While celebrating National Day, a thrilling global capital scramble broke out in the Hong Kong stock market. To target the panda stock market and compete for global funds, the Federal Reserve has begun to make an emergency U-turn, and the United States seems to have exhausted all its tricks.
On October 3, the Hong Kong stock market, as a bridgehead for Chinese assets to the outside world, experienced its first decline after a series of consecutive surges. Mainland real estate and auto-related stocks were the worst hit, with some falling more than 20%, shaking many people's optimistic attitude towards the A-share market after the holiday.
On October 4, the Hong Kong stock market opened low and closed high, counterattacking against the trend. Semiconductors led the way, with the highest-priced stock soaring 230%, stabilizing the upward trend. However, the real estate sector generally fell by around 10%. Over the two-day period, the Hong Kong stock market and the Japanese stock market formed a seesaw effect, where if one falls, the other rises, and vice versa. It seems there is a force competing for capital. Fortunately, the US stock market, the Japanese stock market, and the China-concept related indices all experienced a plunge, then a sharp rebound, reaching a new historical high in global investment enthusiasm for China.
Then, this miraculous event happened: on the evening of October 4, the US non-farm payroll data surprisingly exceeded expectations by a large margin, as if it had been directly lifted from the operating room to the KTV, helping the Federal Reserve to firmly step on the brakes. The 0.5% interest rate cut in November will no longer happen, and the US dollar index immediately experienced a violent surge. However, the non-farm payroll data is known for its inaccuracy, with the initial figure often revised downward, and the true data not known until nearly half a year later, something even Trump has criticized.
Just a fortnight ago, the Federal Reserve had to cut interest rates due to economic recession, but now the recession has suddenly disappeared. The Americans do not even believe themselves, as it seems they are clearly trying to compete with China for global capital, attempting to suppress the panda asset's major counterattack. In just two or three days, the bulls and bears engaged in a thrilling confrontation in the Hong Kong stock market, from policies to technology to market sentiment. It is a matter of where global capital will flow, and the tension and excitement are no less than the 1998 Hong Kong financial defense battle, as this time the opponent is not a single George Soros, but a group of Soroses backed by the Federal Reserve and the Bank of Japan, who chose the National Day holiday as the timing to short the Hong Kong stock market, with impeccable timing and precision.
First, they took advantage of the National Day holiday to create a policy time gap. On September 24, when the panda took advantage of the Federal Reserve's interest rate cut and the continued depreciation of the US dollar to launch a series of powerful stimulus policies and release a large amount of renminbi, it caught the domestic and foreign short-sellers off guard, violently driving up the A-shares, Hong Kong stocks, and China concept stocks, like a dry sponge absorbing global capital that was fleeing other countries' stock markets.
Subsequently, the United States and Japan took action one after another. First, Washington launched a patriotic investment law, demanding that Wall Street withdraw capital from the panda. Then, on the day of National Day, the Federal Reserve chairman suddenly stated that there was no urgency to cut interest rates quickly, effectively undermining the economic rationale for international capital to flow to the panda, leading to a continuous rise in the US dollar. Japan also quickly announced that it would not raise interest rates in the short term, hoping to retain Japanese capital. Europe also passed new auto tariffs on China, with a maximum rate of 35.3%.
During the short National Day holiday, the US, Japan, and Europe acted in coordination, providing direct policy support to the international short-sellers, indirectly curbing the panda's ability to siphon global capital, essentially competing for the global asset pricing power of the panda and other countries. Asset prices, from stock prices and housing prices to bond and exchange rates, are the granaries and ammunition of countries and enterprises. If this pricing power is lost, the real economy will inevitably be reaped without any ability to fight back.
Unfortunately, the A-share market was closed during the National Day holiday, and the capital channels between the mainland and Hong Kong stock markets were blocked, a time when the central government's policies had the least support for the Hong Kong stock market. Additionally, the Hong Kong stock market has no limits on price fluctuations, making it a test of global capital's true and direct attitude towards the panda economy in an unfavorable policy environment. Furthermore, many still believe that this round of surges is merely a policy effect, without substantial changes in the economic fundamentals, making it difficult to determine if it is a true bull market. Many are eager to cash in, which is a critical point of emotional divergence, a most dangerous moment for short-selling. But let's not forget that the panda has reached the point of direct confrontation with the strongest US financial market precisely because it has weathered round after round of fundamental battles. Otherwise, it would have been knocked down long ago.
From the Federal Reserve's interest rate cut in September to the domestic policy changes on September 24, and then to the Federal Reserve's abrupt U-turn during the National Day holiday, this may be the most direct confrontation in the history of Sino-US financial strategy, affecting the subsequent trends of the A-share market, China's economic confidence in the long run, and whether the panda can truly take control of asset pricing power instead of being forever driven by the US dollar cycle.
According to the analysis of domestic investment tycoons, this panda asset counterattack is a shot without a return arrow, not stopping until the goal is achieved, as the policy strength is so strong and the public enthusiasm is so high that investors can earn 8 to 10 times their money in a few years. However, if the short-sellers succeed in their attack, failing to stabilize the long-term bull market, the cost will be extremely severe. Heavily leveraged retail investors, especially new stock market participants, will be heavily trapped, not only severely damaging long-term confidence, but also causing the international long-term capital that ultimately decides the outcome to view the Chinese market with caution. According to research by CICC, foreign capital has indeed been buying in large quantities during the current rally, but most of it is still hot money, not the long-term capital that determines the outcome, such as Singapore's Temasek, Norway's sovereign wealth fund, Middle Eastern sovereign wealth funds, and Warren Buffett who has been selling US stocks. They are still watching to see if the trend of capital flows between China and the US has reversed, and waiting to see how the panda's fiscal policy will boost the real economy. It is expected that they will truly enter the market in late October, as they will only help the winner.
Here is the English translation:Fortunately, at this fragile juncture, key sectors such as semiconductors and automobiles have managed to fend off the short-sellers thanks to their solid fundamentals, and this wave of short-selling on the Hong Kong stock market has allowed this small bull market to narrowly navigate the initial most dangerous stage, which may now have a chance to enter a long-term bull market. But don't forget, over the next period, the high-intensity game between China and the US around the stock market will continue to decline, as there are still many variables in US trade and financial policies, and the domestic stock market, after a wave of stimulated surges, will also pose a very harsh test on the development quality of the real panda economy, such as whether inflation can be well controlled, whether the loopholes in the stock market have been plugged, how much the real estate problem has been fixed, and whether social financing has been pulled up? How to break through in the semiconductor and new energy industries? There are still many difficulties, each of which could become the best ammunition for international short-sellers to target the Chinese stock market, bond market, real estate market, and even the renminbi.
Of course, the US side is also under a lot of pressure, after all, the problems of the banking industry's bond and the artificial intelligence bubble are still hanging over their heads, and the crisis deepens with each day's rate cut. In plain terms, finance is just a weapon, and in the end, it is the real economy that is fought for. So why do we need to focus on the bull-bear battle in the Hong Kong stock market during the National Day period, and why does the country need to launch this major counterattack on assets by taking advantage of the Fed's rate cut, even though the stock market has been languishing for so long and the risks are still so great, and it's still doing the real business honestly? The answer is of course negative, just think about this Great Wall.
The Great Wall, while costly and time-consuming to build, does not appear to be very high. Nomadic tribes still occasionally invade the Central Plains, inevitably taking away a lot of wealth, but with the Great Wall, there is a clear boundary, a stronghold to defend against foreign enemies, and a stable trade pass, as long as the Great Wall does not fall and the Central Plains do not fall into chaos, the predatory nomadic tribes will have a stable period to assess China's strength, and a long-term attitude of trade and peace.
Now, more and more panda enterprises are doing business overseas, and the financial market, as a Great Wall built by the wealth of the common people, if the pricing power is left in the hands of others, it will only be subjected to more and more frequent attacks from the outside, and the real economy is destined to be constantly harvested. Only by winning the defense battle of the financial Great Wall, constantly enriching the assets of the common people, can the panda economy have a long-term expectation in the eyes of the world, and it can actively interconnect, stabilize exchanges, and support an asset pricing system that is mutually reinforcing with the real economy, industrial strength, and trade status, and not subject to others. At the final moment of the Hong Kong defense battle, the responsible officials of the Hong Kong government said that if we can't hold on, we'll atone with our lives, but this time it's different, no matter how high the stock market rises, no matter how much the data grows, in the end, everyone is looking at the real economy, there's no need to be so tragic.
