese herbal medicine market index has risen by more than 30%, compared with an increase of about 10% in the previous three years. Specific to various medicinal materials, the prices of more than 50 Chinese medicinal materials will double in 2021. Among them, white lentils have risen by more than 800%, and Rehmannia glutinosa and Ecliptaea have increased by more than 300%.

Why have the prices of Chinese medicinal materials soared since 2020? Zheng Zhiwen, a senior analyst of Yaotong.com, said in an interview with a reporter from "Daily Economic News" that the price of Chinese medicinal materials has risen mainly due to the following five reasons:

First of all, after the outbreak of the new crown epidemic in 2020, the prices of medicinal materials related to the epidemic began to rise, such as Radix Isatidis, honeysuckle, and Forsythia. According to the "Diagnosis and Treatment Plan for Pneumonia Caused by Novel Coronavirus Infection" (Trial Version 7) issued by relevant departments, Huoxiang Zhengqi Capsules (Pills, Water, Oral Liquid), Lianhua Qingwen Capsules (Particles), Jinhua Qinggan Granules, Shufeng Chinese patent medicines such as Jiedu Capsules (granules) are listed as recommended medicines during the medical observation period for the treatment of new coronary pneumonia by Chinese medicine.

Second, also affected by the epidemic, a large number of customs clearance ports have been closed, and cross-border logistics have been greatly impacted. Some imported medicinal materials cannot be transported to the country. The prices of imported medicinal materials such as white cardamom, horse money, and pepper have begun to rise.

Third, the prices of Chinese medicinal materials are cyclical. The overproduction of medicinal materials stimulated by high prices in the past few years led to the low prices of medicinal materials for many years before and after 2018. Continued low prices will lead to reductions in species, and prices will start to rise again after species reductions. The price of Chinese medicinal materials presents a periodicity of "three years of rising, three years of falling, and three years of neither rising nor falling".

Fourth, it is affected by frequent natural disasters and rising planting costs. In recent years, frequent natural disasters, such as low temperature, drought, floods, etc., have caused some medicinal materials to reduce production, which has caused prices to rise; at the same time, planting and harvesting costs have also risen in recent years, and corresponding medicinal materials prices will also rise.

Fifth, it is affected by the increased supervision of the quality of Chinese medicinal materials. In July 2020, the new version of "The Pharmacopoeia of the People's Republic of China" was promulgated and officially implemented on December 30 of the same year. With the promulgation and implementation of the new pharmacopoeia, qualified medicinal materials have become the first choice for drug users. Due to the problems of heavy metals, pesticide residues, sulfur, and ash, the prices of qualified medicinal materials have risen, the prices of unqualified medicinal materials have fallen, and the prices of medicinal materials of different qualities have also been opened. distance.

Shares of Tongrentang gapped up to a new all-time high on Tuesday, followed by a pullback today. Other TCM stocks are also popping.

New for 2022: A股

While I am bearish on the yuan, the Chinese stock market has many commodity and industrial companies on its stock exchange. If inflation takes off, many individual firms will benefit.

Huning Pigs Massacred

Individual stocks in China are suddenly plunging too amid what I believe is an ongoing topping process.

iFeng: 沪宁股份“杀猪盘惨案”揭秘：福建系游资因何清仓抛售？

In the absence of any abnormalities in the fundamentals, why are investors in the secondary market suddenly strangled by the "slaughter plate"? The CBN investigation found that the flash crash of the Shanghai-Nanjing stocks was directly related to the hot money of the Fujian-based brokerage business department. Since March 17, Shanghai-Nanjing shares have been on the Dragon and Tiger list four times, and the corresponding 20 trading seats with the largest selling amount, mostly from the brokerage department of Fujian, accounted for 19, of which the sales disclosed in the past three trading days The top five seats were all seats in the business department of Fujian brokerage firms. During the period, the accumulated sales amount reached more than 246 million yuan.

Behind the concentrated sell-off of Fujian brokerage seats, a number of Fujianese shareholders of Shanghai-Nanjing shares have also begun to surface. As of the end of September last year, a private equity institution named Fujian Chengyi Asset Management Co., Ltd. (hereinafter referred to as "Chengyi Assets") held a total of 3.11 million shares of Shanghai-Nanjing shares, and many of its natural-person shareholders also existed with the business department of Fujian securities firms. Intersection.

From the perspective of transaction distribution, from March 17th to 30th, the sales department seats of the Shanghai-Nanjing shares were sold in a high degree of overlap with the accounts of the securities companies held by these shareholders. For example, the sales department of Dongxing Securities has appeared in the top five of the stock’s Long and Tigers list ten times during the period, and the cumulative sales amount has exceeded 130 million yuan. The accounts of Chengyi Assets and several other shareholders are all from Dongxing Securities. .

For a long time, Shanghai-Nanjing Co., Ltd. has few public offerings, insurance funds and other institutions holding shares, while private placements and hot money have frequently entered and exited. At the end of the first quarter of last year, the company's top ten shareholders of tradable shares were all natural persons, and there has been no major change since then. Almost all of the shares held by these natural persons are leveraged by the two securities companies.

From the end of 2019 to before the flash crash, the stock price of Shanghai-Nanjing Co., Ltd. had risen by more than 2.5 times. In 2020, individual shareholders of the company were sued in court for private loan disputes. These private equity and natural person shareholders concentrated on liquidating their positions. Is the capital chain broken or is it profitable?

中国A股图标， 哪里好看？

Utilities, aluminim, iron ore, steel, specialty chemicals/metals, "boring" industrial electronics, environmental are among the areas showing nice basing patterns in A-shares.