They’re all back!
Yesterday, with the counterattack of A-Shares and Hong Kong shares in the afternoon and the collective surge of China concept shares, the triple short ETF (Arca: Yang) of FTSE China, a trading variety of US stocks, plunged 63.11%. This sharp decline trend can be described as a fatal blow to the short of FTSE A50 Index! From the highest $48.44 in the previous trading day to $16.2 today, the ETF returned to its original point overnight!
short “40% off” price
All irrational short selling will be taught by the market itself!
Yesterday, FTSE China’s triple short ETF, an ETF that shorted China’s stock market index, experienced the biggest slump this year, with a staggering 63.11% decline in one day and a “40% discount” in trading prices, which also caused heavy losses to many short funds.
At the same time, due to the seesaw effect, FTSE China’s triple long ETF rebounded by as much as 60% and rose sharply. Behind the sharp rise is the sharp rebound of A-Shares and the collective rise of Hong Kong stocks, especially Hang Seng technology.
Market participants pointed out that the Hang Seng technology index rose by 20% yesterday, which is the correction of the irrational decline in the early stage. Malicious short selling may exist in the market, but it will not last forever. Any indiscriminate killing is risky. After all, malicious short selling itself interferes with the normal operation track of the market. When it touches the bottom line of the market, it will naturally be backfired.
The reporter of the daily economic news noted that FTSE China, which fell 63% in a single day and fell into the hot search, has three times short ETF. It is the most characteristic trading variety in the US stock market. Leveraged ETF has greater risk than alternative products without leverage. They are not suitable for all investors, but only for investors who understand leverage risk and actively manage their investment. According to the official website of the ETF, this trading variety uses three times the daily leverage to enlarge the short-term perspective of investors.
It is the so-called high risk and high return. In the irrational trend of the global market in March, such trading varieties gave foreign investors many speculative opportunities, but also contained huge risks. Yesterday, FTSE China’s triple short ETF plunged 63%, which gave a fatal blow to speculators shorting A-Shares and Hong Kong stocks.
a-share confidence is expected to gradually repair
In fact, FTSE China’s triple short ETF varieties have been rising sharply before, mainly due to the sudden and continuous decline of A-Shares since March 7, which gives opportunities for overseas speculators, and the investment confidence of Chinese investors is also declining.
On March 16, the financial stability and Development Commission of the State Council held a special meeting to study the current economic situation and capital market problems.
The meeting stressed that all policies that have a significant impact on the capital market should be coordinated with the financial management department in advance to maintain the stability and consistency of policy expectations. The financial commission of the State Council will strengthen coordination and communication according to the requirements of the Party Central Committee and the State Council, and hold accountable when necessary. Financial institutions must proceed from the overall situation and firmly support the development of the real economy. Long term institutional investors are welcome to increase their shareholding ratio. All parties must deeply understand the great significance of the “two establishment”, resolutely achieve the “two maintenance”, maintain the long-term trend of China’s healthy economic development, and jointly maintain the stable development of the capital market.
As we all know, the financial market has never been a fragmented market. China concept shares, Hong Kong shares and A-Shares have always had strong linkage. This round of rapid decline of A-Shares has a strong correlation with the continuous reduction of China concept shares and Hong Kong shares by some overseas institutions. Therefore, there are clear responses and arrangements for China concept shares and Hong Kong stock markets in this meeting.
The meeting of the Finance Committee of the State Council mentioned that with regard to China concept shares, the regulatory authorities of China and the United States have maintained good communication, made positive progress and are working to form a specific cooperation plan. The Chinese government continues to support all kinds of enterprises to list abroad. With regard to the governance of platform economy, relevant departments should improve the established plan in accordance with the principles of marketization, legalization and internationalization, adhere to seeking progress in stability, steadily promote and complete the rectification of large platform companies as soon as possible through standardized, transparent and predictable supervision, and set up red and green lights to promote the steady and healthy development of platform economy and improve international competitiveness. On the stability of Hong Kong’s financial market, the mainland and Hong Kong regulators should strengthen communication and cooperation.
Shanxi Securities Co.Ltd(002500) pointed out that there are three main reasons for the recent sharp decline in the market, namely, the sudden outbreak of the conflict between Russia and Ukraine, the spread of the epidemic in China and the continuous decline of China concept stocks and Hong Kong stocks. These factors together led to the marginal tightening of market micro liquidity, which brought a negative impact on the market, which led to fluctuations in the A-share market. The valuation level of A-share has dropped to near the historical low, and there has been an obvious oversold in the short term. In this context, the financial stability and Development Commission of the State Council held a special meeting to study the current economic situation and capital market problems, and released multiple favorable policies, which is expected to effectively boost the current market confidence and alleviate the tight liquidity situation.
USD interest rate hike landing positive factors support the future
In addition to the meeting of the financial committee of the State Council, the recent positive information of the Chinese market has actually gathered.
The macro investment and consumption data significantly exceeded the market expectations; Secondly, the central bank recently announced that it would turn over the balance profits to the central finance, with a total amount of more than 1 trillion yuan. Although the social finance data in February was lower than expected, it may be disturbed by the factors of the Spring Festival holiday, and the improvement trend remains unchanged.
On the micro level, the announcement of the company’s overall earnings will be released later than the announcement on the micro level, which will also boost the overall earnings from January to March. On the other hand, the recent A-share market repurchase frequently, the repurchase scale of listed companies is at a relatively high level in history, which also reflects the recognition of listed companies for their own value.
In the early morning of this morning, the Fed raised interest rates and landed. According to Guosen Securities Co.Ltd(002736) analysis, the impact of raising interest rates on A-Shares should also take into account China’s fundamentals. If the fundamentals are weak, it is easy to “make up the knife” to the market (2015); On the contrary, if the interest rate increase occurs when the fundamentals are strong, the impact is relatively limited (2004). The traditional view directly links the interest rate increase with the suppression of the stock market, but in fact ignores the fundamentals behind the weakening.
The broker further pointed out that the recent fundamental environment is still in the process of seasonal normal marginal improvement, and the outflow of northward funds is not directly related to the interest rate increase, which is mainly catalyzed by the risk aversion under the situation in Ukraine; Considering that the conflict between Russia and Ukraine is evolving in a positive direction, the peripheral market sentiment is gradually easing, superimposing the positive economic data from January to February and the positive signals released by the meeting of the financial committee of the State Council, dispelling the market’s doubts about “stable growth”, the subsequent market will evolve in an optimistic direction.
