Rebirth of the Capital Legend

"I think so too," Li Jinshi said. "After the large volume in the previous two trading days, the market is showing a general trend of shrinking volume today. This shows that the motivation of the current off-market capital group to intervene is not as strong. On the contrary, the desire of the profit-taking capital group in the market to flee is obviously increasing.

Take a look at the new energy industry chain, the large infrastructure industry chain, and the smartphone industry chain.

This can be seen from the fact that the selling pressure on many stocks within the market is obviously greater than the buying power of active takeover.

However, due to the relatively stable market sentiment, and the fact that a number of core leading stocks in the new energy industry chain, large-scale infrastructure, and smartphone industry chain still show a strong profit-making effect, the impact of this imbalance in buying and selling forces on stock price trends has not been fully reflected.

However, as the market continues to trade and profit-taking continues, all of this will definitely be reflected in the stock price trend."

"Since both of you feel that the current market sentiment and trend are somewhat weakened, and that the volume cannot be further expanded, the market is likely to enter a period of adjustment. Then..." Chen Guiyun thought for a moment and said, "Then let's wait and see how the market develops."

After saying this, he turned his gaze back to the trading screens of the two markets.

All we saw was the continued discussion among several core investors in the "Fushan Group" main investors group.

The market trend at this moment has returned to calm after the concentrated release of emotions in the early afternoon trading. Both the market sentiment and the performance of various capital groups chasing and taking over have decreased. Moreover, the corresponding major core main-line related concept stocks and their corresponding core leading stocks have also seen a corresponding decline and adjustment in their stock price increases compared to the early afternoon trading.

"It seems the market still can't go up." Noting the overall market trends of the two markets, as well as the leading stocks in the core themes, the corresponding share prices have all fallen. Meanwhile, the major market indices have also fallen, and the intraday trading volume is also showing a trend of continued decline. At this moment, Zhao Zhiyuan, a member of the 'Qilu Gang' of major speculators, stared at the market and sighed, "It's always so short. It looks like today's market's closing trend will not only not replicate yesterday's, but will most likely plunge further."

"I feel the same way," Zhang Wei thought for a moment after hearing Zhao Zhiyuan's words, then responded, "The major infrastructure projects, the smartphone industry chain, and the relatively strong new energy industry chain appear to be trending strongly, but in reality, the underlying bullish momentum has clearly weakened, while the continued selling pressure is increasing. If this trend continues, a plunge is likely to occur sooner or later."

"The market hasn't quite broken through yet," Liang Jiucheng said. "If there's a late-day plunge, that's within expectations. The overall market trend is still a local one, with major trends differing widely and diverging dramatically. With this market, there's no other solution except to embrace the core trends."

"The key is that right now, all the core sectors are no longer cost-effective for speculation," Zhang Wei said. "Selling pressure continues to increase. If the market plunges in late trading and another lower open tomorrow, a lot of the funds taken in this afternoon will likely be temporarily trapped in the market."

"I'm planning to reduce some of my positions here," Zhao Zhiyuan said. "I feel like the smartphone industry chain has the biggest divergence, so I can try to reduce my holdings and positions there. As for the major infrastructure and new energy industry chains, I can continue to wait and see."

Liang Jiucheng thought for a moment and said, "I think the smartphone industry chain is actually quite strong. On the contrary, the major infrastructure and new energy industry chains, which are both considered the strongest core markets, have shown some issues today."

"What's the problem?" Zhao Zhiyuan asked.

Liang Jiucheng paused and continued, "The major infrastructure sector clearly didn't have much initiative today. The trends of many related stocks are following the Hong Kong stock market's domestic real estate stocks. In fact, this sector was actually driven by the Hong Kong stock market today. If it weren't for the general surge in Hong Kong and domestic real estate stocks, the major infrastructure sector would have adjusted. The only noteworthy performance of this sector today is the performance of a small group of stocks, including Oriental Yuhong, Beijiang Communications Construction, and Conch Cement."

"I also feel that the major infrastructure sector isn't showing enough momentum today," Zhang Wei said. "Especially outside of the three core sectors of real estate, building decoration, and building materials, other related sectors, like steel, coal, and nonferrous metals, have barely budged. Furthermore, in the Hong Kong stock market today, the main gains were in real estate-related Chinese real estate stocks, while other related building materials and building decoration stocks also stagnated."

"The major infrastructure sector isn't showing much activity today, perhaps because it surged too much in the previous two trading days," Zhao Zhiyuan said. "On the contrary, in the Hong Kong stock market, mainland real estate stocks, which are booming today, didn't rise much in the previous two days, lagging somewhat behind the mainland market. So, today's surge... I think it's more like a shift in funds after expectations in the mainland market were fully met."

"Switching high and low?" Zhang Wei said, "It doesn't seem like it. In the Hong Kong stock market, the dominant fund group should be mainly foreign institutions. I feel that the dominant fund groups in the two markets are still fundamentally different."

Zhao Zhiyuan said: "I think the funds speculating on domestic real estate stocks in the Hong Kong stock market are most likely domestic capital, rather than foreign institutional groups. After all, the actual trend of Hong Kong stocks with corresponding weights dominated by foreign institutions is a gradual trend, and there will be no such rapid and explosive growth."

"This wave of market activity in Hong Kong and mainland real estate stocks shouldn't be driven by foreign capital." Liang Jiucheng pondered for a moment and then responded, "Looking at the recent market trends in Hong Kong and mainland real estate stocks, it's clear that they're being manipulated by a group of major institutional investors, just like in the mainland market. Compared to foreign institutions, domestic institutions tend to flock in. If a key trend has core logic and can form a consensus for long positions, everyone will rush in and quickly buy shares, fearing they'll miss out if they're too late."

"If it's the same capital, why are the trends so different?" Zhang Wei asked. "Also, the mainland and Hong Kong stock markets have different focuses. In the domestic market, it's clear that the construction and decoration and building materials sectors are performing much stronger than the real estate sector. In the Hong Kong stock market, the real estate sector is clearly the main focus of the major infrastructure investment, and the strength of other supporting sectors is far less than that of the real estate sector."

"That's because the mainland real estate stocks in the Hong Kong stock market are indeed quite undervalued compared to the mainland real estate stocks," Liang Jiucheng said. "Furthermore, last year's mainland real estate market boom, driven by Kewan Real Estate, significantly increased the valuation of the entire sector. Therefore... compared to the mainland real estate stocks in the Hong Kong stock market, there is no valuation advantage. So... I think this is the reason why the real estate sector trends in the two markets are so different."

"Differences in valuations are indeed a major factor," Zhao Zhiyuan said. "But I think the bigger factor is that in this real estate bull market, several core real estate developers listed on the Hong Kong stock market are currently the most aggressive in terms of business expansion, and their future expectations are the strongest."

"Well, that's true. Hengda Real Estate, Sunac China, and Country Garden..." Liang Jiucheng said, "These stocks are indeed the most aggressively expanding real estate companies in the entire real estate industry chain. Compared to their previous scale, their future prospects are quite strong."

"That means the expectation gap is bigger, right?" Zhang Wei said.

Liang Jiucheng nodded and said, "That's what I mean. The expectation gap is bigger."

"It's obvious that the major infrastructure sector isn't very proactive," Zhao Zhiyuan paused, then continued, "But, Lao Liang, you mentioned that the trend of the new energy industry chain is a bit questionable today. How do you get there? I think the new energy industry chain is indeed the core sector that attracts the most attention and discussion from the vast majority of investors in the market."

"It's true that investors are paying the most attention and discussing it the most," Liang Jiucheng said. "But haven't you noticed that within the new energy industry chain, the core leading stocks are showing increasingly divergent trends from the other major component stocks with average fundamentals and concepts?

Even though many popular core leading stocks such as Tinci Materials, Do-Fluoride Chemicals, Ganfeng Lithium, Tianqi Lithium, Shuguang Shares, Jiangte Motor, and Power Source are still performing strongly, with some even hitting the daily limit, other constituent stocks, after their initial sentiment performance in the afternoon session, are showing signs of weakness.

Now all of them have fallen below the opening positions in the afternoon, and the current positions of many stocks are already lower than the positions at the beginning of the morning trading.

This shows that the trend divergence between the core leading stocks and other ordinary component stocks in this line is intensifying.

When the core leading stocks diverge from the overall trend of the sector...

This can be compared with yesterday's performance of the emerging industry chain, including the performance of the film and television media, internet software, and internet application sectors, as well as the performance of Huawen Online.

"It feels a bit different," Zhang Wei said. "Yesterday, in the emerging industry chain, while Huawen Online's stock hit its daily limit, the three major sector indices of film and television media, internet software, and internet applications all showed a downward trend. Most of the other component stocks also showed a trend of large-scale declines. But looking at the new energy industry chain today, apart from a number of core leading stocks, they are still maintaining a large rise or hitting the daily limit.

The performance of several core industry sector indices related to this line are all in the red.

Not to mention the increase in the two major concept sector indices of lithium batteries and charging piles, which are ranked first and second in the two markets, and are in a leading position.

There are also various fund groups in the current market.

Including the main capital groups of institutional investors, they are continuously flowing into the new energy industry chain, and there is no continuous outflow.

And yesterday's emerging industrial chain line.

Although the market is rising, the various capital groups within this line are clearly showing a net outflow trend.

As a result, this line has gone through a compensatory decline today.

I think that the new energy industry chain, although it has overdrawn some expectations after the big rise in the past two days, has accumulated a lot of potential profit-taking and profit-taking capital groups.

However, a comprehensive comparison.

The overall position of this line in the new energy industry chain is still very low.

Moreover, looking at the capital flows on the market, the major capital groups in the market, as well as a number of capital groups that follow the trend and speculate, have shown no obvious decline in their enthusiasm for taking over the corresponding weighted leading stocks in the new energy industry chain and the leading stocks in the core growth industries.

When the funds for taking over the business continue to flow in and everyone's willingness to take over the business does not show any obvious decline.

Even though it was suppressed by profit-taking.

I think that even if there may be a large-scale adjustment in the new energy industry chain, it should be pulled up quickly. It is very likely that this line will not fall back excessively, but will form a strong high-level oscillation trend to further clean up and consolidate the chip structure in the market.

If this line continues to maintain a strong oscillating trend pattern.

So, at this stage, there is actually no big problem in gradually buying chips."

"I think what Lao Zhang said makes some sense," Zhao Zhiyuan said. "It's undeniable that the new energy industry chain is indeed siphoning liquidity from other main lines of the market, and the willingness of various capital groups in the market to take on this line remains relatively high.

According to this siphoning effect, as well as the high level of discussion and capital following suit.

I think that even if the new energy industry chain is adjusted, it should be the most moderate core line among the major adjustments in the entire market.

Relatively speaking, the trends of the main line of major infrastructure and the main line of the smartphone industry chain are obviously not so strong.

Lao Liang has just analyzed the line of large-scale infrastructure.

Regarding the smartphone industry chain, I feel the motives and holdings of the "Fushan Group" of investors currently dominating stocks like Goertek, O-Film Technology, Lixun Precision, and Changying Precision could significantly impact the overall market trends of the smartphone industry chain.

“The Fushan Group?” Liang Jiucheng pondered for a moment and said, “The Fushan Group’s capital structure is indeed quite ordinary. However, I feel that the smartphone industry chain isn’t dominated by this group, is it? Regarding Lixun Precision, although yesterday’s and previous trading data didn’t show any trace of Mr. Su’s ‘Fuxing Road’ or ‘Huayi Capital’ institutional seats, I have a feeling that Mr. Su has a considerable amount of capital invested in this stock, and even in the entire smartphone industry chain.” (End of Chapter)