How should you react when something makes you not handle it in time?
Whenever the market falls, we always like to find the reason. However, this time you may find hemp, and it is difficult to say “one, two, three, four” without fear. After Monday’s sharp fall, A-Shares once made a full-scale counterattack on Tuesday, but in the afternoon, the bull market flag bearer – securities companies suddenly plunged, leading the market to fall again. Tuesday’s counter offensive also ended in failure. So, what is the logic of the stock diving of securities companies?
from this round of decline, the direct cause is the epidemic situation. In fact, today’s epidemic situation has also seen some great advantages: first, the covid-19 virus inactivated vaccine of Sinopharm China biological Omicron mutant (hereinafter referred to as Austrian strain) has obtained the clinical approval of the State Food and drug administration China National Medicines Corporation Ltd(600511) afternoon, so pull the sector directly; Second, the number of confirmed cases in Shanghai fell significantly, down 13% on the 25th
It is worth mentioning that under the background of the Fed raising interest rates and the US dollar index continuing to rise, other countries in the world tend to have frequent situations. In the last two days, there has been another accident in Sri Lanka. After Monday, Sri Lanka’s blue chip index fell another 10% on Tuesday, triggering a full day stop.
So, when can we stop falling?
bull market flag bearer suddenly diving
Today, the most surprising thing is brokerage stocks. Because, in the past, brokerage stocks were the mainstream position to protect the market. Every time the market fell, brokerage stocks always got some capital favor, and maintained the stability index in the process of raising themselves. However, in the last two days, there has been an unexpected diving in securities stocks. On Tuesday afternoon, China Securities Co.Ltd(601066) suddenly plunged, leading the whole sector to fall. Finally, the brokerage sector fell 4.5% to close.
So, why did brokerage stocks fall?
First, there may be a need to cover the decline in this sector. Because, previously, although the whole securities companies had some adjustments, they carried down for a long time in the process of stabilizing the market.
Secondly, it can be expected that the performance of securities companies in the first quarter may be generally poor due to the breaking of new shares, shrinking transactions and falling stocks and bonds.
Third, with the decline of the market, the scale of the two financial institutions has fallen rapidly. On the one hand, the interest rate business of securities companies may shrink. On the other hand, the market is also expecting that the two financial risks and equity pledge risks may be gradually exposed in the process of falling.
From the previous situation, brokerage stocks do have obvious periodicity. In a bull market, there can be an amazing increase, while in a bear market, the decline of this sector is also quite large. Of course, the elasticity of this sector in the process of rescuing the market is also very amazing. Once there is good, it will rebound quickly.
epidemic situation turns around
according to the framework of our analysis of this round of market decline, two variables are very important and direct: one is the conflict between Russia and Ukraine, and the other is the epidemic situation. The former is not obvious for the time being, but there are great advantages in the epidemic situation
first, on April 26, 2022, the covid-19 virus inactivated vaccine of Sinopharm China biological Omicron mutant (hereinafter referred to as Austrian strain) obtained the clinical approval of the State Food and drug administration CNBC will conduct a sequential immune clinical study in the form of randomized, double-blind and cohort study among people aged 18 and over who have completed 2 or 3 doses of covid-19 vaccine to evaluate the safety and immunogenicity of inactivated covid-19 virus vaccine of Omicron variant. Sinopharm China Bio introduced the Omicron variant strain from the University of Hong Kong for the first time on the basis of the prototype strain covid-19 inactivated vaccine listed in the early stage and the research and development of beta and delta variant inactivated vaccine. On December 9, 2021, Sinopharm quickly launched the research and development of Austrian inactivated vaccine.
second, the epidemic situation in Shanghai has taken a turn for the better data show that on April 25, Shanghai added “1661 + 15319” local positive infections, 259 severe patients, 28 critically severe patients and 52 Local deaths. The number of people discharged from Shanghai on the same day was 14812. Sun Xiaodong, deputy director of Shanghai CDC, said that the number of positive infections reported on the same day decreased by more than 2000 cases, or 13%, which is the largest decline since the downward trend of the epidemic.
In addition, recently, the market expected that due to the epidemic, the industrial chain and supply chain would flee. In this regard, the Chinese reporter of the securities company also conducted a preliminary investigation. At present, there is no business to do in foreign trade in Guangdong. A boss of LED told the Chinese reporter of securities companies that their business is very hot now. There are no orders in China. Now the business mainly depends on overseas support. In addition, due to the depreciation of the exchange rate, it is also very good for export business.
Sri Lanka stock market meltdown
On Tuesday, Sri Lanka’s stock market experienced a circuit breaker again. Sri Lanka’s blue chip index fell another 10% on Tuesday, triggering a halt to trading. The Colombo index also plunged 8.1%.
Since April 16, the Sri Lanka stock exchange has suspended trading for two weeks. The first week is closed due to the traditional New Year holiday, and the second week is the suspension ordered by the country’s securities and Exchange Commission, saying it needs to give investors time to digest their economic situation. Two weeks later, Sri Lanka’s stock market reopened on Monday local time. The Sri Lankan stock exchange was closed only 30 minutes later.
The crisis in Sri Lanka is also due to the epidemic and the conflict between Russia and Ukraine. The country is a tourist country, and the foreign exchange income contributed by tourism accounts for about 10% of GDP. However, after the outbreak of covid-19 epidemic, the income in this regard has decreased sharply; On the other hand, 45% of the country’s wheat imports come from Russia and Ukraine, and more than 50% of sunflower oil and soybeans are imported from Ukraine. However, the conflict between the two countries has directly led to the soaring prices of relevant materials and the great pressure on the import cost of Sri Lanka.
It should be emphasized that the US dollar interest rate hike may be the root cause of all problems. Due to the withdrawal of liquidity by the Federal Reserve, major currencies in the world have depreciated recently. At this time, commodity prices have not yet significantly corrected. Therefore, it is very likely that the world may return to a rebalancing pattern and the market will usher in a relatively safe period until the end of the US dollar interest rate hike cycle.
