Rebirth of the Capital Legend

"Given this position and this price pattern, it's normal for funds to hesitate on the charts," Zhao Zhiyuan said. "The turnover rate for Beijiang Jiaojian stock was a bit high today, and the core theme of infrastructure construction isn't the market's main focus. The active institutional investors in the market certainly aren't as optimistic about this stock's performance as they were yesterday or a few days ago. Plus, with the concentrated profit-taking, it would be better than expected if this stock could hold steady at its current price without further sharp corrections."

"For Beijiang Jiaojian stock, the main task today is to stabilize the market and prevent excessive losses. That would be a victory," Liang Jiucheng interjected. "Given the opening situation this morning, people weren't expecting this stock to continue its winning streak. Moreover, the continuous high-level turnover and the rebuilding of the shareholding structure actually make it easier for the subsequent market to perform well. If this stock continues to push upwards today, further accumulating excessive profits, then when the speculative sentiment surrounding the major infrastructure theme subsides, the market will likely collapse, and the rally will truly come to an end."

"Brother Liang, are you saying that there's a high probability that Beijiang Jiaojian stock still has room for further gains?" Zhang Wei asked after hearing Liang Jiucheng's words. "It seems unlikely, doesn't it? In the past few months, none of the concept stocks that have been hyped up in the short term have doubled. Beijiang Jiaojian stock, at its current position, is already the concept stock with the highest potential upside in recent months. Going any higher... it doesn't seem like there's any stronger expectation to support it. And looking at the market... it seems that most of the active major funds in the market are clearly showing signs of fatigue with the hype surrounding the infrastructure sector. In the future, the infrastructure sector will most likely enter a period of adjustment, just like the liquor, white goods, and pharmaceutical sectors that were previously heavily hyped by funds?"

"I feel that the outlook for the major infrastructure sector remains very strong, and it is highly unlikely that there will be a period of adjustment at this level," Zhao Zhiyuan said. "It is very inappropriate to compare the major infrastructure sector with sectors such as liquor, white goods, and pharmaceuticals."

The liquor, white goods, and pharmaceutical sectors, besides the factor of their safe-haven attributes, are also relevant.

While the fundamental expectation of an industry turnaround is relatively certain, this is a long-term, high-growth industry, meaning that its expectations need to be supported by sustained performance.

Furthermore, it is unlikely that these industries will experience a sudden surge in performance or a dramatic increase in expectations.

Therefore, the leading stocks in these industry sectors.

In terms of trend, although the overall trend is upward, the trend in each stage is not smooth.

But what about the current large-scale infrastructure construction project...?

Whether it's the real estate sector or the building materials and decoration sectors, the entire industry is experiencing explosive growth due to soaring housing prices and a surge in infrastructure projects across the country. Under such explosive growth, it means that the core leading stocks in these sectors are also likely to experience explosive growth in their performance.

In other words, the medium-term prospects for these sectors are much stronger than those for liquor, white goods, and pharmaceuticals.

Under such strong and sustained expectations.

Given the current low valuations of leading stocks in the real estate, construction, and building materials sectors, it is unrealistic to expect a period of adjustment to provide better entry points for funds that missed out on the rally. This is also unacceptable to funds that have already established positions in the market.

Therefore, from a purely underlying logical perspective...

These major funds in the market will prevent core stocks in the major infrastructure sector from undergoing excessively drastic adjustments.

Besides this underlying logical factor, in the Hong Kong stock market, stocks related to the real estate industry chain are still rising rapidly.

Moreover, compared to mainland real estate stocks, stocks in the construction and decoration and building materials sectors are also considered.

Similar stocks in the Hong Kong stock market have significantly higher valuations and expectations, and are subject to more intense speculation.

In other words, compared with the performance of the Hong Kong stock market, many stocks in the mainland market related to major infrastructure projects still have considerable room for further gains.

Take Conch Cement stock as an example.

In the Hong Kong stock market, this stock's price is higher than that of its A-share counterpart.

Among stocks listed in both A-shares and H-shares, the fact that H-shares command a premium is extremely rare, which fully demonstrates the desire of overseas capital to buy shares and also reflects the strong future prospects of this stock.

In summary, I believe that the major infrastructure sector remains the core theme with the highest certainty, strongest expectations, and greatest speculative value in the current market. However, it is constrained by market liquidity and the large number of short-term profit-taking funds that have recently followed the trend.

In the short term, this trend line needs to undergo a certain degree of market adjustment.

It's just a shakeout to clear out those who have taken profits.

However, this adjustment does not mean that the main trend will undergo a continuous adjustment period. I estimate that this adjustment will only last for two or three days at most. After the short-term adjustment ends, this trend will most likely continue to rise, and the upward trend should be smoother.

Of course, this applies to the main storyline.

Taking a single stock as an example, such as Beijiang Jiaojian.

Aside from valuation and expectations, the stock's price movement is primarily correlated with short-term market sentiment.

If market sentiment remains hot, then this stock is highly likely to launch a second wave of upward movement.

If market sentiment continues to decline in the coming days, it's possible that this stock won't be able to make a second wave, and may even temporarily peak here before entering a correction phase.

After all, this is within the continuation of the main market trend.

Funds can still switch between high and low positions within the main investment theme, choosing other target stocks for speculation. For example, Taihe Shares, which is currently showing a high-low switching trend with Beijiang Jiaojian, has a certain probability of gradually replacing Beijiang Jiaojian's position in the entire major infrastructure theme, attracting concentrated pursuit and speculation from various active institutional funds, and replicating the previous trend of Beijiang Jiaojian.

In other words, when the vertical space cannot be opened.

Funds within the market will naturally choose to expand horizontally, diversifying their reach.

“I think it’s unlikely that Taihe Shares can replace Beijiang Jiaojian in the main theme of infrastructure construction,” Zhang Wei said. “If the core leader can’t open up upward space, then the low-priced follower stocks in the same sector will inevitably fail to perform well.”

I think that if the funds in the market are to switch between high and low levels...

This target stock must be located in another major sector.

Just like when the film and television media sector saw a surge in demand due to the concept of online education, Huawen Online's stock was heavily speculated on by various funds.

When the stock of Huawen Online reaches its peak, there are no new expectations to support it.

When you can't open the upward height at first.

The shift in capital allocation from high to low levels involved a return to the major infrastructure sector, which had already undergone a period of adjustment. It was at this point that Beijiang Jiaojian took over from Huawen Online, becoming the core leader in the market and successfully emerging from the downturn.

At that time, funds did not seek out new low-priced concept stocks for speculation in the same concept sector as Huawen Online, namely the online education concept sector. In fact, as the speculation on Huawen Online ended, the speculative rallies of other concept stocks that moved in tandem with Huawen Online, such as Huace Film & TV, Quantong Education, and Huawen Media, also all came to an end.

If the stock of Beijiang Jiaojian is at this level, it will not be able to break through to a higher level.

Therefore, I believe that stocks like Taihe Shares, Tianshan Cement, and Shougang Group will inevitably be unable to form an independent upward trend and will inevitably follow suit with adjustments.

At this time, other key sectors are seeing a shift in investment levels.

Only then will there be a high probability that new leading companies in the concept will emerge.

Judging from the current market trend, I think the market is indeed showing signs of a shift between high and low levels, and it seems that Tianci Materials is gradually taking the lead over Beijiang Jiaojian.

"Tianci Materials' stock performance is good, but to say it can rival Beijiang Jiaojian, I don't think it can," Zhao Zhiyuan said. "Or rather, the logic behind these two stocks is completely different, and they are not comparable. Moreover, the nature of the funds speculating on these two stocks is also completely different."

Don't be fooled by the fact that the circulating shares of Tianci Materials are similar to those of Beijiang Jiaojian.

In reality, among the main funds driving the stock's price movement, there aren't many truly speculative market funds; the majority are institutional funds.

And, I don't know if you've noticed, that...

Almost every unusual price movement in Tinci Materials stock is linked to the price movements of Tianqi Lithium and Ganfeng Lithium, the two core leaders in the lithium battery sector. I feel that the funds driving Tinci Materials' stock movement are the same funds driving Tianqi Lithium and Ganfeng Lithium's stock movement.

"The same fund? That can't be right?" Liang Jiucheng was slightly surprised when he heard Zhao Zhiyuan's words. He hadn't noticed this point Zhao Zhiyuan mentioned. He replied, "Aren't Tianqi Lithium and Ganfeng Lithium stocks mainly driven by Su's 'Huayi Capital'? If that's the case... the main fund inside Tianci Materials stock might also be 'Huayi Capital'?"

If it really is 'Huayi Capital'.

That day, Tianci Materials stock is definitely worth watching long-term. Given the trading style of 'Huayi Capital,' it's highly likely that it will replicate the trajectory of Oriental Yuhong stock, not Beijiang Jiaojian. Compared to Beijiang Jiaojian, Oriental Yuhong's trajectory will reach significantly higher levels.

“You know what, I really have that feeling,” Zhao Zhiyuan said. “'Huayi Capital' likes to make overall investments in the industry. Moreover, their investment strategy has always been to focus on creating a leading concept stock to continuously raise the valuation and upside potential of the core leading stocks in the industry. This was the case with the liquor sector at the time, and it was also the case with the major infrastructure theme later on. So it is possible that the new energy industry chain and the lithium battery sector will also operate in this way.”

“The circulating shares of Tianci Materials are so small,” Zhang Wei said. “Given the size of the ‘Huayi Capital’ fund managed by President Su, they probably wouldn’t invest in such a small-cap stock, right? After all, the circulating shares are limited, and the funds that can be held are at most ten or twenty million, or at most tens of millions. With such limited capacity, even if the stock price replicates the trend of Oriental Yuhong and multiplies several times, the profit won’t be much.”

“Old Zhang, you don’t understand this, do you?” Zhao Zhiyuan said. “This is called using minimal force to achieve maximum effect. By leveraging the sentiment and potential upside of small-cap concept stocks, we can indirectly drive up the overall valuation and speculative potential of other leading stocks in the same core industry sector. Although the funds of ‘Huayi Capital’ control over Tianci Materials stock can’t make much money on this stock at most, the money they can make from other leading stocks in the core industry sector through the influence of this stock is very likely to be several times, or even ten times, that amount.”

“I see.” Zhang Wei suddenly realized, smiled and said, “If you analyze it this way, you can’t rule out that possibility. Moreover, after the large volume yesterday, the stock of Tianci Materials has started to shrink again today. This shows that after a brief period of turnover and dispersion, the internal shares of this stock have begun to regroup today. This pattern... is enough to show that this stock still has a lot of room to rise.”

“Yes, that’s what I think too,” Zhao Zhiyuan said. “That’s why I bought this stock early on.”

“Penghui Energy, whose stock price movement is somewhat correlated with that of Tianci Materials, is also worth noting today,” Liang Jiucheng said. “Penghui Energy’s stock price movement today shows obvious signs of multiple funds working together to push up the price. It’s just unclear which group of funds in the market is the main speculative capital that entered this stock today.”

Zhao Zhiyuan pondered for a moment and said, "Based on the trading volume of Peng Hui Energy stock today, there is a high probability that there will be a list of top traders after the market closes. We can check it after the market closes. When Peng Hui Energy stock rose to the daily limit, there were several large buy orders of 10,000 lots in the main buy orders. Such orders should be impossible to hide in the data disclosure of the list of top traders and should be clearly visible."

"Tianci Materials and Penghui Energy both performed quite well today," Zhang Wei nodded. "However, Shuguang Shares has clearly fallen behind. It seems unlikely that Shuguang Shares will see a second wave of gains. I'm wondering... will this weak performance affect the overall bullish sentiment in the new energy industry chain? If it likely will, then we can't be too optimistic about the new energy industry chain. We need to be wary of being caught in a day-to-day market correction." (End of Chapter)