Rebirth of the Capital Legend

"Looking at the trading data of the two stock exchanges, it's clear that short-term investment funds that were previously concentrated in the 'emerging industrial chain' sector have indeed returned to the 'major infrastructure' sector." Amidst the heated discussions among countless investors in the market, Yu Xiaolu, the head of the trading team for the 'Jufeng Future Growth Fund' product at 'Jufeng Asset Management Company,' looked around at the trading data of the various listed stocks and smiled as she said, "President Lu's previous judgment was indeed accurate. Sure enough, without underlying logic and future expectations, it's difficult for the 'emerging industrial chain' sector to truly experience a trend reversal. I didn't expect... that once the market's short-term speculation shifted, various short-term funds would so quickly converge back towards the 'major infrastructure' sector."

Hearing Yu Xiaolu's praise, Lu Xiangxiang, whose eyes were also fixed on the stock exchange's daily trading data, smiled and said, "Among all the major themes in the market right now, only the 'major infrastructure' theme has the strongest underlying logic and the most certain expectation of future performance growth. With short-term investment sentiment declining and risk aversion rising, and funds starting to prioritize certainty over seeking more upside potential, it's foreseeable that various funds will converge on the 'major infrastructure' theme. Fortunately, we held firm and didn't rashly adjust our positions, otherwise... not only would we have lost our core stock holdings in the 'major infrastructure' theme, but we would most likely be stuck in the 'emerging industrial chain' theme today as well."

"Judging from today's market performance, a large number of short-term funds have fled the 'emerging industrial chain' sector, resulting in a lack of support. It seems likely that the 'emerging industrial chain' sector will need to adjust for a period of time," Yu Xiaolu said. "Although the risk of a significant index pullback is not high based on the candlestick pattern and the trend of the main board's heavyweight stocks, I am worried that the continued sharp correction in the 'emerging industrial chain' sector, along with the continued losses in many concept stocks, will still significantly damage the overall bullish sentiment and investor confidence that had just begun to recover!"

"With the hype surrounding the 'emerging industrial chain' theme coming to an end, short-term speculative sentiment in the market will definitely decline," Lu Xiangxiang said. "However, the decline in the main theme of concept stocks and the effect of the waning hype should not have a significant impact on the major weighted themes on the main board and the 'major infrastructure' theme. After all, if the correlation between the two were that strong, the Shanghai Composite Index and Shenzhen Component Index would not have been trading sideways today, even as the ChiNext Index, Huazheng 500 Index, and CSI 1000 Index all experienced sharp declines."

Observe the divergent trends of the major market themes, as well as the trading volume...

It is clear that the overall market trend is still characterized by a rotation of main themes, which is no different from the previous market trend.

In fact, today's sharp decline in the 'emerging industrial chain' sector is a testament to this.

The most significant influencing factor is insufficient market volume and a lack of new funds entering the market, rather than changes in the underlying logic or other major negative news.

Generally speaking, extreme declines are not caused by changes in underlying logic or by major negative news.

Similarly, it won't have much sustainability.

In other words, assuming no major changes in the fundamentals of the entire industry and no significant deterioration or shift in its underlying logic, and given that many concept stocks in the 'emerging industrial chain' sector are currently not at high levels, even if speculative sentiment subsides and a large number of short-term speculative funds that previously entered the market take profits and withdraw, or immediately adjust their portfolios and move into other sectors, this sector will not fall much further.

Overall, the impact of the 'emerging industrial chain' on the trends of other main market themes is very limited.

And at the same time...

When a large amount of funds that were previously concentrated in the 'emerging industrial chain' sector shifted back to other core themes, and the internal shareholding structure of other major themes such as 'major infrastructure' and main board sectors such as liquor, white goods, pharmaceuticals, consumer goods, power, and finance remained relatively stable.

The return of these funds will drive these main market trends upward.

As these main market trends continue to rise, driven by new buying funds, they will also provide corresponding support for the overall market and index.

So, I think this position...

There is limited room for downward adjustment, while there is still a strong expectation for upward potential.

In terms of index performance, it is unlikely that the Shanghai Composite Index, Shenzhen Component Index, ChiNext Index, Huazheng 500 Index, and CSI 1000 Index will fall back to the bottom levels before the previous market rally.

Therefore, we don't need to worry too much about the risks associated with the overall market trend.

Currently, our focus should remain on leading stocks within the core "major infrastructure" sector.

"Mr. Lu is talking about 'Huaxin Cement' and 'Tianshan Cement'?" Yu Xiaolu listened to Lu Xiangxiang's analysis of the market trends and future expectations, pondered for a moment, and said, "These two stocks did perform very well today, but I think... their market capitalization is still a bit too small, right? The liquidity isn't very abundant, and judging from their trading data, although there are institutional funds involved in guiding the market, a lot of speculative funds have also intervened. Their internal shareholding structure doesn't seem so clean, and their internal shares don't seem to have been fully settled. Analyzing solely from the perspective of shareholding structure, I think 'Dongfang Yuhong' has a stronger certainty of trend. Although it may be a little less elastic, it wins in terms of high certainty. And didn't Mr. Lu just say that the current market participants clearly prefer certainty over elasticity?"

Therefore, in summary, I believe that the current stock 'Oriental Yuhong' is still not a core leader in the 'major infrastructure' sector.

And it still has a very high investment value.

If you want to invest in leading stocks in the popular core sectors of the "major infrastructure" theme.

I still think 'Oriental Yuhong' is a more suitable stock. Moreover, if the logic behind the explosive performance of 'Oriental Yuhong' is verified, there is still a lot of room for its price to rise, especially when everyone was speculating on this stock before.

Many people have already proclaimed their goal of making Oriental Yuhong a '100 billion yuan company' in the future.

I think that if this goal can be achieved in the future, it is not entirely hopeless.

Moreover, given the current position, the funds from Fuxing Road, which previously gathered within the stock 'Oriental Yuhong' and dominated the market trend, are most likely still there.

As long as this capital continues to be locked up, the market discussion and investor attention surrounding the stock "Oriental Yuhong" will not be low.

As long as there is attention and discussion, and given relatively positive future expectations, there will inevitably be a continuous stream of follow-up buying.

Even considering the potential for growth, today's performance of a large number of leading concept stocks, such as 'Huaxin Cement', 'Tianshan Cement', 'Shougang Group', and 'Financial Street', is a testament to this.

The stock performance of 'Oriental Yuhong' isn't exactly weak.

This stock closed up 8.45%, significantly outperforming the broader market index.

Moreover, in terms of trend and trading volume, once 'Oriental Yuhong' hits a new high, the upward path will be smooth again. It seems that the resistance to this stock's upward movement is actually the least.

Therefore, even though the current stock price of 'Oriental Yuhong' is relatively high compared to other popular concept stocks in the 'major infrastructure' sector, I believe that in terms of expected upside potential and investment value, it is still significantly better than other stocks.

We should continue to hold a large position in this stock and accumulate our shares until the stock's future prospects are fully realized, or until the funds from 'Fuxing Road' exit the market.

“You’ve misunderstood.” Hearing Yu Xiaolu seriously comparing the investment value of leading stocks in the core concept of “major infrastructure” such as Huaxin Cement, Tianshan Cement, Shougang Group, Financial Street, and Oriental Yuhong, Lu Xiangxiang smiled and said, “What I mean by paying more attention to the performance of core leading stocks is to pay more attention to the performance of core heavyweight leading stocks such as Conch Cement, Huaguo Construction, Poly Real Estate, Kewan Real Estate, and China Merchants Shekou. Compared with the few concept leading stocks with smaller market capitalization, these core heavyweight leading stocks are actually the foundation that truly supports the performance of a core main theme market trend.”

Without the sustained upward trend driven by heavyweight leading stocks such as Conch Cement, China State Construction Engineering Corporation, Poly Real Estate, Kewan Real Estate, and China Merchants Shekou, and without the platform set by these stocks, the speculative capital that gathers towards these leading concept stocks would not have dared to speculate so boldly.

Furthermore, the valuation increase of these heavyweight stocks is the anchor point for the valuation of the entire main market trend.

Only by raising the valuations of these core leading stocks can we truly extend the duration and potential upside of the "major infrastructure" theme's speculative cycle.

Of course, as things stand at the moment...

The performance of these core, heavyweight leading stocks is still quite good.

"The performance of these core leading stocks is indeed quite good," Yu Xiaolu nodded and said. "Especially 'Anhui Conch Cement,' which has been on a steady upward trend. Regardless of whether the market index is falling or rising, this stock always manages to slowly and steadily move independently, reaching new highs one after another. It is precisely because this stock has continued to deliver unexpected performance that I feel this round of 'cement concept' sector has become the vanguard of the rebound in the entire 'major infrastructure' theme, or rather, the entire 'real estate industry chain' theme!"

“Yes, there must be a super major fund operating in Conch Cement,” Lu Xiangxiang said. “It’s just that the trading volume of this stock has been shrinking, and the shares are locked up too tightly. It will probably be difficult to find out which super major fund is operating in it before the third quarter earnings report is released.”

Yu Xiaolu said, "No matter which super-large main force is operating in it, as long as this stock continues to perform well and maintains the current trend, it will be beneficial to the entire 'major infrastructure' theme and the index trend of the 'cement concept' sector which is strongly related to it. In fact, this stock has driven up the stock prices of many 'building materials' stocks in the entire market, and they have reached a new high for the period."

“That’s true,” Lu Xiangxiang replied. “There’s no need to get hung up on who the main funds are for the specific operations; it’s more important to look at the overall impact.”

Yu Xiaolu nodded and continued, "President Lu, looking at today's market trend, after a large amount of funds returned to the 'major infrastructure' theme, especially after stocks like 'Huaxin Cement,' 'Tianshan Cement,' and 'Beijiang Jiaojian' all showed unexpected upward movements, combined with the post-market trading data, it feels like the market's bullish sentiment has begun to fully concentrate on the 'major infrastructure' theme. Do you think the 'major infrastructure' theme will accelerate its rise tomorrow? Do you think 'Dongfang Yuhong' can reach a new high tomorrow? And is there any hope for a rebound in the 'emerging industrial chain' theme?"

Lu Xiangxiang thought for a moment and said, "Judging from the current after-hours sentiment, the 'major infrastructure' sector is indeed experiencing a rapid rise in bullish sentiment, and the market's discussion and attention on the leading stocks of related core concepts are also increasing significantly. Based on this sentiment and discussion, if there are no negative news tonight, and if the US stock market continues its positive trend tonight, then I estimate that tomorrow, the 'major infrastructure' sector, related industry sector indices, concept sector indices, and a number of popular leading stocks with high market attention and discussion will most likely continue the trend from today's closing and form a significant gap-up opening effect."

In other words, this emotional expression...

If these leading stocks with high market recognition open flat or lower tomorrow, it indicates a significantly weaker-than-expected trend, which warrants caution. Conversely, if they open higher and hold steady, they are likely to continue attracting active short-term funds in the 'emerging industry chain' sector, and subsequently rise higher and reach new highs.

As for the "emerging industrial chain" line, and concept stocks such as "Huawen Media", "Huawen Online", and "Quantong Education", these stocks have suffered extremely severe intraday losses.

Since its market attention and discussion are both decreasing.

At the same time, the emotional state is gradually becoming pessimistic.

In addition, active buying funds continue to be drawn in by the "major infrastructure" theme.

Therefore, barring any unforeseen circumstances, it is unlikely that the leading stocks in this core theme will rebound and provide an opportunity for the vast majority of investors who bought in today to exit safely.

I estimate that the overall trend of the 'emerging industrial chain' will be quite disastrous tomorrow.

The market might even perform worse than it did today, as the potential buying power along this line is expected to be weaker tomorrow. (End of Chapter)