Hello everyone. Chinese mainland stock market tumbled for the second day, amid over 4% drop of HK market as well(refer to the chart below). The ab=cd pattern totally failed as expected because the context is different when I measured the possible pullback zone many days ago.
Following yesterday's northbound outflow of CNY 10B, the outflow continue today with amount of CNY4.1B. It looks foreign investors are reducing their exposures to Chinese mainland stocks. I observed massive sell-off of Kweichow Moutai. I checked the short-term market rate(DR001 and DR007), the range is quite normal. I attributed the drastic drop to the spread concern of tighter regulation from education sector or real estate sector and many more.
Yep. We, as human beings, tend to be linear thinkers. What happened to education sector does not mean that other sectors will suffer the same thing. We need to ask ourselves. What's the logic behind it?
Let's go to the tech sector as an example here. Government wants to achieve following goals:
1. Ensure big tech companies follow rules and is socially responsible. The good old days of no regulation is passed for ever!
2. Boost innovation so big tech firms couldn't simply buy small innovators like in the US.
3. better personal data protection. That's why firms need to be approved for listing in overseas.
4. Encourage to list in HK and Shanghai to strengthen China stock market.
I've listed the reason above. I don't think gov. set to kill those big tech firms. But in the short term, the sell-off is likely to continue. Based on supply & demand theory, we need massive buying orders to take out the selling ones. Will that happen tomorrow? I think the chance is slim. I'm waiting for signals like small base candles indicating dynamic balance between buyer and sellers, followed by impulsive bullish candles.
By the way, I also noted CNH weaken against dollar. That's remined of Aug in 2015 when the drastic fall of RMB triggered massive sell-off in Chinese stock & bond markets. That's horrible. However, economy in 2015 was probably the worst since 2000s. The weakness of RMB(CNH/CNY) helps to boost China's export to overseas market. It's not the case of today.
From the stock market to regulations and currency, I still have a bullish view on Chinese market, though in the short term, pain is inevitable.
Give me a like if you're with mine. Thank you for your support.
Following yesterday's northbound outflow of CNY 10B, the outflow continue today with amount of CNY4.1B. It looks foreign investors are reducing their exposures to Chinese mainland stocks. I observed massive sell-off of Kweichow Moutai. I checked the short-term market rate(DR001 and DR007), the range is quite normal. I attributed the drastic drop to the spread concern of tighter regulation from education sector or real estate sector and many more.
Yep. We, as human beings, tend to be linear thinkers. What happened to education sector does not mean that other sectors will suffer the same thing. We need to ask ourselves. What's the logic behind it?
Let's go to the tech sector as an example here. Government wants to achieve following goals:
1. Ensure big tech companies follow rules and is socially responsible. The good old days of no regulation is passed for ever!
2. Boost innovation so big tech firms couldn't simply buy small innovators like in the US.
3. better personal data protection. That's why firms need to be approved for listing in overseas.
4. Encourage to list in HK and Shanghai to strengthen China stock market.
I've listed the reason above. I don't think gov. set to kill those big tech firms. But in the short term, the sell-off is likely to continue. Based on supply & demand theory, we need massive buying orders to take out the selling ones. Will that happen tomorrow? I think the chance is slim. I'm waiting for signals like small base candles indicating dynamic balance between buyer and sellers, followed by impulsive bullish candles.
By the way, I also noted CNH weaken against dollar. That's remined of Aug in 2015 when the drastic fall of RMB triggered massive sell-off in Chinese stock & bond markets. That's horrible. However, economy in 2015 was probably the worst since 2000s. The weakness of RMB(CNH/CNY) helps to boost China's export to overseas market. It's not the case of today.
From the stock market to regulations and currency, I still have a bullish view on Chinese market, though in the short term, pain is inevitable.
Give me a like if you're with mine. Thank you for your support.
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