Rebirth of the Capital Legend

As Liang Jiucheng spoke, the market activity shifted.

The panic selling that started in the 'emerging industrial chain' sector has begun to spread to the 'major infrastructure' sector, which is still generally maintaining a positive trend.

Almost visibly, the indices of sectors related to the "major infrastructure" theme, including real estate, construction and decoration, building materials, non-ferrous metals, steel, and coal, all plummeted rapidly due to a continuous increase in selling pressure. Core popular stocks within these sectors, such as Huaxin Cement, Beijiang Jiaojian, Shougang Group, Financial Street, Tianshan Cement, and Shenhuo Shares, experienced a surge in selling pressure, while corresponding active buying pressure rapidly declined. Even for Huaxin Cement and Beijiang Jiaojian, two popular stocks that had hit their daily limit up, the number of buy orders at the limit up price decreased sharply.

Similarly, it's not just about the main theme of 'major infrastructure'.

Key sectors on the main board, such as pharmaceuticals and power, are also experiencing rapid declines.

At this moment, only the liquor and white goods sectors are relatively stable, with sufficient active buying power continuing to purchase corresponding stock shares.

"Damn, 'Oriental Yuhong' stock really couldn't hold on and has already plunged." Amidst the deteriorating market trend and with Liang Jiucheng constantly reminding them to reduce their holdings, Zhao Zhiyuan, watching the stock's movement, complained, "Sure enough, this stock is dropping all at once. The 'major infrastructure' sector can't hold up anymore. Judging from this, the market is going to experience a general decline today, and it looks like a collective crash."

"The buy orders for the two stocks, 'Huaxin Cement' and 'Beijiang Jiaojian,' are also starting to decrease sharply at the moment," Zhang Wei continued. "This trend is very bad. If the 'major infrastructure' sector can't hold up, then the other main market themes are basically all doomed."

"Needless to say, it's already finished," Liang Jiucheng said. "Look at the current 'emerging industrial chain' sector, as well as a number of small and medium-sized stocks, more than 40 stocks have hit their daily limit down, and many small stocks have even fallen back to their previous starting points."

"That's terrible!" Zhao Zhiyuan said. "How could your emotions break down so quickly?"

Liang Jiucheng responded: "There is insufficient incremental funds in the market. The only lifeline of the market, 'major infrastructure,' cannot fully drive the market to form an upward attack trend. In addition, the market opened lower than expected, and the extreme loss-making effect of the 'emerging industrial chain' main theme has naturally caused the sentiment to fall rapidly. I originally thought that there would be no sharp drop at this position, but now looking at the market sentiment trend, I feel that I may have been too optimistic."

"The ChiNext index has fallen by 2.25%," Zhang Wei said. "Moreover, the Huazheng 500 index and the CSI 1000 index have also fallen by more than 2.5%. In both markets, small and mid-cap stocks have generally fallen by more than 3%, and the market trend is quite severe. It can be said that we are currently in a state of full-blown crash."

"However, the Shanghai Composite Index and the Shenzhen Component Index are still stubbornly holding within a 1% drop," Zhao Zhiyuan said. "Looking at the performance of the Shanghai Composite Index and the Shenzhen Component Index, it feels a bit ironic!"

"The Shanghai Composite Index's relatively small decline is mainly supported by the 'big financial' sector and the liquor and white goods sectors," Liang Jiucheng said. "The Shenzhen Composite Index is supported by the 'big infrastructure' sector. However, with the overall market sentiment continuing to decline and the overall market losses increasing, the Shanghai and Shenzhen Composite Indexes' stubborn resistance will most likely only worsen the market trend. As time goes on, when people realize that the 'big financial' and liquor and white goods sectors on the main board have temporarily become safe havens, a lot of funds in other main sectors will definitely cut their losses and enter these heavyweight sectors to hedge against risks."

However, once a large amount of capital in the market moves to other places where losses are severe.

The funds flowed out in a concentrated manner and then flowed into the financial, liquor, and white goods sectors.

Therefore, with the financial, liquor, and white goods sectors continuing to siphon liquidity, the liquidity in other main sectors will become increasingly worse. Stock price trends and market sentiment will naturally deteriorate as they lose liquidity and active buying power.

In short, in this situation, you should quickly reduce your positions, clear out your holdings, and leave the market to free up capital.

The best strategy is still to trade.

As the ancients said, of the thirty-six stratagems, running away is the best.

“I’ve sold everything I could,” Zhang Wei replied. “There’s still a portion of my holdings that I can’t sell, so I can only watch as I lose money.”

"Old Zhang, you have a light position, you should be alright, right?" Zhao Zhiyuan said. "My position is quite heavy, that's really bad. Fortunately, most of my position is concentrated in the 'major infrastructure' sector. I just hope that 'Huaxin Cement' doesn't crash today and can maintain its limit-up trend. Otherwise, if this stock collapses and replicates the trend of 'Huawen Online' tomorrow, I'll be finished. I have more than ten million in this stock!"

“Even if ‘Huaxin Cement’ is going to crash, it’ll be the last one to crash, right?” Zhang Wei said. “Don’t worry too much. Market sentiment is already very bad, but look at ‘Huaxin Cement’. The buy orders are still above 20 lots. Compared to the 32 lots in the previous ten minutes, this number of buy orders has decreased a lot, but compared to other stocks, it is still considered to be relatively strong.”

Moreover, the stock of 'Huaxin Cement' was listed at the opening of trading this morning.

Although the price surged to the daily limit quickly, the turnover rate was also relatively high.

When I noticed that this stock hit its daily limit, there were major funds placing orders to buy more than 10 lots.

In other words, at this moment, there are definitely quite a few major speculative funds gathered on the 'Huaxin Cement' stock.

I think these participating funds are unlikely to withdraw their orders at this critical juncture, causing retail investors to break the price limit.

After all, what happens if the price limit is broken?

The group of investors who suffered the most severe losses were those who bought heavily into the stock at the beginning of trading this morning, locking in the daily limit up price.

“That makes sense, but with the market's concentrated efforts, even if the major speculative funds that bought in early in the morning wanted to push the price up, they couldn't,” Zhao Zhiyuan said. “I certainly hope they can, but looking at the market sentiment and the price charts of many stocks, it seems unlikely. Actually, compared to other stocks, the selling pressure on ‘Beijiang Jiaojian’ seems to be less.” “That’s right,” Liang Jiucheng said. “During a market downturn, the size of the circulating shares becomes very important. Compared to ‘Huaxin Cement,’ ‘Beijiang Jiaojian’s’ circulating shares are almost half the size, so naturally the selling pressure isn’t as great. That’s why I said that if the market sentiment is bad today, ‘Beijiang Jiaojian’ has a high probability of taking the lead over ‘Huaxin Cement’s’ position.”

“Sigh, what a pity…” Zhao Zhiyuan said, “We should have decisively accepted the 'Beijiang Jiaojian' check this morning instead of the 'Huaxin Cement' check.”

"That's not entirely true," Zhang Wei responded. "Given the market trend this morning, it was clear that 'Huaxin Cement' was more popular and had stronger momentum. I think buying 'Huaxin Cement' in the morning was the right thing to do. As for the market's subsequent trend, it was impossible to tell at the opening bell."

As the discussion continued...

The market is now in trading hours past 10 a.m.

After half an hour of trading, the market trend in both Shanghai and Shenzhen markets has gradually become clear, and a sharp decline has basically taken shape.

All the main themes in the market, except for the liquor and white goods sectors.

Most of them are in a downward trend.

In the morning session, sectors related to the "major infrastructure" theme, which had been very strong, such as real estate, construction and decoration, building materials, non-ferrous metals, steel, and coal, all fell into a decline. However, compared to the "emerging industrial chain" sectors, the decline was relatively small, and the overall loss was not significant.

The most severely affected sectors in the market right now, and their related stocks.

The focus is mainly on the 'emerging industrial chain' sector.

At this point, all sectors related to the 'emerging industrial chain'—whether it's the film and television media, internet software, internet applications, electronic information sectors, or the smartphone and new energy industrial chains—have experienced a sharp decline.

In particular, the three major industry sectors of film and television media, internet software, and internet applications.

The market is currently down 4%, leading the decline among all sectors in both Shanghai and Shenzhen stock exchanges.

Meanwhile, many popular concept stocks and industry leaders in these three sectors have also suffered huge declines. In particular, as sentiment worsens, many small and micro-cap stocks in these sectors are rapidly heading towards their daily limit down.

Of course, given the current one-sided sharp decline...

The one who suffered the most severe losses was He Zhong, a key member of the "Suzhou Group" of speculative investors.

He originally had the opportunity to reduce his positions and cut his losses at the beginning of the trading day, but he saw that the "major infrastructure" theme had driven up some market bullish sentiment, and at the same time, a number of industry sectors and concept sectors in the "emerging industrial chain" theme had indeed opened quite low. Therefore, he did not decisively reduce his positions or liquidate them to cut his losses.

"Damn, this trend is really something else... Ugh... We're doomed. It's locked at the daily limit down, and we can't even sell our shares." In the 'Suzhou Group's' main speculative capital group, He Zhong's face was gloomy as he couldn't help but complain, "Damn, the overseas markets are all soaring, and there's no negative news in the domestic market, so how did it fall like this?"

"The market sentiment collapsed today, and it was really fast." Not only was He Zhong feeling heavy-hearted and his account was suffering heavy losses, but Lao Qian in the group couldn't help but complain at this moment, "There was really no resistance at all. The entire small and medium-sized and micro-cap sectors are all being driven to the limit down."

"Sigh, it's a complete collapse now." Zhang Xinlei sighed at this moment. "'Major infrastructure' has also collapsed. Today, I'm afraid the vast majority of investors will lose money."

"It's true that everything has fallen indiscriminately." Zheng Jinming paused and replied, "But what's strange is that the Hong Kong stock market didn't fall. Instead, it gradually rebounded. And in the entire Hong Kong stock market, whether it's the mainland property stocks in the 'major infrastructure' sector or the leading stocks in the technology sector, the performance is very good. I don't understand... It feels like the two markets have completely diverged."

“The Hong Kong stock market follows the US stock market,” Zhang Xinlei said. “The US stock market surged last night, so it’s normal for the Hong Kong stock market to follow suit today. As for the domestic A-shares, going its own way has become the norm. Everyone generally expected the ‘emerging industrial chain’ sector to adjust today, but no one expected that the ‘emerging industrial chain’ sector would drag down the entire market like this and even bring down the ‘major infrastructure’ sector.”

"An independent trend is still too difficult," Old Qian sighed again.

“I’m really speechless,” He Zhong said. “I have over 100 million yuan in my portfolio, all in the ‘emerging industrial chain’ sector. I lost over 10 million yuan yesterday and another 10 million yuan today. Judging from the current situation, the market will probably open even lower tomorrow. I’ll have to account for some of the losses tomorrow. In total, this market rebound has not only failed to make me any money, but I’ll actually lose a lot of money. It’s really unbelievable.”

“Indeed, the market trend is completely incomprehensible,” Zhang Xinlei replied.

“Old He, sell if you can,” Zheng Jinming said. “I feel that the ‘emerging industrial chain’ sector is completely hopeless. Almost all the funds in the market are fleeing, and the risk aversion sentiment in the entire market has been rising rapidly. Large funds are also concentrating on the two safe-haven sectors of liquor and white goods from other main sectors. If this continues, as the market trading time goes on, the liquidity of the ‘emerging industrial chain’ sector will only get lower and lower. The lower the liquidity, the less buyers there will be, and the harder it will be to sell. Moreover, looking at the trend of ‘Huawen Online’ and ‘Huawen Media’, it’s not impossible for them to fall back to their starting point.”

“It’s already hit the daily limit down,” He Zhong said. “When the market opened this morning, I sensed something was wrong with the market sentiment. I should have been more decisive. Sigh… Next time, I definitely won’t try to make the last penny in the market. And if I see the trend is not right, I must cut my losses decisively. Damn it, in just two days, more than 3000 million yuan was wiped out. I feel like even the bull market crash and the stock market disaster weren’t this ruthless.”

"If it keeps falling like this..." Zhang Xinlei said, "the ChiNext index might be heading for a double bottom, right?" (End of Chapter)