Rebirth of the Capital Legend

The ninth, tenth, and eleventh most popular stocks in the two markets are all core leading stocks in the main sectors of market weighting, such as Huaguo Construction, Moutai, and Kewan Real Estate. Following them are stocks such as Tianshan Cement, Shougang Group, Changying Precision, and Baofeng Technology, which are also among the top 20 most popular stocks in the two markets.

Moreover, among these stocks, apart from Baofeng Technology, the others generally maintained a flat opening or a slightly higher opening.

Overall, the opening results were largely in line with everyone's expectations.

And it maintained a certain level of profitability in the market.

"The opening patterns of these top 20 most discussed stocks in the two markets should be in line with expectations, and the trend is quite good, right? Especially Beijiang Jiaojian. I originally thought that after yesterday's huge divergence, this stock would likely open significantly lower today. Unexpectedly, it actually returned to consensus in terms of sentiment during the entire opening auction. It turned the divergence into consensus so quickly. The leader is indeed worthy of being the leader."

Faced with the opening performance of the two stock exchanges, retail investors on various stock investment exchange platforms are engaged in heated discussions.

"Whether the market is good or bad ultimately depends on the performance of Beijiang Transportation Construction."

"As long as the film and television media, internet software, and internet applications sectors don't drag down the market too much, I think today's market situation is fine."

"It depends on the situation. Although the film and television media, internet software, and internet applications sectors, which are weak, did not open at a good position and the opening sentiment was very weak, the loss effect in these sectors has not spread. It feels like the market influence of LeTV stock has indeed decreased a lot compared to before."

"A washed-up leader is no better than a dog. The concept of mobile internet is no longer popular. The entire domestic film and television media industry, especially the film industry, has no expectations to support it after the subsidy reduction. It is normal for the market influence of LeTV to decline."

"Mr. Jia is really inhuman! He said he wouldn't reduce his holdings, but look what happened..."

"The film and television media industry has long been out of control. LeTV's stock price has been falling steadily, and its performance has been poor. I heard that the group's internal cash flow is also not good, and its capital chain is already very tight. If it does not reduce its holdings and raise funds at this time, it may not have much of an opportunity to reduce its holdings later."

"Anyway, I am firmly bearish on LeEco stock. It will naturally return to where it came from."

"The tides turn, and the market trend has clearly shifted completely towards the main themes of large-scale infrastructure and consumption. It feels more like a shift from the virtual to the real."

"The phrase 'from the abstract to the concrete' is well used. Indeed, the overall style of the storyline does resemble a shift from the abstract to the concrete."

"I wonder if this change is good or bad?"

"I feel great. The core driving force behind the rise in stock price should be the improvement in industry fundamentals and performance, rather than some simple concept story."

"Indeed, there must be performance to support the stock; only then can one feel secure holding onto the shares."

"It seems that although everyone says that the performance of the infrastructure sector is bound to explode sooner or later, it has not yet reached the point where the expectations have been realized. At present, I think that the valuation of some popular stocks in the main infrastructure sector is still obviously overvalued."

"Overvaluation and undervaluation are relative. You can't just look at the infrastructure sector alone. You have to compare it with other sectors, such as film and television media, internet software, and internet applications, or other technology sectors that are already weak in the market. In fact, the overall valuation of the infrastructure sector is still at a reasonable to low level. It has not fully reflected everyone's expectations for the future of this industry. In other words, most of the constituent stocks in the core infrastructure sector have not been fully priced in, and there is likely to be room for further growth in the future."

What does "full pricing" mean?

"Fully priced means that the stock price has already reflected all the positive factors and overdrawn future expected growth. Currently, many leading stocks in the infrastructure sector are still undervalued relative to the average valuation of the entire market. Therefore, I say that this sector has not yet reached the point of being fully priced, and there is a high probability that there is still room for further growth."

"From the perspective of average market valuation, the large-scale infrastructure sector is indeed at a relatively low level."

"Looking at the market's average valuation is meaningless, isn't it? After all, the main financial sector, especially the banking sector, generally only has a PE ratio of a few times. The valuation of these bank stocks significantly lowers the average market valuation. Therefore, the actual average market valuation should be calculated after excluding the banking sector. And after excluding the banking sector, the average valuation of the infrastructure sector is basically near the average market valuation. It can't be said to be undervalued, can it?"

"The future prospects of the major infrastructure sector are better, so it should naturally enjoy a higher valuation. The current valuation is similar to other main sectors, which means there is still room for further growth."

"Actually, I think it's meaningless to ignore the market's own sentiment and only talk about the market's average valuation."

"That's right. In the short term, the impact of sentiment on market valuations should be greater than that reflected in actual earnings expectations and fundamental expectations."

Is the sentiment surrounding the major infrastructure sector primarily driven by the Hong Kong stock market?

That's how I feel.

"The performance of Hong Kong-listed mainland property stocks is indeed worth watching, and their performance is quite correlated with that of stocks in the mainland's major infrastructure sector. However, I think the key factors are the price trends in major cities, the commencement of new projects, and the pace of land acquisition by major core real estate companies. If housing prices are generally trending upwards and the rate of increase has not slowed significantly, while real estate companies have a good willingness and pace to acquire land, then... it means that the overall fundamentals of the domestic real estate market are still improving, which will naturally translate into positive stock expectations."

"What's the national housing price trend? I feel like the recent rate of increase in housing prices isn't as fast as before, is it?"

"This is quite normal, after all, the government is also preventing housing prices from rising too much."

"I heard that first-tier cities are going to implement purchase restrictions, right?"

"There are no specific documents yet, but I think... this is highly likely to happen. It's just unknown whether the purchase restrictions in first-tier cities will have more of a positive or negative impact on housing prices and the overall domestic real estate market."

"I think purchase restrictions should be beneficial for housing prices, right?"

"How can this be good news? Isn't it bad news?"

"How can it not be a positive? Human nature dictates that when it comes to fixed assets, people tend to buy when prices are rising and not when they are falling. Purchase restrictions indicate a booming market, a shortage of housing, and too many buyers, which necessitates these restrictions. In other words, the market is dominated by sellers, so how can housing prices not rise?"

"Indeed, it seems that no matter what it is, every time the government introduces a purchase restriction policy, the result is usually a price increase."

"This is inevitable. Properties in first-tier cities are high-quality assets in the future, and they will most likely continue to appreciate in value over time."

"Isn't this judgment a bit too arbitrary?"

"This is not arbitrary, it is inevitable, because the population is continuously flowing into first-tier cities."

"How much does this have to do with population inflow and outflow?"

"It's very relevant. The continuous influx of population indicates that the potential demand in the market is continuously growing. The more people there are, the more rigid housing is needed. Under such circumstances, if a purchase restriction policy is implemented, then the supply of housing in the market will naturally fall short of demand." "That makes sense. From this perspective, it seems that the more companies that have a presence and acquire land in first-tier cities, the higher their future performance elasticity will be."

"Aren't most of the companies that acquire a lot of land in first-tier cities state-owned enterprises?"

"There are also a few leading private real estate companies, but the two best ones are listed on the Hong Kong Stock Exchange. Currently, the capital requirement for the Shanghai-Hong Kong Stock Connect is still around 50 yuan. Even though I know that the quality and valuation of several mainland real estate stocks in the Hong Kong stock market are better and that there is greater potential for future growth, I don't have enough funds to buy them, so I can only settle for second best."

"There's nothing wrong with settling for second best; it's the so-called doctrine of the mean."

"In the A-share market, the only relatively high-quality companies are the core leading real estate companies such as Kewan Real Estate, Gemdale Group, and Poly Real Estate."

"These core leading stocks will have no problem outperforming the market, but it will be very difficult to achieve several times the upside potential. Therefore, since the overall real estate sector is trending upwards, we should choose stocks with higher elasticity when selecting stocks."

"Among the stocks with higher elasticity, Taihe Shares is probably the only one."

"Taihe Holdings shouldn't be considered a top-tier real estate company, right? Actually, I think Jingcheng Holdings' stock is better. Moreover, this stock seems to have only been listed on the A-share market for a short time, so there aren't many historical trapped investors. It's easier for subsequent funds to concentrate on speculation and push up the price."

"Isn't Jingcheng Holdings a company based in Shanghai?"

"It seems so. In Shanghai's real estate industry, it can be considered a leading local real estate company."

"That's great. This stock should be among the first to benefit from the subsequent purchase restrictions in first-tier cities, and it's worth buying."

"I bought some shares of this stock, but looking at the recent trend and the attention from major funds, I feel that this stock... has some problems, both in terms of the strength of major funds in accumulating positions and the level of discussion among retail investors. It seems to lack initiative."

"Nothing can be accomplished overnight. I think that Jingcheng Holdings will likely need some time to consolidate before it can truly break through. Holding this stock requires a lot of patience. I feel that if you hold on firmly, you will definitely see good returns later."

"Don't just focus on the large-scale infrastructure sector, take a look at the new energy industry chain. What's the likely future development of this sector?"

"I estimate that the new energy industry chain will likely continue to consolidate in the future?"

"A consolidation is likely, and the performance of the corresponding stocks within the relevant sectors will definitely diverge further in the future."

"Divergence is not a problem, as long as there is a profit-making effect."

"You can tell from the drastically different opening trends of Tianci Materials and Shuguang Shares that the divergence will definitely become more and more pronounced in the future."

"Judging from today's opening pattern, Shuguang Shares is probably completely ruined."

"It's hard to say what will happen with Tinci Materials stock, isn't it?"

"I feel that Tinci Materials stock will most likely accelerate its upward trend today and continue to reach new highs."

"I also hope this stock can follow this path, but it will most likely still be influenced by Shuguang Shares to some extent. Without the support of the main market sentiment, it will be difficult for this stock to continue its independent trend."

"Why isn't there any supporting main theme? Isn't the main theme of the new energy industry chain quite good?"

"The amount of active funds in the market is insufficient, and it seems unable to support multiple main themes simultaneously. Judging from today's situation... it's highly likely that the infrastructure sector will lead the charge again. As long as most of the active funds in the market concentrate on the infrastructure sector, it will naturally be difficult for other popular market themes, including the new energy industry chain, to attract the attention of major institutional investors. Thus... without sufficient support from major institutional investors, where will the sustained bullish sentiment come from, and how can the market remain unaffected?"

"Let's take it one step at a time and see what happens."

"Compared to the major infrastructure sector, the new energy industry chain, as well as the steel, coal, and non-ferrous metals sectors that performed relatively strongly yesterday, are indeed not very strong, or rather, their strength is limited. In terms of following the trend, the major infrastructure sector is definitely the priority."

"Speaking of the smartphone supply chain, it's pretty good, isn't it?"

"Yes, if it doesn't weaken when it should, it's strong. Originally, as the time for Apple's new product launch was getting closer, this line should have turned weak, but it is still going up along the trend. This shows that the main funds in the market have a relatively deep involvement in this line. It is worth paying attention to in the future."

"It's not just about keeping an eye on it; I feel we can boldly build positions or even increase our holdings."

"At least the stock of Lixun Precision is very strong."

"Yes, the opening auction performance of Lixun Precision stock today was truly astonishing, incredibly strong. I'm even wondering if there's some other major positive news that hasn't been released yet? Otherwise, how could the stock be performing so strongly?"

"There shouldn't be any major positive news that hasn't been released, right?"

"I was just saying."

"But this stock is indeed quite strong, and I feel it's worth following the trend and trying it out."

"Hmm, let's try it out when the market opens later."

These numerous retail investors continued their discussions on various online stock investment platforms.

Trading time in the market passes by very quickly.

Almost instantly, the time changed from 9:25 to 9:30.

With countless investors across the market, including retail investors, speculative funds, and institutional investors, the two stock exchanges officially began their continuous auction trading session at this moment.

The stagnant stock market screens began to move again.

Amidst much anticipation, those popular stocks that had already demonstrated strong performance during the pre-market auction instantly attracted a large influx of active buying funds, causing their prices to rise rapidly. (End of Chapter)