As the Shanghai Composite Index fell below 3,000 points, the fear dominated by the liquidity crisis in January once again enveloped the market. The plunge of small-cap stocks was repeated, with the number of declining stocks once exceeding 5,000, forcing the national team to expand its market rescue targets from the Shanghai 50 ETF and the CSI 300 ETF to the CSI 500 ETF.
It can be observed that the CSI 500 ETF saw two instances of increased trading volume during the session and at the close. The buying wave during the session once ignited hope in the market, as it seemed the national team was rescuing small and mid-cap stocks again. However, the national team's funds might have been nearly depleted in January, and the purchases on last Friday and today were far from as strong as those in January. Coupled with the significant selling pressure just after breaking through the 3,000 point mark, the index fell again shortly after the midday opening, and panic selling emerged at the close, with the three major indices closing near their daily lows. It is evident that the national team kept buying at the close, but the selling was too fierce, and the index simply could not be lifted.
This round of A-share market correction was mainly driven by adjustments in high dividend stocks and accelerated declines in large-cap stocks, especially the plunge in Moutai's wholesale prices, which raised concerns about high-end consumption and a more pessimistic outlook on the domestic economy, with the core assets widely acclaimed by the market in 2020 collapsing. Kweichow Moutai is still relatively resilient; one can look at the trends of large-cap stocks such as Longi Green Energy, China Duty Free, and Aier Eye Hospital, which have been halved and then halved again.
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High dividend and large-cap stocks are inherently weighty stocks. When the stock market fell previously, the Shanghai Composite Index was relatively strong due to the counter-cyclical strength of high dividends. However, in this round, it is the high dividends, Mao Index, and Ning Index that are falling together, and the index has also been hit quite hard. But as we mentioned earlier, this round has seen stronger performance in technology stocks, partly due to institutional rebalancing.
Nevertheless, technology stocks also caught up in the sell-off today, which could be a signal that the adjustment is nearing its end. Additionally, during the sharp market drop in January this year, it was the national team and foreign capital that bottom-fished, so most of the chips below 3,000 points are in the hands of institutions, the national team, and foreign capital. If these three do not sell off, there won't be much power left for the bears.
After nine consecutive trading days of net selling, the northbound capital stopped selling last Friday. The depreciation of the Chinese yuan may also have reached a critical point; after the offshore yuan approached 7.3 last Friday, the central bank should have intervened, and the motivation for foreign capital to continue selling off significantly may not be strong.
Let's now look at today's significant news:The Minister of Commerce, Wang Wentao, held a video conversation with the Executive Vice-President of the European Commission and Trade Commissioner, Valdis Dombrovskis, as scheduled. Both parties agreed to initiate consultations on the EU's anti-subsidy investigation case against Chinese electric vehicles.
Following the "Science and Technology Innovation Board Eight Measures," the first equity acquisition deal has emerged, with Xilinx Integration planning to increase its investment in silicon carbide business. Naxinwei: Plans to acquire 68.28% of Megatron's shares in cash.
According to a report by Caixin, NVIDIA's GB200 and B-series AI chips have been widely adopted by customers. After significantly increasing the wafer input volume at TSMC's advanced process technology, the follow-up order effect has spread to the back-end packaging and testing factories. Advanced Semiconductor Engineering (ASE) and Kinpo Electronics have seen a significant surge in operations. Insiders revealed that Kinpo Electronics is overwhelmed with additional orders from NVIDIA and needs to reallocate more capacity to meet NVIDIA's demands.
On the evening of June 21, Green Technology announced that the American Personal Transportation Vehicle Manufacturers Alliance, composed of Club Car, LLC and Textron Specialized Vehicles, Inc., filed a petition with the U.S. Department of Commerce and the U.S. International Trade Commission on June 20, 2024 (U.S. time), requesting the initiation of anti-dumping and countervailing duty investigations on specific low-speed passenger vehicles (CLSPTV) imported from China. Affected by this bearish news, Taotao Vehicle Industry's stock was suspended from trading, and Green Technology's stock fell by more than 6%.
GF Securities slightly revised up the 2025 800G shipment forecast to 18 million units. Compared to this year's expectation of just under 10 million units, it is nearly doubled. The significant change in the 2025 800G demand forecast is attributed to Microsoft, which plans to establish several "hundreds of thousands of cards" ultra-large scale clusters next year, using Ethernet architecture + 800G single-mode modules.
The National Development and Reform Commission and other departments issued measures on "Creating New Consumer Scenarios and Cultivating New Growth Points for Consumption." Focusing on traditional consumption and service consumption such as food, clothing, housing, and transportation for residents, a batch of new consumer scenarios with broad driving force and high visibility will be cultivated, a batch of distinctive and market-leading typical cases will be promoted, and a batch of consumer-end leading enterprises with strong innovation capabilities and good growth prospects will be supported to accelerate development. This will promote the continuous emergence of new consumer formats, models, and products, and continuously stimulate the vitality of the consumer market and the potential of enterprises.
Finally, a brief look at the market shows that by the close, the Shanghai Composite Index fell by 1.17%, and the ChiNext Index fell by 1.39%. After the A-share market closed, the Hong Kong stocks surged significantly, with the Hang Seng Index turning red and the Hang Seng Technology Index falling by 0.65%.
As for the reason for the late surge in Hong Kong stocks, we have seen the U.S. dollar index retreat, and in addition, the Development and Reform Commission issued the "Measures on Creating New Consumer Scenarios and Cultivating New Growth Points for Consumption" after the market closed. No other immediate benefits have been observed.