At the end of the morning session on February 5, China** set off a huge wave. There are less than 200 companies, and there are more than 1,000 companies that have fallen limits, and even more than 3,000 companies whose stock prices exceed 5%. This situation is particularly grim, especially the ** with assets of less than 10 billion has fallen to a miserable situation that makes people doubt their lives.
Why is this happening? First of all, the shareholders who use leveraged funds to trade have liquidated their positions, triggering irrationality**. As the name suggests, the so-called leveraged liquidation refers to the forced liquidation of a position due to a loss exceeding the acceptable range due to borrowing funds to purchase**. In this case, investors tend to sell their holdings**, leading to increased panic in the market.
Secondly, the equity pledge of the listed company was also forcibly liquidated. According to statistics, the equity of 2,466 listed companies in the whole A** market has been pledged, with a total market value of about 3 trillion. However, when the stock price falls below the pledge, these shares will be liquidated. This data is chilling and further exacerbates the panic in the market.
To make matters worse, more than 90% of Chinese investors are speculative. They only pursue short-term interests, accept or die in the first place, and do not really look at a certain company, so as to buy it. This speculative mentality has led to the phenomenon of China's first day for 20 years, and it has also made the market more volatile.
This sharp fall has aroused widespread concern and controversy in the society. Many people have questioned the legitimacy of China's operational mechanism. Some people believe that the regulator should strengthen the management of leveraged trading to prevent investors from falling into huge risks due to the use of high leverage. At the same time, when a listed company pledges its shares, it is necessary to strengthen supervision to ensure that relevant parties can fully assess risks and do a good job in risk control.
In addition, it is important to develop a long-term investment philosophy throughout the financial system. If most investors only pursue short-term profits, then it will be difficult for the market to develop steadily. ** and regulatory authorities should strengthen macroeconomic control, promote the transformation of economic structure, and improve the health of the market.
All in all, the sharp drop in China is a wake-up call for investors. We should not be blindly optimistic that it is already the bottom, and we must be wary of the risks brought by the speculative mentality. Only through comprehensive measures such as reforming and improving market mechanisms, strengthening supervision, and cultivating long-term investment concepts can China move towards a more stable and sustainable development path.