Strictly check the introduction of consumer loans to the market, have you escaped?

For friends who opened accounts during National Day, you will be able to successfully complete the procedures and start trading in the market tomorrow. The significant fluctuation today may help new friends gain more awareness of the risks involved.

According to information from financial institutions, the financial regulatory authorities have provided guidance to commercial banks, requiring financial institutions to attach great importance to investor suitability management and investor protection, strengthen internal control and compliance management, and strictly control leverage. Industry insiders emphasize that bank credit funds are strictly prohibited from entering the stock market illegally, which is a financial regulatory bottom line that commercial banks must adhere to. (Financial Times)

This is inevitable. Don't be nervous, but also don't be too careless. The loosening of market chips is a gradual process that takes place bit by bit. It won't happen overnight.

Since the main focus is on raising risk awareness, today I will mention a few pitfalls that need to be avoided.

On October 8th, the latest announcement on the Shanghai Stock Exchange website shows that Jin Lei, the shareholder and actual controller of Haier Medical Holdings, plans to increase his holdings in the company using his own funds or self-raised funds. Previously, the company had announced plans to increase its holdings using special loan funds.

1. Stay away from this company, as they are trying every means possible to capitalize on market themes for speculation.

2. Avoid companies that announce plans to reduce their holdings. When the valuation has just recovered slightly, but there is a strong urge to reduce holdings, it indicates that future growth will not be able to cover the current valuation level. The major shareholders are just taking advantage of the market sentiment to exit.

3. Large blue-chips, big finance, take a break and then discuss. Because the upper level hopes for market stability without falling, and also does not want the market index to rise too quickly, these sectors have too much impact on the index.

4. Stay away from Hong Kong stocks for now. Hong Kong stocks surged significantly ahead of A-shares, so in my article yesterday I mentioned that Hong Kong stocks are not as attractive as A-shares. Let's wait until the market cools down before considering Hong Kong stocks.

The market will return to a calm state once the short-term emotional disturbances are suppressed. Only then can we see the true situation of the market and make decisions accordingly.

"Provide some views from foreign investors:"

Has the low-end manufacturing in China ended?

Before obtaining the mutual fund portfolio data for September/October, it is difficult to quantify, but if we use the fund flow on our platform as a reference, the position is starting to look quite full. In the past two weeks, long positions have a net purchase of $3.4 billion, which is similar in amount to the buying during the rebound of the unveiling of the epidemic but over a much shorter period. Global investors are trying to get ahead of the upcoming surge of retail funds by buying Hong Kong stocks/ADRs and any products based on A-shares (ASHR). Therefore, I expect any decline on Friday/Monday to be short-lived.

2. Will you buy H-shares here?

The momentum-driven rebound may exceed expectations, but the current risk-return profile is not particularly attractive. The forward P/E ratio of the state-owned enterprises index is now close to 10 times, approaching the re-opening level (11 times). Historically, when the valuation exceeds this threshold, the return of the state-owned enterprises index (3-month forward) shows a negative skew.

How to view A shares?

If our assessment that the revival of animal spirits and similarities to the 2014-2015 bull market (despite poor macro conditions) is correct, A-shares' valuation may be re-rated much more than H-shares. Although foreign holdings for the latter have been increasing rapidly, participation of domestic retail investors has just begun. On Monday, the proportion of margin financing in total turnover exceeded 10%, but it is still much lower compared to 2014 (18%).

4. Will this rebound be bigger than that of 2014-2015?

It's not impossible. In the two years before the bull market in 2014, household bank deposits increased by 15 trillion RMB. On the eve of this rebound, bank deposits increased by 40 trillion RMB, with more funds off the market.

Above.

In the morning, I used a metaphor with my friends: when there's nothing to do outside, everyone gathers at the village entrance to play cards and gamble; during the worst and most bearish times in the market when it's hard to make money anywhere, everyone collectively trades in the worst and most speculative stocks; when the economy is at its lowest, and there is a lack of opportunities to make money in society, everyone collectively trades in A-shares.

From being undervalued and quickly returning to fair valuation, to heading into gambling territory at the end of the street. How to accurately assess the current state of the market is crucial and challenging. Lao Wang shares his own view that most companies are still undervalued, while some have already entered into deep gambling territory. Making a wrong purchase in this stage may lead to losses.

Another thing to mention, the market volatility was quite significant today, drawing a long lower shadow, isn't it also quite healthy?

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