Since the beginning of this year, A-shares have suffered many illogical declines.
Many people explain that everyone is desperate for A-shares!
Is desperation really the direct cause of selling?
I'm afraid not.
In fact, the more scolding on the Internet, the more people have not left.
Even if they leave the market for a short time, these people are waiting for a certain time to buy in.
The reason is very simple, if they are all sold, and they plan to never come back, then what else is he scolding?
Besides, there are groups of people who predict how many points A-shares will fall to online.
Why predict? Isn't it just thinking about buying the bottom to make the difference?
The vast majority of inexplicable declines are mostly related to passive sellers.
Only by understanding the passive sellers can we understand the decline of the market.
Otherwise, the mind is full of conspiracy theories, or personify A-shares, and call it a slaughterhouse.
1. The most influential passive seller: leveraged customers
When the stock price falls, if it does not stop, it may fall below the liquidation line of some people, so these funds will be forced to liquidate.
This part of the funds also disappeared directly.
Some funds may not be liquidated, but because the psychological pressure of the decline with leverage is too great, so they choose to sell.
The above selling pressure is actually not large, but if the over-the-counter funds are bought at this time, there will be no incremental funds to catch the selling pressure.
Then the speed of falling up will be very fast.
Then, it will fall below the closing line of another group of people.
So the selling pressure increases.
Eventually, we will find that there was not much selling pressure at the beginning, but it triggered the dominoes to fall and the stock price to spiral.
The most typical example is the stock market crash in 2015. At that time, many people were trading stocks with 10 times leverage.
The decline at the beginning of this year was also related to the liquidation of leverage.
Second, the institution's stop-loss operation
There are some institutions that will make stop-losses during the downside.
The selling pressure of one part of the stop loss may also break the stop loss line of the other part of the fund, causing a chain of declines.
It's just that this kind of decline is less violent than leveraged liquidation.
Stop-losses for retail traders have less impact on the market.
First, because the operation of retail investors is relatively scattered, it is not easy to form a joint force;
Second, because most retail investors can't strictly stop losses, they even cover their positions more and more;
The third is because they have no external pressure.
What is stress?
For example, private placements have liquidation lines.
In order to keep the fund from being liquidated, they will inevitably strictly stop losses in the fall. Even the operation of the stop loss is handed over directly to the computer, which is not affected by human emotions.
Therefore, most of the private placements are chasing the rise and killing the fall.
Since the beginning of this year, most of the inexplicable declines have been related to private placements.
They are the passive sellers with the most problems.
3. Passive sellers brought about by rule changes
This year is a big year for the reform of A-shares.
The transformation from a financing market to an investment market will disrupt the original ecology.
There will be people who can't adapt to the new environment.
Every time a new regulation is about to be implemented, it will cause some people to become passive sellers.
Like what:
1. Limit the reduction of holdings, and some vested interests will run away in advance;
2. Change the rules of the game for private placement, and the original position of private placement will change;
This year, the private equity and quantitative targets are the heaviest, which leads to the largest selling pressure and the longest duration.
3. Liquidate the garbage stocks
This puts a lot of pressure on people who hold junk stocks.
Because the risk of ST and delisting will threaten the safety of their funds for a long time.
4. Limit shorting
This has already been explained, if you don't let shorting, long positions will be cut, bringing short-term selling pressure.
5. Limit leverage
As the leverage ratio decreases, you will definitely be forced to sell a portion of your leveraged position.
In short, there are so many rules that have been changed, and there are still to come.
So passive sellers always pop up from time to time and put pressure on the market.
4. Passive sellers brought about by exchange rate disturbances
In the last month or so, the expectation of interest rate cuts has been very strong.
This puts a lot of pressure on the exchange rate.
Under the pressure of the exchange rate, some foreign capital will be temporarily withdrawn.
From June 6 to June 28, foreign capital withdrew about 50 billion.
However, the withdrawal of foreign capital is only a temporary hedge.
Although Yang Ma will also pay attention to the foreign exchange market, it seems that he has not stopped easing money.
There are two pieces of evidence:
1. The R007 interest rate is not higher than the previous month-end and quarter-end
2. There is no return of funds in the open market, indicating that the willingness to ease is still very strong.
If the currency is not tightened, will the exchange rate not be stable?
Not necessarily.
Because monetary easing is the vanguard, when the vanguard kills the enemy in front for a period of time, the economy will gradually stabilize and risk appetite will gradually increase.
Then the final exchange rate will gradually appreciate.
In addition, term spreads are now stable, indicating that risk appetite has not deteriorated, so the central bank can continue to ease without paying so much attention to the exchange rate.
5. Summary
If there are fewer passive sellers in the market, the market correction will not be too drastic.
On the contrary, the market adjustment will be more drastic.
This year, we have been hit by the above four types of passive sellers.
The main pressure on this round of decline comes from two aspects:
1. Changes in rules;
2. The expectation of interest rate cuts disturbs the exchange rate and causes a temporary outflow of foreign capital.
After these two parts of the selling pressure come out, it will drive a part of the stop loss order.
Since there is no leverage pressure at the beginning of the year, the magnitude of the volatility is likely not to be as large as at the beginning of the year.
Of course, it also depends on how quickly and how much money a team intrudes.
When incremental funds can hold back the selling pressure from passive sellers, the correction is nearing its end.
When the passive seller is cleared out in stages, the amount of funds in the market will be re-entered, the turnover will be re-increased, and a new round of the game will begin.
Those stop-loss orders are actually just a temporary withdrawal.
Only the liquidation of the financing order will be permanently exited.
So, the market looks volatile, but it doesn't really matter to the vast majority of people.
Because the vast majority of people are not passive sellers, nor are they providers of incremental funds.
Most people are just grass on the wall, panicking when they see a fall, and excited when they see a rise.
We understand the market, and we need to understand these passive sellers, because their reasons for selling are independent of the market and will sell regardless of the cost.
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