Rebirth of the Capital Legend

"Will Su's Fuxing Road and Huayi Capital be lurking in the smartphone industry chain?" Zhang Wei asked with some suspicion. "From the market, there's no obvious sign of this, but it's not impossible. After all, Huayi Capital, now headed by Su, has a very large amount of capital. Given the current market liquidity, such a large amount of capital should not be limited to just the liquor, white goods, major infrastructure, and new energy industry chain sectors. Correspondingly, sectors with strong future expectations, recognized by the main capital groups in the market, and with a clear direction of forming a bullish synergy, should all become the targets of this capital layout.

Moreover, wasn't it said before that... the large-scale infrastructure line in the Hong Kong stock market was also led by the institution "Hua Yi Capital" headed by President Su?
If you, Lao Liang, suspect that the main funds behind China's major infrastructure projects and the funds speculating on domestic real estate stocks in the Hong Kong stock market are most likely led by the same main force, is it possible that this main force guiding the linkage between the two markets is Huayi Capital, the institution headed by President Su?"

Liang Jiucheng nodded and said, "It's entirely possible. I don't quite believe that Huayi Capital, headed by President Su, is limited to investing in the A-share market. The Hong Kong stock market should also be their target. However... as you said, there are no obvious signs from the market at the moment. Everything is just our own speculation. But I think that as time goes by, as the market trends and the corresponding main stocks become clearer and clearer, when Huayi Capital announces its performance and net worth next time, we should be able to see which specific main stocks this institution holds."

"Although Huayi Capital has a huge influence on the current market trends and the corresponding individual stock performance," Zhao Zhiyuan said, "even if we ignore Huayi Capital, the current smartphone industry chain still offers a certain investment and speculation cost-effectiveness, and it can form a core direction that can form a unified bullish momentum in the market. Isn't it worth participating in?"

Liang Jiucheng nodded and said, "Of course, but judging from the market trends, the smartphone industry chain itself is also quite strong. Moreover, for a core market trend and for a number of industry-leading stocks, the real influence on stock price trends is not a single fund. No matter which fund is guiding the market trend, it is actually just following the trend.

When the original trend of this stock is upward, then the intervention of the leading funds can truly drive the market and form a unified long-term force among various fund groups.

When the fundamentals of the stock, as well as other expected conditions, are deteriorating.

Its trend is clearly downward.

So, no matter how strong the main capital involved is, it is impossible to continue to go against the trend, pull a stock that is originally in a downward channel and a downward trend back from the original trend, and form a continuous and rapid reversal trend. This is simply impossible.

In short, no matter what the circumstances, we must go with the flow.

Look at the other stocks that Mr. Su invested in Fuxing Road and Huayi Capital, an institution headed by Mr. Su.

Whether it is Oriental Yuhong, Conch Cement, Qianzhou Moutai, Wuliangye, Luzhou Laojiao, China Yangtze Power, Wanhua Chemical, Hikvision... and other stocks, their fundamentals are not bad, and their stock price trends are already in an upward trend.

In other words, these stocks would not have been possible without the support of Huayi Capital, an institution headed by Mr. Su.

There is a high probability that you will be able to get out of it in the end.

In fact, Huayi Capital, headed by President Su, only slightly accelerated the trend of these stocks, but did not change the trend of these stocks. "

"Well, I completely agree with what Lao Zhao said," Liang Jiucheng said. "Indeed, no matter which fund in the market, including the more powerful 'national team', in fact, when it comes to the stock market, they can only follow the trend and cannot go against it.

Just last year, there were several rounds of stock market crashes, and at the beginning of this year.

The 'national team' used trillions of dollars to prop up the market, but it failed to do so, didn't it?

In other words, in the face of the power of trends, any other funds that attempt to change this trend force are insignificant.

Mr. Su has previously invested in many stocks, including the liquor and white goods sectors.

There are also major infrastructure and new energy industry chain main sectors.

The fundamentals of these major sectors have undergone significant changes. The corresponding leading industry stocks have entered a window period where their performance is about to explode due to the fundamental changes in the industry. Therefore, stock prices can continue to rise under his guidance.

If this is not the case, the trends and fundamentals of these stocks continue to deteriorate.

Well, let alone the tens of billions of dollars that President Su has invested in the market.

Even if there are tens of billions or even hundreds of billions more funds, it will be difficult to reverse the market trend.

Just like the core sectors of the current emerging industrial chain, namely film and television media, Internet software, and Internet applications.

During the last bull market, everyone was excited about the explosion of mobile Internet.

The major related industry sectors and their corresponding core concept stocks have been over-expected and over-hyped. Now they are facing a continued downward trend in these stocks and a continued deterioration in fundamentals.

Even if there are large financial institutions, they continue to intervene in this line.

In fact, it is difficult to truly reverse the trend of these major sectors, or even the entire main market trend.”

"In general, it's about following the trend and going with the flow," Zhang Wei continued. "If you're on the right path, no matter how slowly you go, you'll always gain something. But if you're on the wrong path, even if you temporarily gain something, in the end... you'll definitely gain nothing, or even lose money."

Liang Jiucheng smiled and nodded, saying, "Old Zhang's understanding is correct. What everyone said before about following the strongest main trend of the market is actually this principle. Moreover, I feel that many investors in the market have some misunderstandings about following the strongest main trend of the market.

Many people actually cannot tell which main line is the strongest main line in the market.

For example, some time ago, as Huawen Online continued to perform beyond expectations, the major sectors of film and television media, Internet software, and Internet applications were driven by the performance of Huawen Online and the policy benefits of online education, and continued to perform beyond expectations, forming a market trend that continued to lead the market.

Many believe the strongest core theme in the market is the emerging industry chain, specifically the leading stocks in sectors like film and television media, internet software, and internet applications. Consequently, they've been aggressively increasing their positions in these leading stocks. However, the underlying logic of this emerging industry chain theme is simply a rebound after a sharp decline.

Rather than a trend reversal.

In other words, judging from the stock price trend, this order is the emerging industrial chain main line that is the strongest main line in the market in the short term. In fact, this is not the case.

I think the most important point in judging whether a core market line is the strongest core market line at present and in the future is to start with fundamental analysis. We have to analyze whether this industry and this sector have the potential for a huge demand explosion in the future, and compare whether the main line sector or branch main line sector we want to do can usher in the time for performance realization.

Only substantial performance growth can continuously raise expectations.

Only then can the stock valuation be truly improved.

Only an increase in valuation, coupled with an increase in sentiment, can create a speculative profit range with a high degree of elasticity.

Otherwise, it's just stock price speculation, profiting from market fluctuations in stock prices and sentiment. We all know that stock price fluctuations and sentiment fluctuations are the most unstable and unpredictable and uncertain things. If you really only focus on this aspect, then I think it will be difficult to make any tangible profits from the market.

"Well, it's really important to identify the market's true core strength," Zhao Zhiyuan said. "It's also true that determining the direction is crucial no matter what you do."

Zhang Wei responded, "From a fundamental perspective, the current core market themes, particularly those that resonate strongly with various funds and drive these funds to focus on long positions, are really only the major infrastructure sectors, the liquor and white goods sectors, the new energy industry chain, and the smartphone industry chain. If you want to speculate or make a phased investment, you will most likely have to analyze these aspects and follow the market."

"In other words, not only can we abandon the emerging industrial chain for now..." Zhao Zhiyuan said, "but we can also abandon it in the future, at least during the stage of the trend, right?"

Liang Jiucheng said: "Anyway, this is what I think. Under the circumstance that the number of mobile Internet users will not have a large-scale explosive growth, if we want to see something new in this line, if we want to have sufficient expectations for future performance explosions and emotional expectations to change the stock price trend and completely loosen the huge amount of historical locked-in stocks on this line, then I think... there must be more clear and sufficient positive factors in the future to change the fundamentals of the entire main line related industry sector. Just like the new energy vehicle subsidy policy for next year announced by the state last Friday, only when new opportunities appear, these related stocks and industry sector indexes will have room to play. What we can do now for this line of emerging industrial chains, especially the film and television media, Internet software, Internet applications and their corresponding core leading stocks, is to wait patiently and observe quietly.

It was previously said that the trend of the smartphone industry chain is obviously lagging behind the market trend.

Lagging behind the trends of other main sectors.

In fact, in my opinion, the trend of emerging industries is obviously lagging behind the trends of other main lines in the market.

Moreover, due to the extremely heavy historical locked-in positions, this line is difficult to gain the recognition of other large-scale institutional capital groups in the market and choose to increase positions and follow up in this main line direction when the fundamentals continue to deteriorate and there are no signs of reversal.

In other words, the market trend of the emerging industrial chain is probably far from reaching the bottom.

Of course, for stocks like Baofeng Technology, LeTV, Quantong Education, etc., I think it is basically impossible to replicate the past trends.

Because the overall scale of development of the industry and the environment it faces are deteriorating.

It is difficult for these companies to form their own independent moat, and it is also difficult for them to form a joint force of various capital groups to lock in positions and go long.

Therefore, compared with the main lines of major infrastructure construction, the new energy industry chain, and the smartphone industry chain, the trend of this line is so weak, often forming a huge difference with the performance of the index and other leading stocks in the market.

"If we want the market to return to the atmosphere of the last bull run, with the enthusiasm for mobile internet hype, we'll probably need another major change in the mobile internet terminal market," Zhao Zhiyuan said. "Only when this kind of massive change occurs will it lead to an increase in the business scale of the entire industry. And only when the industry explodes will the corresponding individual stock trends experience a simultaneous explosion."

"In the mobile internet era, further evolution will certainly be difficult for the time being, right?" Zhang Wei said. "At least for now, with no incremental growth, everyone's expectations for the future scale of the mobile internet industry have generally declined."

"It's normal for expectations and sentiment to decline," Zhao Zhiyuan said. "I just hope that the downturn in the emerging industry chain—film and television media, internet software, and internet applications—won't significantly impact the broader market."

Liang Jiucheng said, "It's definitely unrealistic to say there's no impact at all. We can only say that with the support of major infrastructure, the new energy industry chain, and the smartphone industry chain, as long as market liquidity isn't as scarce as it was in March and April, localized market trends and corresponding differentiation will continue to exist. In other words... as long as we observe carefully, we can continue to find opportunities to trade in the market."

Having said that, Liang Jiuchen turned his attention back to the market where transactions were taking place fiercely without waiting for the other two to respond.

Only at this moment...

The market trading hours have already entered after 2 pm.

After the market officially entered the closing trading period, the market's intraday volume, as well as the trading conditions of a number of core leading stocks and blue-chip stocks, were obviously much lower than at the beginning of the afternoon session, both in terms of the degree of volatility and the burst of volume.

That is to say, the overall sentiment of the market after the trading hours enter the late trading period.

It has obviously declined.

Investors' confidence in following the trend and continuing to hold positions is gradually decreasing, and profit-taking selling is once again gradually increasing. (End of Chapter)