Ouyang XiaohongFinance
Perhaps, history will be remembered on that day on February 2, 2024. On the same day, the Shanghai Composite Index** reached 266633 points, with a total market capitalization of more than 805.6 billion. What is the reason for the sharp decline in the two major stock indexes?
WuXi AppTec (603259.)SH) from January 26 to February 2 this year, coupled with a sharp increase in credit history and credit history, has made the company's wealth management products through refinancing lending activities in the spotlight.
China's ** Regulatory Commission has announced the management measures for further strengthening ** credit transactions, including: completely stopping lending**, and adjusting transaction records from real-time availability to next-day availability, the first measure will be implemented from January 29, 2024, and the second measure will be implemented from March 18, 2024. Therefore, the short position system in China's ** market has received extensive attention.
Yi Huiman, chairman of the China Supervision and Administration Committee, presided over the meeting of the Politburo Standing Committee on February 4 to study how to maintain the smooth operation of the market.
At the meeting, it was pointed out that it is necessary to conduct a comprehensive investigation into serious violations and crimes such as suspected market manipulation, short selling, insider trading, and fraudulent issuance. It is necessary to encourage and support various types of investment organizations to strengthen counter-cyclical adjustment, so that more medium and long-term capital can enter.
The meeting stressed that it is necessary to cooperate with all parties to increase coordination and support for economic and social development, strengthen support for economic development and economic development, strengthen support for economic growth and economic growth, and remain vigilant against abnormal fluctuations.
This is the fourth time in the past two weeks that China's ** Supervision and Administration Commission has issued a stable voice. In January 2024, China** fluctuated sharply, with Shanghai ** having ** more than 6%, and Shenzhen Guide Index and GEM ** exceeding 137% and 168%, the biggest monthly decline since 2015.
So, who exactly is selling short? How do I sell short? What will be the impact of the new rules before they go into effect on March 18?
WhatcalledShorts
Why WuXi AppTec was fired is all because of the "demon".
WuXi AppTec's has been 31 in a matter of days48%, and in this process, the number of its ** repurchase orders surged, and a large number of ** transactions were thrown out, which made investors have great worries about the *** behind it. According to the statistics of China Securities Finance, from January 26 to February 1 this year, WuXi AppTec received a total of 12429,000 refinancing loans, of which 35 were purchased. This not only reflects the strong interest of investors in its holdings, but also shows the positive role it plays in margin trading.
Refinancing refers to a financing method between the brokerage company and investors and securities companies, which is mainly based on financing methods, that is, a financing method used by investors when financing. Theoretically, doing so would increase the liquidity of ** and make it more flexible in its operations.
Since 2019, China has begun to finance private funds, which has broadened the credit limit of brokers, and theoretically, the number of "bullets" that can be shorted for brokerages has increased. The public offering funds are refinanced and borrowed to obtain their income, and are included in the net asset value. While doing so does not increase the net worth, it does generate more income for investors.
But at the same time, it also brings a series of problems, especially if the shares held are shorted (T+0), it will not only bring an adverse impact on the net value of **, but also bring losses to investors.
At present, the regulator has taken a number of measures, such as stopping the issuance**, to reduce the manipulation and risk in trading. However, there is no lack of "bearishness" behind this news, that is, the limitation of regulatory means and the reaction strategy of investors. For example, China's new regulations, starting March 18, stipulate that the public disclosure of market-based trading market agreements will be converted from one day to the next day. In other words, the previous financing arrangement is still "T+0".
An industry source told Caijing that under the current circumstances, it is mainly the major shareholders who are willing to raise funds, rather than restricting their shares. Because its original purpose is to increase the equilibrium of both sides of the transaction, so as to improve the efficiency and accuracy of the market, therefore, in recent times, due to the continuous refinancing of the market, the impact on China's first country is not large.
For example, a private equity firm requires that its share of the funds raised cannot exceed 30% of its total capital, but in most cases, the company lends less than 10% of its capital. Take the recent ** WuXi AppTec as an example, at the end of the fourth quarter of last year, Huabao Pharmaceutical ETF (Huabao Pharmaceutical ETF) was only 11395,600 yuan, accounting for 055%；And WuXi AppTec in the period from January 26 to February 1, another 124The total market capitalization of the 290,000 CSI Pharma ETFs combined is less than 1% of the total trading volume of the latest day.
According to the information of China Securities Finance, on February 2, there were detailed information on the trading of **, with 4,590 shares; 1540534,400 shares. From the perspective of ** transactions, the trading volume was 2067; The initial margin is 689563500,000 shares; Margin financing and securities lending 15405340,000 shares; The final remaining number of shares is 690421770,000 shares; The balance at the end of the year was 8612086280,000 yuan.
In more detail, 4,590 sticks were involved in the sale. This data indicates that a large number of ** have raised funds, reflecting the level of activity ** on the day. In terms of melting, a total of 15,405 were melted on the day340,000 shares; This data indicates that a large amount of money was used to raise funds during this period, and this data also indicates that the market needs a lot of funds for short selling.
However, judging from the transaction situation in the market, there are a total of 2,067 companies participating in the business. This data may be representative of the total number of ** that has been traded, while 4590** may be registered but not necessarily all of them**.
From the above figures, it can be seen that on February 2, because a considerable number of ** were bought and sold, on February 2, there was still a considerable degree of activity in the ** market. Although the amount of financing on that day will not have much impact on the entire market, the trading volume and volume of this day show that there is a considerable amount of short selling.
In fact, as of February 2, margin financing and securities lending in the Shanghai Stock Exchange has reached 40.3 billion; Shenzhen** (as of February 1) is 24 billion yuan, and the total market value of the two cities is about 6 or 70 billion yuan, and the single-day turnover of the two markets has reached at least 6 or 7 trillion yuan.
From this point, it can be seen that at present, the total amount and proportion of funds involved in China's investment are very low, although some of the largest margin financing and securities lending quota can be increased, but the impact on the whole market is very limited.
"Sell pressure".Stillexists
At this critical juncture, what is the short-selling mentality of A-shares, how much selling pressure is there, and how much volatility is **?
China's Regulatory Commission will start new regulations on the financing of companies on March 18, and it is expected that the company will enter a period of adjustment. During this period, some investors (bearish) will increase the implementation of the T+0 system, which will increase the volatility of **.
If measured by the turnover of the two markets on February 2 exceeding 800 billion, it indicates that there is considerable selling pressure.
There are many reasons for this, among which are market sentiment, liquidity, macroeconomics, corporate fundamentals, policy adjustments, etc. Even if individual investors no longer have the capital to spend on new investments, there will still be a huge amount of buying, selling and capital flows.
Considering the selling pressure in the market, large institutional investors such as ** brokerages may adopt the method of ** shares for reasons such as asset allocation and risk management. The volume of such institutions is usually large enough to influence the volatility of the market.
The second is to stop selling: when the market is declining, whether it is an institution or a market, a stop point will be set to control losses. If *** falls below this level, a large number of sell orders will be activated, causing the index to slide further.
In the case of short positions, even if the capital of ** is not large, the short position can take the form of ** or selling. This kind of business is not necessarily initiated by ** investors, but it may also be qualified institutions or professionals.
So, where did our short money come from? The answer is: Buying and selling of credit** based on options and other derivatives.
As mentioned earlier, financing refers to the fact that investors borrow shares from brokerage companies or other shareholders in the hope of buying them back at a low price in the future. This method does not require the investor to hold shares, so even if it does not have excess capital, it can be shorted through margin trading.
In addition, in the market, it is also possible to short sell in the market through derivatives such as put options. This way of managing money allows investors to trade short at a fairly low price without **shares.
It is true that the rise in trading volume indicates the activity of **, but it does not represent the rise of ***. If, in the event of a sell-off due to uncertainty about the outlook, the expectations are lower than expected, then the stock price will fall, despite the huge trading volume. This reflects the power gap between buyers and sellers in the market, while sellers are in an advantageous position.
However, after the introduction of the new financing management measures, it is expected to gradually stabilize, and the focus of investors may gradually return to fundamentals. During this period, investors should be vigilant, conduct a rational analysis of **, and make the right investment decisions.
In principle, going short is a common investment strategy around the world, allowing investors to make a profit by lowering their valuation. Due to historical reasons, institutional arrangements and market structure, China's market development and application in China are different from those of foreign countries.
Some people in the industry pointed out that compared with foreign countries, China's market has certain particularities and limitations. There are relatively few margin financing and securities lending businesses in China's market, and the types of financing and securities lending that can be carried out are relatively few, which makes its application in the financial field subject to certain restrictions. Secondly, China's **transactions** are much higher than those of developed countries, and the credit risk of ** is also much higher. In addition, in order to avoid the drastic and artificial operation of the market, China's financial supervision has also restricted short behavior to a certain extent.
Fundamentally, the bears are able to fully reflect all kinds of news (including negative news) in various markets, thereby increasing the pricing level of **, thereby improving the effectiveness of the market. From another point of view, the short selling mechanism gives investors the opportunity to avoid the risk of long positions. However, short selling can also cause a sharp fall, especially when the information is incomplete or the market sentiment is unstable.
Fourth, at this particular moment, how can investors identify the trend?
Looking back, liquidity, policy, and some external things are the key factors that determine the direction of February**. Joaquin ** said.
According to Joaquin, February's is likely to be strong, as the Shanghai Composite Index has risen in February for ten of the last 14 years. In February, the main factors are liquidity, policy, and external matters.
First, whether the liquidity in February is moderately relaxed has a great impact on the performance of **, such as in February 2010, 2011, 2012, 2014, 2015, 2019, and 2021, liquidity was relatively loose, and the Shanghai Composite Index rose. In February of this year, due to the tightening of funds, the Shanghai Composite Index fell back.
Second, it was significantly impacted by policy and external factors, such as February 2015 ("Entrepreneurship and Entrepreneurship") and February 2019 (the economic and trade relations between China and the United States were repaired), while February 2018 was weak (debt reduction). Third, the value sentiment of the market is also good for the February market when it is low.
February continues to oscillate at the bottom, with the possibility of a rebound. Joaquin ** said.