Why Are We Afraid To Empty The Chinese Stock Market?

For retail investors, investors certainly do not want to adjust the stock market, so they hope to have positive information to support the stock market every day, and try to reduce negative external information. In order to achieve these goals, some shareholders even talk about the bull market everyday and refuse any bear market speech.

Although some of these behaviors are biased, it is natural that no one wants the stock market adjustment to cause its own wealth to shrink.

Of course, for institutions, singing more and singing empty are important means to gain profits in the capital market, so more people who are afraid to sing empty are retail investors because they are in a weak position in the capital market.

Although investors want the stock market to rise as the commonality of the world, China's stock market's fear of singing empty has its own outstanding performance.

Buying and selling stocks is a special term in our country, that is, "stock speculation". The implication is that the stock market is "fried" rather than determined by the economic fundamentals. Therefore, the stock market is a contest of comprehensive strength of all kinds of short messages and opinions, rather than a very fancy economic development trend.

Under such circumstances, China's stock market is not compatible with economic development.

Since the financial crisis, China's economic growth has been at the highest level in the world's major countries.

And from an incremental perspective, China has become the largest contribution to global economic growth since the financial crisis.

The stock market is a barometer of the economy. The outstanding performance of China's economy should be accompanied by the continuous rise of the stock market, but the result is that the stock market has been in a doldrums for a long time since the financial crisis.

Although there has been a rare bull market in China's stock market since last year, the root cause is not the continuous improvement of our economy, but the great downward pressure on China's economy.

In the 3 quarter of 2014, China's economic growth slowed down to 7.3%, and from the perspective of power generation and other leading indicators, China's economy is still facing greater downward pressure, and even the risk of deflation is also significantly improved.

However, in this context, China's stock market has seen a marked rise, indicating the abnormal performance of China's stock market.

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In the absence of a necessary link, what are the main factors leading to the current stock market? In view of the fact that the stock index has continued to reach a new high level since the second half of last year, the current stock market is mainly dominated by concepts.

The concept of "one road area" and "free trade zone" have been introduced in a bid to promote the rising stock index.

From this point of view, continuous singing has become an important reason for this round of bull market, which has again verified the fact that China's stock market is dominated by information rather than economic fundamentals.

Therefore, the fear of singing in China's stock market is not only the psychological demand of shareholders, but also the internal mechanism of stock market. The current capital market mechanism has not yet been straightened out, and the relationship between the stock market and the economic fundamentals is in a state of confusion, which leads to the fact that our stock market is more afraid of singing than other countries.

Of course, from this perspective, we should be more aware of the unpredictable nature of the potential risks of the stock market. There may be a "no sense" phenomenon in the rise and fall of the stock market, which may make the retail investors more vulnerable in the capital market. In the process of pure follow suit, the machine is the real profit-making, because the institutional controller has more voice power, and can sing around the stock market through concepts, news and so on, so as to achieve the profit target.

The policy implication of the above discussion is that China's stock market's fear of singing empty does not mean that the government should adopt various policies to stop singing empty space. Instead, it should speed up the reform of the capital market system and mechanism, change the situation that the stock market runs counter to the fundamentals of the economy, make the "barometer of the stock market" worthy of the name, and the capital market will no longer be dominated by news, investors will have higher anticipation, and economic growth can push the bull market and ultimately benefit the broad masses of shareholders.