After several days of rampant increases in the A-share market, there was a significant correction today, with trading volume shrinking by 13%. Today's trading volume of 2.96 trillion yuan was over 500 billion yuan less than yesterday's. Sectors and individual stocks fell across the board, with the Shanghai Composite Index closing down by 6.62%, and the ChiNext Index plummeting by 10.59%.

The market opened low and plummeted significantly today, leaving new investors who rushed into the market a bit "dazed": Where is the promised bull market? Regarding today's significant market shock, some private fund managers indicated that the market has seen substantial gains from the recent surge, especially as it has reached the previously dense zone of trapped positions. Additionally, Chinese assets plummeted in the overseas market last night, and domestic listed companies have also frequently announced plans to reduce holdings. However, private fund managers are generally optimistic about the adjustment: There is no need to panic! This is a common washout during a bull market, and the market will enter a phase that tests stock selection abilities!

The Shanghai Composite Index fell by 6.62%, and the ChiNext Index fell by 10.59%.

Recently, the market has seen a significant surge, and the enthusiasm of funds outside the market is unstoppable, rushing to enter. Yesterday, the A-share market set a historical record in trading volume. As of October 8th, the combined margin balance of the two markets was 1.536548 trillion yuan, an increase of 107.04.7 billion yuan from the previous trading day. Unexpectedly, after several days of rampant increases, the A-share market corrected significantly today, with the Shanghai Composite Index down by 6.62% and the ChiNext Index down by 10.59% at the close. The trading volume of the Shanghai and Shenzhen markets approached three trillion yuan, more than 500 billion yuan less than yesterday. All industry sectors fell, with the number of rising stocks less than 300, the number of falling stocks exceeding 5,000, and the number of stocks hitting the daily limit down exceeding 800.

Advertisement

For today's significant market shock, some private fund managers believe that the recent rampant rise in the market has resulted in substantial gains, and the current position has reached the previously dense zone of trapped positions, exerting some pressure. Secondly, the significant drop in Chinese assets in the overseas market last night, coupled with the phenomenon of a large number of domestic listed companies reducing their holdings, has had a significant impact on market sentiment. Today's market adjustment, in the view of Hou Yanjun, the general manager of Hou Shi Tiancheng, is mainly due to the recent rapid and significant rise in the stock market, and a short-term correction is normal. In the early stage of a bull market, the securities sector is highly focused and will also experience significant fluctuations. At present, it still belongs to the normal stage of fluctuation and adjustment.

Ma Cheng, chairman of Shenzhen Juze Investment, told reporters that after the market's short-term surge, the securities sector, which led this wave of the market, fluctuated at high levels, but in the medium to long term, market sentiment has been completely ignited. Recently, trading volume has increased significantly, and liquidity in the A-share market is currently relatively abundant, with continuous funds to be supplemented. We are optimistic about the medium-term trend, and there is still a good opportunity to get on board after the market's short-term adjustment.

Chen Hongbing, chairman of Anhui Meitong Assets, told reporters that the recent rapid increase in trading volume far exceeded expectations, with funds from all walks of life rushing into the market. More funds pushed up the index, and the short-term increase was too large. Slight negative news on the market caused a significant shock, resulting in a big阴线. Today's decline is attributed to the significant drop in the Hong Kong and U.S. stock markets, causing panic in the market. In this wave of the market, those who outperformed the index were those who bought the ChiNext and STAR Market, especially the three consecutive daily limit-ups of Oriental Fortune, confirming that everyone's expectations for this wave of the market are relatively high. Securities companies are the standard-bearers of the bull market. From historical experience, the biggest beneficiaries when the market rises are securities companies.How does the massive transaction volume of 90 billion yuan of East Money affect the market?

The two leading securities firms, CITIC Securities and East Money, which are seen as the barometers of a bull market, both opened their boards, especially East Money's massive transaction volume of 90 billion yuan today, which has a significant impact on market sentiment. Ma Cheng, chairman of Shenzhen Juze Investment, told reporters that after a sharp rise in the short term, the securities sector, which led this wave of the market, fell back at high levels, with East Money alone trading over 90 billion yuan, indicating that after a sharp rise in the short term, the desire to cash out profits is strong, which will have a greater impact on the market in the short term.

Chen Xingwen, Chief Investment Officer of Heqi Capital, told reporters that from a positive perspective, a massive transaction volume usually means high market participation and good liquidity, which can enhance market confidence, drive stock prices up, and form a virtuous cycle. The breakthrough in East Money's transaction volume reflects investors' strong interest in the company and its industry, which may indicate the market's optimism about financial technology stocks. However, a massive transaction volume may also bring some negative impacts. When market participants have obvious disagreements on stock trading, a massive transaction volume may mean that the market has some disagreements, and some investors may think this is a signal of the market's peak.

Chen Xingwen said that the increase in transaction volume may lead to increased market volatility because more funds flowing into the market means more buying and selling forces are competing with each other, which may lead to significant short-term fluctuations in stock prices. If the transaction volume continues to increase while the stock price fails to rise synchronously, or if there is a divergence between volume and price, it may mean that the market has the risk of excessive speculation or bubbles. For East Money, its business volume and revenue may increase with the expansion of market transaction volume. East Money's massive transaction volume is an important indicator of market activity, which can both drive market sentiment and cause market fluctuations. Investors need to pay attention to the company's fundamentals and the overall trend of the market.

Yi Xiaobin, Director of Equity Investment of Shunshi Investment, also told reporters that East Money's market value is second only to CITIC Securities, and its 20% price fluctuation is easy to be favored by funds, so its activity is often greater and the increase is also considerable in each wave of securities stocks. Although it still closed with a red plate after setting a historical high today, its long upper shadow line and huge transaction volume will be a huge obstacle to the subsequent rise, and it is necessary to accumulate more volume to form an effective breakthrough. At the same time, the securities market is often an important barometer of how high the market can go. If the leader cannot continue to strengthen, the market will be more or less affected to a certain extent and may need some time to digest.

Private Equity: No need to panic! Common washing in the bull market!

For the huge shock in the market, market senior analyst Wang Ping pointed out that the market opened high yesterday, then fell sharply, and today the market opened low and fell sharply, which is a fierce washing. Investors who rushed into the market must be a bit confused; but this is a common washing action on the way to the bull market, and there is no need to panic. Moreover, moderate retreat and fluctuations are beneficial to the long-term and healthy development of the market. The market sentiment has been obvious recently, and emotions are changeable and fickle, which will lead to the market's sharp rise and fall.Wang Ping pointed out that after the strong washing of the market here and the subsequent market fluctuations, the market will gradually return to rationality, and impulsive transactions will decrease. From a technical perspective, the continuous surge of the market in the previous few days has resulted in a large deviation of the index, with the index deviating too far from the 5-day moving average. The market itself has the demand to fall back and fluctuate, and to retrace to the 5-day moving average. During the previous stage of the market's surge, the market was a general rise pattern, with almost all stocks rising, although the differences in the increase were also very large. After the end of the first surge, the general rise pattern will also change, and the differentiation of individual stocks is inevitable, and the market will enter a stage of testing stock selection ability.

After the A-share market has experienced a rapid surge in the short term, the market's volatility is also increasing. With more funds flowing into the market, it means that more buying and selling forces are playing against each other, which may lead to greater market fluctuations in the short term. East Money has become the weathervane of this round of market trends. The huge transaction volume of East Money has not only set a historical record but also had a positive impact on the market, enhancing investors' confidence in the market and possibly indicating further market activity in the future.