Chapter 5 Chapter 04 Highlights of Mainland China, Hong Kong, Taiwan and US Stock Markets

Highlights of this chapter: Only by understanding the essential reasons behind the stock market recovery in China, Hong Kong, Taiwan and the United States can we remain invincible.The stock market trends in mainland China and Taiwan are the same, but the mainland stock index does not dominate the Taiwan stock index. The reason why the mainland stock index rises is that manufacturing funds and bank credit funds enter the stock market, while the reason why the Taiwan stock index rises is due to a large amount of international hot money entering Taiwan.The Hong Kong stock index and the Dow Jones stock index not only moved in the same direction, but also bottomed out on the same day.I can't find the reason for the rise of these two stock indexes. I worry that the stock indexes of the two places will be manipulated by some force at the same time.

The Hong Kong stock market is completely driven by the US stock market, but is Taiwan really driven by the mainland? We should not be fooled by this superficial phenomenon, thinking that Taiwan's index is influenced by the Mainland, this is not the case, it is just a coincidence. A more suspicious phenomenon is that since May, international financial speculators have sharply raised the investment rating or target value of Hong Kong's heavyweight stocks. I would like to especially warn all investors, as long as these international financial speculators are optimistic about the stock market for no reason, you should be careful.

Some audience friends asked me to talk about the stock market once a month in the biography of "Lang Xianping Talk", because the stock market was full of demons dancing in the first half of 2009, which was very interesting.I've done a lot of research recently and made a couple of really interesting graphs.First of all, I compare the stock price trend of the mainland China stock market with that of Taiwan.Now the political and economic relations between Taiwan and the mainland are getting closer and closer. After the three links (cross-strait commerce, postal and air links), I found that the relationship between the stock market has also become very close.Taking the first half of this year as an example, the trend of stereotyped stocks in mainland China (thick line) and the trend of Taiwan's weighted index (thin line) unexpectedly coincided everywhere.As shown in Figure 4-1, after the three links, even the stock market trend was exactly the same.

Looking at the Hong Kong stock market again, you might think that the Hong Kong stock index is closer to the mainland A-shares, but this is not the case.Taking the first half of 2009 as an example, as shown in Figure 4-2, the trend of the Hong Kong Hang Seng Index (thin line) is almost identical to that of the US Dow Jones Index (thick line).At the same time—the inflection point was reached around March 9th, the coincidence of the two stock indexes is close to perfect. They both fell before March 9th and rose after March 9th, rising and falling at the same time.We found an interesting phenomenon that the stock price trend in Hong Kong is the same as that in the United States, while the stock price trend in Taiwan is almost the same as that of the mainland stock market.Therefore, the stock price trends in the mainland and Taiwan are completely different from those in Hong Kong. The Hong Kong stock market is completely driven by the US stock market, but is Taiwan really driven by the mainland?

In order to analyze Taiwan's stock market, we first look at how experts comment on the trend of Taiwan's stock market.Taiwan Bora Securities said that after May 14, about NT$500 billion (US$15.3 billion, or RMB 100 billion) of foreign hot money flowed into Taiwan.This is very interesting, the mainland stock market does not have such a large-scale foreign capital inflow. On the same day, May 14, Morgan Stanley announced that 22 Taiwan stocks had been added to Morgan Stanley's international index fund.It is estimated that there are about 3 trillion US dollars of funds in the world following this index to adjust asset allocation.Before the adjustment of the index on May 14, the funds in the Taiwan stock market were mainly owned by the Taiwanese themselves, but after the adjustment on May 14, a large amount of foreign capital flowed to Taiwan.That is to say, the rise of Taiwan's stock market is greatly affected by the inflow of foreign capital.

However, according to my research results, since March, a large amount of international hot money has flowed into Taiwan, which has caused Taiwan's stock prices to rise crazily.So why did these international hot money enter Taiwan?The Mainland and Taiwan are currently interacting well, as the political climate on both sides of the Taiwan Strait is becoming more relaxed.Due to the reduction of political risks, international investors chose Taiwan under the impact of the financial crisis.Because in a politically stable region, stock prices should rise.This point of view seems to be confirmed by the actual data. Taiwan's weighted index stopped falling in December 2008, continued to rise in February 2009, and increased even more after March.One of the important reasons is the impact caused by the massive inflow of foreign capital.

The rise of Taiwan's stock index is due to the large inflow of foreign capital, and the inflow of foreign capital is due to the gradual loosening of the political atmosphere on both sides of the Taiwan Strait, so international investors are interested in Taiwan's stock market.If there is any negative news about cross-strait relations, Taiwan's stock index will fall sharply.For example, on July 13, 2009, Taiwan's relevant authorities pointed out that the two sides of the Taiwan Strait may not have time to sign a cross-strait economic and trade cooperation agreement this year. On that day, Taiwan's weighted index immediately dropped by 239 points.Of course, in addition to the promotion of international funds, the follow-up of Taiwan's local funds also contributed to this rally.

However, we should not be fooled by this superficial phenomenon, thinking that Taiwan's index is influenced by the Mainland, this is not the case, it is just a coincidence.As for why the stock indexes in the mainland rose at the same time, and the range was similar, I have discussed the reasons in detail in Chapter 3, so I won’t go into details here. Let's look at the stock markets of Hong Kong and the United States.I've been trying to figure out why these two markets are going up.Frankly speaking, I can find many reasons to go down in both markets, but very difficult to find reasons to go up.Moreover, the two markets started to rise on the same day, and also fell and reached the lowest point at the same time. This phenomenon is really interesting. Why?

First of all, Li Ka-shing made a speech. He said on May 21 that the recent hot money flowing into Hong Kong is about 300 billion Hong Kong dollars, or about 38.7 billion U.S. dollars.Li Ka-shing’s speech this time is different from three months ago. Three months ago, he was quite optimistic. This time he specifically warned that this round of increase made him very worried.Li Ka-shing is very humble. He said that he does not understand the stock market, but he does not recommend that everyone borrow money to speculate in stocks.Because the increase of more than 20% in just a few months is worthy of vigilance, so Li Ka-shing is not optimistic.

Ren Zhigang, chief executive of the Hong Kong Monetary Authority, said at the Hong Kong Legislative Council in May that a large amount of hot money from Europe and the United States has recently entered the Hong Kong stock market.These hot money should have entered the U.S. market on the same day, otherwise, how could it be possible that the Hong Kong and U.S. stock markets started to rise on the same day? Looking further down, the Hong Kong government pointed out in late May that Hong Kong's economic situation this year is not optimistic, and it is likely to continue to decline.The Hong Kong government said this, but Goldman Sachs disagreed. It said that Hong Kong's economic growth this year should be a 4% decline, while Hong Kong's economic growth in 2010 should be a positive 4%. This year it will be negative, and next year it will be positive.Why did Goldman Sachs say that?A more suspicious phenomenon is that since May, international financial speculators have sharply raised the investment rating or target value of Hong Kong's heavyweight stocks.The heavyweights are the constituent stocks of Hong Kong's Hang Seng Index. There are a total of 33 stocks, usually very large companies, such as Li Ka-shing's company, HSBC, PetroChina, Sinopec, China Construction Bank, China Mobile and so on.Citibank raised HSBC's rating to buy; Goldman Sachs raised CNOOC's rating from neutral to buy; DBS also raised CCB's rating from neutral to buy; JPMorgan Chase raised PetroChina's stock price from its original target price 5.5 Hong Kong dollars raised to 7 Hong Kong dollars.Why are they so optimistic about these Hang Seng Index constituents?

I would like to warn all investors, as long as these international financial speculators are optimistic about the stock market for no reason, you should be careful.When they say they are bullish, it most likely means that they are selling heavily short.There is no short-selling mechanism in the mainland stock market. Only when the stock price rises can you make money. Hong Kong has a short-selling mechanism.What is short selling?very simple.For example, I borrow a stock from a securities company today and sell it at a price of 100 yuan. I will buy it back when the stock price drops to 70 yuan tomorrow, and then return the stock to the securities company.Since I sold it for 100 yuan and bought it for 70 yuan, I made a difference of 30 yuan.In other words, short selling is a bet that the stock price will fall.Investors in our mainland stock market cannot sell short, but can only bet on rising stock prices. In Hong Kong, only major international investment banks can sell short, and ordinary investors cannot sell short.If they sell short, they are betting that the stock price will fall.So how do they make more money?The higher the stock price rises, the harder it will fall in the future.Suppose the stock price is 60 yuan today. If I make a rumor to pull the stock price to 100 yuan and then fall to 30 yuan, I can earn 70 yuan; if the stock price falls from 60 yuan to 30 yuan, I can only earn 30 yuan. piece.This is why whenever international financial speculators want to sell short, they start to raise the price of the stock, saying that the price will increase, and the price will increase.They sell short first, then push up the price, and wait for the stock price to rise to the highest point before suppressing the stock price. This is their usual operating method. This time is different, and the situation is more complicated this time, so our mainland investors must pay attention, they are basically the constituent stocks of the Hang Seng Index this time.What is their purpose?They want to raise the Hang Seng Index by raising the stock prices of these constituent stocks.Why pull up the Hang Seng Index?Because if you're going to be short, you're shorting the "big guy." What profit is there in shorting a company?Short selling the Hang Seng Index makes a lot of money.According to my judgment, they may short-sell the Hang Seng Index in advance, and then push up the constituent stocks of the Hang Seng Index, so that the Hang Seng Index will rise accordingly, and the higher the rise, the better.When the index rises to the highest point and suddenly suppresses these stocks, the Hang Seng Index will plummet, and they can make a lot of money by shorting the Hang Seng Index.So I suggest readers, the next time you hear these speculators raise their valuations, you must first think about whether they have already begun to sell short, and you must not easily believe their valuations.Of course, their valuations are sometimes true and sometimes false, leaving other investors confused.I did a research in 2005. Compared with manipulating the Hang Seng Index and manipulating a component stock, manipulating the Hang Seng Index can earn 10 times as much money. This time, the Hong Kong Hang Seng Index and the U.S. stock index rose at the same time, which made me very puzzled.Like the Hong Kong stock market, I really can't see why the US stock market should go up.American analysts found many plausible reasons, including pinning their hopes on China’s economic recovery, because the Chinese economy is about to recover, which will inevitably lead to the rise of the US stock index. I think this is standard nonsense, and it is simply a big “fudge”. .In addition, they said that the recent performance of US financial stocks is not bad, and the US Secretary of the Treasury said that they will do their best to protect financial stocks and prevent financial institutions from failing.A well-known person told the truth. He is Nieder Auer, the head of the New York Stock Exchange. He said that the rise in U.S. stock prices was not the result of full-scale buying by institutional investors, but a large amount of speculative funds. The result of the crazy pull.Nieder Auer's words are relatively authoritative, which means that the current stock price in the United States is not supported by the corresponding substantive aspects, but is just spreading some rumors, such as Chinese factors, etc., and is boosted by some financial capital from unknown sources.By August 2009, the Dow Jones Index was pulled to more than 9,000 points, and American professionals doubted whether this situation could last.Many professionals pointed out that some good news came out in August, such as the sales of second-hand houses and the earnings of some large companies exceeded expectations, which supported the index of more than 9,000 points.However, the unemployment rate in the United States was as high as 10% during the same period, which is still seriously underestimated.However, negative news such as rising credit card bad debt risks and Deutsche Bank predicting that 48% of high-quality mortgages will be insolvent in 2011 did not seem to impact the US stock market.The phenomenon that the Dow Jones Index reflects more positive and less negative will bring more risks to the US stock market in the future. However, just when American financial capital used some plausible reasons to push up the U.S. stock index, we found that on the same day, a large number of foreign capitals entered Hong Kong to push up Hong Kong stocks. Ratings led to a surge in the Hang Seng Index in mid-June.I think if they continue to rise, there will be a sharp drop, and they can make a lot of money.I really can't see why the Hong Kong and US stock markets are going up.But one thing I know is that American financial capital can freely enter and exit the U.S. and Hong Kong markets, so the best manipulation method is to manipulate the U.S. and Hong Kong at the same time, and earn a little more if you want to make a profit. Why only earn one index and earn two Wouldn't an index be better?This is why the trend of the Hang Seng Index and the Dow Jones Index is exactly the same. There are serious bubbles and serious manipulations.Because of this, Ren Zhigang and Li Ka-shing are very cautious about the current situation and express their concerns cautiously.I made this point in the program at the end of May, when the Hang Seng Index was above 19,000 points, and fell to more than 17,000 points in late June. This drop confirmed my point of view.For example, one point of the Hang Seng Index is equal to 50 Hong Kong dollars, so a short-selling contract can earn (19000-17000) X 50 Hong Kong dollars = 100,000 Hong Kong dollars.After they make money, they may pull up the stock index again, and use another trick to prepare for the next looting.As I said, the Hang Seng Index rose to 18,000 points in early July, and the Hang Seng Index rose to more than 20,000 points in August. I am very worried about the next looting.