Hexun Investment Advisor Zhou Xiang: Why are A-shares continuously plunging, but the securities firms are not stepping in to support the market?

A-shares have been falling sharply for consecutive days. Why haven’t the securities firms come out to support the market, and why are they even leading the decline? In this analysis, Zhou Xiang from Hexun Investment Consulting explains that you might not have considered that this abnormal sign could mean it’s not that they are unwilling to support, but that they simply can’t anymore. This also indicates that the true bottom is still missing a very key signal. Once this signal appears, it will be the night before a mid-term market rally begins. Today is Thursday, March 26th, and over 4,000 stocks in the two markets are falling, with everything in the red. Especially during the late trading plunge, I was puzzled—given the situation, why aren’t securities firms stepping in to support the market? Since the peak of the securities sector in August last year, it has been falling for more than half a year, and the position is very low. Why is it still leading the decline? After reviewing the situation, I believe there are three reasons.

First, in this complex current situation, the market no longer follows any logic. Putting real money in might be less effective than a single statement from Chuanzi (a market figure). He tends to act on impulse, and moreover, the current situation has spiraled out of control beyond his expectations. Therefore, now securities firms coming out to support the market could be like digging a bottomless pit.

Second, when the index was above 4,000 points with 17 consecutive days of gains, the major players were continuously pushing the market higher. It’s only been a little over two months since then, and the cooling-off period hasn’t been long. If at this point, they make a big move to lift securities and successfully bring the market up, it’s likely that the market will cool down again in just a few days. Then, the stock market would become a pattern of three days of support followed by two days of decline, which would cause even greater damage.

Third, within the securities sector, there are only two types of players: the super main forces and retail investors. During declines, opposing forces form unconsciously. Supporting securities will lead some to sell off, so when the market falls heavily, funds will come in to support the sector. However, dragging on without action doesn’t leave room for arbitrage. So, when can the market truly bottom out? It depends on when the super main forces start continuous buying, especially when broad-based ETFs are consistently increasing in volume. That’s the bottom recognized by the super main forces. But this situation is likely to occur at the end of geopolitical conflicts or after they are completely resolved. So, in the short term, avoid bottom fishing and don’t tinker. Even if the market enters a sideways consolidation phase, any slight movement will trigger buying without a word of protest. These are real lessons learned with real money. When the situation becomes clearer, it will mark the start of at least two months of upward trend. Then, we can fully go all out and make bold moves.

(Editor: Wang Gang HF004)

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