The bottom is in for Chinese stocks (maybe)

Cross posted from Investing in Chinese Stocks

The voices, centrally located and authorative are growing that the “bottom is in” Chinese stocks:

Authoritative voices send the bottom signal September may mark a turning point in the market! The risk in the market is mostly exhausted, some blue chips are reasonably priced! Buy Buy Buy!

From Securities Daily:

First, the leverage rate has decreased significantly. Since June the Commission since a punch to clean with capital to HOMS system with capital represented at the regulatory system will maelstrom. July 12, the Commission banned the securities account under the sub-account illegal trading, the Hang Seng electronic HOMS system, Shanghai Chong Ming and flush and other software vendors have shut down with a new funding system business, three “with the capital artifact” For Added with capital funds substantially closed gate. Currently, once fame went off with capital end, with the capital stock of the size of the OTC has dropped dramatically; from the floor lever of view, in order to balance the two financial scale of Shanghai and Shenzhen, for example, in early June this year, This value was close to 2.3 trillion yuan level. He experienced a “drop lever” process several times after the two financial balance has dropped to mid-December levels. As of August 31, Shanghai and Shenzhen, two financial balance of the size of about 1.0559 trillion yuan, has previous month highs over one trillion yuan of scale. “Reducing leverage” Risk gradually released, the market price is expected to thereby stabilizes.

Secondly, the market valuation more reasonable. Stock index since 5178 point adjustment, the biggest decline in more than 40%. In valuations in Shanghai and Shenzhen, for example, in early June this year, the market valuation enormous pressure, and valuation-related stocks is up to a thousand times and even thousands of times the state. And after the recent sell into the market for two months, many stock prices have dropped to the position last year when the bull market started. Moreover, its share price has hit a new low in recent years. According to the “Securities Times” reporter Statistics found that, as of September 2, high-priced shares in Shanghai and Shenzhen hundred remaining five stocks, while the ultra-low-priced stocks below $ 5 Number of was a substantial increase to the level of around 100 stocks. As the number of 10 yuan lower than the low-priced stocks, but also a substantial increase to more than 800 the number of breaking the net shares also significantly increase, even a lot of the price of the stock has returned to pre-bull market started. It is worth mentioning that, after the recent sell after a new round of accelerated, for this already belongs to underestimate the value of blue-chip, its valuation advantage will be further highlighted. Therefore, for these stocks, the risk has also been released to the end of the stage.

Third, the market capital structure change. Such changes and adjustments, has left a deep imprint on the three days before the holiday of the disk. August 31, the Shanghai Composite Index, Shenzhen Component Index and GEM mean fell 0.82%, respectively, 2.32% and 3.42%, the GEM late plunge, but the banking sector appear sharp pull on the 3200 tape station; September 1 Day, also in late trading, with China Construction Bank, Industrial and Commercial Bank and other banking stocks led by blue chips were the cost of eating seems to speak to scan cargo, intraday hundreds of million of super big pay from time to time, almost at the same time, Early active military unit, has continued to sell time shares etc; September 2, the main net inflow of funds in the top ten stocks have eight as banks, the Industrial and Commercial Bank, Agricultural Bank, Minsheng Bank and Bank of Communications, net capital inflows were more than one billion yuan. Which ICBC late trading, the main net inflows reached 1.389 billion yuan. Is not difficult to find, the forward movement of funds admission, admission means that the new funds have been sounded core blue-chip assembly number.

In short, there are indications that, A-share risk of the release has entered the end, bottoming Assembly thus sounded. Some analysts have made clear that after two rounds of sell, market risk substantially phased release of some blue chips have returned to a reasonable valuation range, then down no longer much space, so in September is likely to be a turning point in July, there will be good rising band, as to whether the bull market turned into the second half, when the need to further judgments.

Latest posts by Chris Becker (see all)


  1. Those authoritative voices certainly have an idiosyncratic writing style or need more than Google translate.

  2. Josh MoorreesMEMBER

    so now it has reached fair value I assume they are looking for it to put back on 50-100% over the next few months?

  3. Did someone remember to tell the people trading on the SSE that it doesn’t need to fall any further?