This panic after a long trend often corresponds to the final stage of the trend; Combined with the time window of the beginning of spring and the potential turnaround brought about by the landing of the RRR cut, the market may "reverse the extreme" at any time. 
Investor Network" Special Wealth Navigator Mao Rui.
The three major indexes opened mixed in early trading on Friday. After the opening, the index continued to decline, and the ChiNext index led the decline. In the afternoon, the index continued to decline and the decline rate accelerated, the ChiNext index once fell nearly 5%, and the late stage rebounded significantly under the pull of heavy stocks. In the end, the Shanghai Composite Index, the Shenzhen Component Index, and the ChiNext Index fell sharply respectively. 43% were reimbursed. On the disk, there are 26 limit stocks (excluding ST) and 47 stocks falling (excluding ST), indicating that the market sentiment is panicked; The change-change ratio is 368:4704, and the average increase is -432%, the loss effect is significant, and the turnover of the two cities is 805.7 billion, an increase of 14 from the previous trading day61%。The net inflow of northbound funds exceeded 1 billion.
Last Friday, the market showed an accelerated "dive" trend, reflecting the overall market conditions of the average stock price index in the afternoon once fell sharply more than 6%, if not for the late session of the mysterious funds to use the "power of the wilderness" to protect the disk, maybe it will once again create a historical record of A shares, that is, the average stock price index recorded the largest weekly decline since records began in 2011, even so, 14The 43% drop is second only to the week that occurred shortly after the end of the bull market in 2015.1842% drop.
Not to mention that such a decline is completely contrary to the fundamentals of the economy and the market, it can even be said that it is completely beyond the scope of rationality, and the important reason for this phenomenon lies in the "negative feedback" of the market. One is the emotional "negative feedback". To put it simply: continuous ** leads to a comprehensive money-losing effect Confidence continues to be frustrated Negative emotions spread through the network Further contribute to the acceleration of ** Leads to the expansion of the money-losing effect Confidence collapses ....... With the increasing development of the current self-development, the spread of negative emotions has become more and more widespread, and it has also caused the positive guidance influence of the regulator and the mainstream to decline, and the decline seems to be more difficult to reverse than before. The second is the "negative feedback" on the capital side or liquidity. With the continuous emergence of various innovative products in the capital market, some products will have the effect of helping to rise and fall, such as the recent continuous knock-in of snowball products and the sharp decline in the balance of the two financial institutions, which has exacerbated the negative feedback of liquidity in the market.
To break this "negative feedback" of the market, one is to wait for it to clear naturally, which is a relatively long process. Second, strong external intervention is required. For example, in early November last year, the South Korean Financial Supervisory Service announced the resumption of a comprehensive ban on short selling**, and as a result, the South Korean KOSPI index has since risen from 2368 to a maximum of 2675 on February 1 this year. It can also be a huge amount of "real gold" into the market, such as the 97 Asian financial crisis during the Hong Kong financial defense war, the central bank thundered, directly took out 140 billion US dollars of foreign exchange reserves, to Hong Kong's first support, and finally won the victory of the defense war, so that foreign malicious short capital returned.
Now, we seem to have begun to see some corresponding measures on the policy and "real gold" in A-shares. On the one hand, yesterday the China Securities Regulatory Commission held a meeting of the party committee to make arrangements for maintaining the stability of the capital market. The meeting proposed that it is necessary to thoroughly investigate clues of violations of laws and regulations, and severely crack down on major illegal acts such as market manipulation, malicious short-selling, insider trading, and fraudulent issuance in accordance with the law. The meeting stressed that it is necessary to actively cooperate with relevant parties to make greater efforts to coordinate the implementation of various measures to stabilize the market, stabilize expectations and confidence, and resolutely prevent abnormal market fluctuations. Uncle Rui hopes and believes that the regulator will implement more powerful measures as soon as possible to curb the irrationality of the current market**. On the other hand, I have recently seen that there are mysterious funds taking advantage of ETFs to enter the market to protect the market. Last month, the total "gold absorption" of **-type ETFs** exceeded 160 billion yuan, a new high since August last year, and the net subscription amount of **-type ETFs exceeded 16 billion yuan in one day last Friday. However, Uncle Rui also wants to make a few suggestions in this regard, first, don't "just support but not lift" when protecting the disk, it is best to form a money-making effect, and the money-making effect is a good medicine to end the "negative feedback"; Second, the amount of funds should be large enough to offset the pressure on the capital side caused by the continuous knock-in of snowball products and the sharp decline in the balance of the two financial institutions; Third, there is no need to hide and hide the capital disk, but it should be publicized with great fanfare, so as to convey a resolute attitude to the market, which is also more conducive to stabilizing market confidence.
Yesterday was the first of the 24 solar terms of the lunar calendar, the beginning of spring, which marked the end of winter and the beginning of spring. In fact, the 24 solar terms often become an important time window in technical analysis, and the beginning of spring is the second most important time window of the year, second only to the winter solstice, and most of the time it is to help rise, such as February 4, 2020 is the beginning of spring, on the same day, ** saw the lowest point of the stage and ushered in a wave of more than 14% strong**, there are many similar cases in history, you can review by yourself. Moreover, there is another important event landing today, that is, the central bank has cut the reserve requirement ratio by 05 percentage points and the reduction of the rediscount rate will be officially implemented today, and historically, after a similar situation in the first quarter of A-shares, the market has often performed quite well, such as: on January 4, 2019, the central bank announced a 1 percentage point RRR cut, and since then, the ** range has risen by as much as 327%；On February 4, 2015, the central bank announced a 0.0 RRR cut5 percentage points, and since then, the ** range has risen by as much as 472%。There is not a spring that will not come! Based on the time window of the beginning of spring and the potential turnaround brought about by the landing of the RRR cut, Uncle Rui also hopes that the spring of this year's A-shares will start today! At the corresponding operational level, it is also recommended that those with light positions increase their positions on dips, and those with heavy positions hold shares patiently to rise.
In terms of sectors and hot spots, on the market last Friday, in terms of industries, sorted in an unweighted manner, only tourism closed up against the trend, and environmental protection, aviation, and software services were among the top decliners. In terms of subject matter, combined with the number of increases of more than 5%** and the increase in sector indexes, there are no obvious active sectors.
In the context of the overall market plummet, there were basically no obvious active sectors last Friday, and the relatively resistant ones were in addition to the "special assessment" that Uncle Rui has repeatedly prompted in recent days, and it is worth noting that there is also the tourism sector. According to the non-weighted sorting, tourism is not only the only sector that is red against the trend, but also half of the sectors have closed up, ranking first among all sectors. Driven, the strong demand for Spring Festival tourism is expected to continue the hot situation on New Year's Day. According to Ctrip's "2024 Spring Festival Travel Market** Report" released on January 15, as of January 13, orders for domestic, outbound and inbound travel during the Spring Festival holiday (February 9-17) have increased significantly. The "north-south exchange" of ice and snow tours in the north and hot springs in the south is a popular domestic tour, and travel orders during the Spring Festival increased by more than 7 times year-on-year. Previously, the Ministry of Transport also predicted that there would be about 9 billion people traveling, visiting relatives, and leisure in 40 days during the Spring Festival this year, which may hit a record high. In addition, with the approach of the Spring Festival holiday, Iceland, Finland, Norway, Sweden and other Nordic countries have entered the best time to see the aurora. According to the Zhongxin tourism platform, the Nordic "Light Chaser" Ice and Snow Aurora series of themed products performed well, and the popular travel date products were sold out as early as a month and a half before the Spring Festival. On Tuniu's platform, Aurora-themed package tours such as "Iceland In-depth 8-Day Tour", "Finland-Iceland 9-11 Day Tour", "Iceland-Nordic Countries 9-Day Tour", and "Norway-Lofoten Islands 12-Day Tour" are particularly popular. Snowmobiles, reindeer sledding, husky sledding, ice fishing, ice sculpture hotels and other Nordic winter limited attractions have also attracted the attention of many Chinese tourists. According to the analysis of relevant brokerage research reports, there are the following characteristics in the booking of this year's Spring Festival holiday: 1. The population flow during the Spring Festival has reached a new high, and railway traffic has recovered faster than air traffic. 2. "Going home for reunion" is still the main theme of population flow during the Spring Festival, but the tourism attributes of the Spring Festival holiday are enhanced, and more people prefer to travel for the New Year or increase the proportion of tourism consumption during the Spring Festival holiday. 3. Driven by the popularity of ice and snow tourism, local cultural and tourism bureaus have strengthened new promotions, increased the popularity of travel to a new stage, and led to the gradual recovery of inbound tourism. 4. The supply side of cross-border tourism has gradually improved, from the perspective of tourist destinations, polar ice and snow, Nordic products have grown rapidly, and Southeast Asia is still the most intensive product scheduled. Looking back on the history of A-shares, the tourist attraction index outperformed in most of the 20 trading days before and after the Spring Festival**. From 2014 to 2023, the number of years before the Spring Festival in the index of tourist attractions is 4 years, of which only 1 year** has a range of more than 10%; In the 10 years from 2014 to 2023, the number of years after the Spring Festival is 7 years, of which 3 years have a range of more than 10%; Except for 2017 and 2019, the index range of the tourist attraction index** exceeded that of the Shanghai Composite Index and the CSI 300 Index. Within the 20 trading days before and after the Spring Festival, the magnitude and probability of the tourist attraction index after the Spring Festival were higher than those before the Spring Festival, and the tourist attraction index was mostly the trend after the Spring Festival; The tourist attraction industry index outperformed the Shanghai Composite Index and the CSI 300 Index most of the time. Based on the divergence between the significant recovery trend of the tourism industry since last year and the current sector index hitting a new low in recent years, and learning from the performance of the same period in history, it is advisable to pay attention to the potential opportunities in the tourism sector at present.
On the news side, on February 3, the "Opinions of the Communist Party of China on Learning and Using the Experience of the "Thousand Village Demonstration and Ten Thousand Village Renovation" Project to Effectively and Effectively Promote the Comprehensive Revitalization of Villages ("Document No. 1") was released. The document clearly mentions the stabilization of grain and important agricultural products, and the focus of increasing output is to increase yields, consolidate the results of soybean expansion, increase the minimum purchase price of wheat and continue to implement the subsidy requirements for corn and soybeans; Emphasize the strengthening of agricultural science and technology support, accelerate the revitalization of the seed industry, and promote the expansion and acceleration of the industrialization of biological breeding; In terms of regulation and control of grain and important agricultural products, deepening agricultural cooperation under the Belt and Road Initiative was mentioned for the first time; In terms of strengthening rural reform and innovation, we will start the implementation of the second round of land contracts and extend them for another 30 years after the expiration of the pilot project for the whole province, and improve the formation mechanism of land circulation. Looking back at the first document of the previous years, biological breeding was mentioned for the first time in 2021, pointing out that the industrial application of biological breeding will be promoted in an orderly manner, major projects of agricultural biological breeding will be launched and fully implemented in 2022-2023, and it will be proposed to promote the industrialization of biological breeding in 2024. On January 18, 2024, the Ministry of Agriculture issued the "2023 Agricultural Genetically Modified Organism Safety Certificate Approval List (III)", and a number of genetically modified corn and soybean crops were issued with production and application safety certificates for the first time. With the acceleration of the genetically modified industrialization policy, the penetration rate of genetically modified corn and soybean is expected to accelerate growth, and the leading enterprises will fully benefit. In addition, under the main theme of ensuring stable grain production, the document points out that the minimum purchase price of wheat should be appropriately raised, the minimum purchase price of rice should be reasonably determined, and the policies of subsidies for cultivated land protection, subsidies for corn and soybean producers, and subsidies for rice should continue to be implemented. Improve the response mechanism for ensuring the supply and price stability of agricultural materials, and explore the establishment of an inter-provincial horizontal interest compensation mechanism for grain production and marketing areas. In terms of agricultural insurance, the document points out that the implementation scope of full-cost insurance and planting income insurance policies will be expanded, the national coverage of the three major staple grains will be realized, the coverage of soybeans will be expanded in an orderly manner, and local governments will be encouraged to develop insurance for special agricultural products. The above policies will help to enhance farmers' enthusiasm for growing grain, ensure planting income, and then improve the overall prosperity of the planting chain. In general, Document No. 1 focuses on the theme of food security and emphasizes that the focus of increasing grain production should be on a large area to increase yields. In order to achieve a large-scale increase in yield, it is inseparable from biological breeding and the revitalization of the seed industry. At present, the Ministry of Agriculture has publicized the approved transgenic varieties, 23 December 26, 26 enterprises obtained the first batch of genetically modified corn, soybean seed production and operation licenses, opened the prelude to the commercialization of genetically modified varieties, the follow-up planting area should be in line with the national breeding industrialization arrangement. With the start of the commercialization and promotion process of genetically modified organisms, it may significantly open the ceiling of the seed industry and promote the pattern to concentrate on the head. According to the research report of relevant brokers, genetically modified technology is difficult, and the number of companies that master genetically modified technology is scarce, so the market concentration of genetically modified traits is expected to be high in the future. Taking genetically modified corn as an example, the profit scale of the trait industry is expected to reach 3 billion+, and the market share of the TOP4 is expected to reach 90%. Seed companies with early reserves of genetically modified varieties, strong variety strength and perfect channel layout are expected to obtain a higher market share in the industry by virtue of their first-mover advantage, and the market share of genetically modified corn seeds is expected to move closer to the global level, with the head company gaining nearly 20% of the market share and the TOP5 market share exceeding 50%. The profit distribution of domestic traits-seeds-channels may be more balanced, and the profit distribution model of 1:1:1 may be achieved in the later traits-seeds-channels.
Operational strategy: Last Friday, the market showed an accelerated "dive" trend, and the average stock price index, which reflects the overall market conditions, recorded the second largest weekly decline on record, reflecting that the current market is in an extreme state. On the one hand, the emergence of this panic after a long-term trend often corresponds to the final stage of the trend; On the other hand, at present, based on the calendar effect, technical analysis and other dimensions, as well as with the recent frequent introduction of various policies to stabilize growth and stabilize the market, the disturbance of performance after the conditional mandatory pre-disclosure of the annual report of listed companies has temporarily come to an end. In the long run, the "policy bottom", "economic bottom", "valuation bottom" have appeared one after another, and the third quarterly report of listed companies reflects the "performance bottom" has also initially appeared, coupled with the improvement of the capital at the beginning of the year, the market tends to appear "spring restlessness" ** In the medium term, on the one hand, the current price-earnings ratio and price-to-book ratio corresponding to the Shanghai Composite Index are at the bottom of history, that is, it has a very high medium and long-term margin of safety and investment cost performance. On the other hand, although the foundation of the current economic recovery is not yet solid, the general direction of the recovery has not changed as the monetary policy continues to be loose and measures to stabilize growth have been implemented one after another. In addition, the Fed is expected to enter a cycle of interest rate cuts this year, external liquidity will continue to show an improving trend, and the medium-term market outlook remains positive. In terms of operation, those with light positions mainly increase their positions on dips; Heavy positions are mainly patiently holding on to the stock to rise.
IFC**Mao Rui SAC Practice Number: S1130622080021).