Facing the market's continuous trend of thousands of stocks hitting their daily limit down.
The large individual investors in the VIP trading room were already completely numb.
No one held out hope for a bull market anymore, nor did anyone expect the Shanghai Composite Index to return to 4000 or 5000 points.
As long as there was any liquidity in the market, everyone was panic-selling, desperately fleeing.
And the stock index futures, which continuously hit their daily limit down,
also wiped out countless funds that had previously gone long, with an untold number of forced liquidations.
Now, whether it's stocks or stock index futures,
all have completely lost liquidity.
All funds and investors daring to go long have been ruthlessly buried in the continuous plunge, leaving no place for burial.
After the market closed...
Despair and panic investment sentiment, through every nerve of the internet, expanded boundlessly towards the entire financial system.
Countless banking institutions that accepted equity pledges from major shareholders of listed companies, with many of the pledged equities approaching the forced liquidation warning line, began to urge the major shareholders of the pledged equities to quickly replenish collateral or margin.
Within brokerage firms, risk control departments were swamped.
Countless margin trading accounts were approaching or had already hit the forced liquidation line.
Within numerous fund companies, large quantities of fund products were being forcibly redeemed on a massive scale by off-exchange retail investors.
Various on-exchange leveraged funds, such as 'Securities B', 'Military Industry B', 'Internet B', and other popular leveraged fund products, all faced downward adjustment risk.
And various capital institutions that entered the market through other channels were also desperately cutting losses and fleeing.
Overnight, this "wealth destruction" storm, stemming from the continuous stock market plunge, began to frantically sweep through the entire financial system, forming a "comprehensive systemic financial risk" via entities such as banks, brokerage firms, fund companies, other private financing institutions, and listed companies that obtained financing.
If at this time, regulators did not intervene.
Then, subsequently, with the emergence of comprehensive systemic financial risk,
the stock chips that banks, brokerage firms, fund companies, other private financing institutions, and listed companies were forced to sell on a large scale, would create an even more tragic plunge, causing more severe wealth destruction, and even affecting the development of the macroeconomy.
It would affect the wallets and lives of ordinary people who never traded stocks and had no connection to the stock market.
Fortunately...
Amidst the widespread curses and complaints from retail investors.
When the entire financial market was completely shrouded in panic and despair, with no future in sight.
The regulators remained clear-headed.
At 7 PM, after continuous discussions within the regulatory body, a series of market rescue measures were publicly released to the market.
According to the announcement issued by the regulators,
the CSRC (China Securities Regulatory Commission) would suspend market IPO approvals starting from July 6th and increase the QFII quota.
At the same time, China Securities Finance Corporation (CSF Corp) announced a capital increase and expansion of shares, and Central Huijin Investment Ltd. announced its entry into the market.
And one hour after the release of several major positive news, at 8 PM, a storm of major positive news also began to sweep in.
It was seen that...
The People's Bank of China (PBOC) issued an announcement, stating it would provide liquidity support to CSF Corp.
The Ministry of Finance issued an announcement, stating its support for state-owned financial enterprises to increase their holdings.
The State-owned Assets Supervision and Administration Commission (SASAC) issued an announcement, requiring major central state-owned enterprises listed on the stock market not to reduce their holdings.
After these announcements, another half an hour passed, and a total of 21 brokerage firms announced a joint capital contribution of 120 billion to invest in blue-chip ETFs to stabilize the market.
Subsequently, the China Financial Futures Exchange announced
that starting from July 6th, it would raise the trading margin threshold for stock index futures, increasing it from a minimum of 8% to a minimum of 12%, an increase of 50%.
In addition to this,
the China Financial Futures Exchange also stated that it would restrict naked short selling of stock index futures.
It also placed restrictions on the number of positions individual investors could hold when trading stock index futures, requiring individual investors not to exceed 5 lots as their maximum position size when trading stock index futures.
Otherwise, their accounts would face opening restrictions.
From the suspension of IPOs, to CSF Corp and Central Huijin entering the market, to commanding brokerage firms to directly inject capital to rescue the market, to restrictions on index futures trading...
Throughout the evening, inside and outside the market, it was bombarded with positive news.
Everyone could see that these were unprecedented market rescue measures, representing the utmost sincerity from the regulators in rescuing the market.
Facing a continuous bombardment of heavy positive news, and powerful market rescue measures taken by the regulators to prevent systemic financial risks, the hearts of countless investors, which had been rendered silent by the bears, involuntarily stirred with ripples of hope for the market next week.
Su Yi gazed at the series of heavy positive news released by the regulators.
On one hand, he was glad he had closed his positions and taken profits in time during the day; on the other hand, he lamented that his path to making huge profits by continuously shorting stock index futures contracts during the unilateral market crash was now completely blocked.
However, he also knew.
With the continuous market plunge, systemic financial risks became prominent.
It was an inevitable measure for regulators to restrict naked short selling of stock index futures and limit the number of open positions in stock index futures for individual accounts.
Fortunately, he had already profited considerably by continuously shorting stock index futures.
He had accumulated his first pot of gold.
Now, although it was somewhat regrettable that this path to immense profit was blocked, he felt no remorse.
However, moving forward... if he wanted to use the stock market to further increase his capital, it would certainly not be as easy and comfortable as before.
But opportunities would definitely still exist.
Thinking this, Su Yi began to formulate subsequent trading plans and look for more definite investment and trading opportunities, based on his historical memories from before his rebirth.
After a while, after he had browsed through all the individual stocks in the market.
A stock named 'Teli A' stood out before his eyes.
If he were to say which stock left the deepest impression on him during the fierce bull-bear market transitions he experienced in 2015, it would undoubtedly be this one.
This was a listed company controlled by the SASAC of Shenzhen.
Its main businesses included property leasing, automobile sales, automobile maintenance, etc.
Its performance and development had been mediocre for many years since its listing.
Looking solely at its fundamentals and performance, it had no distinguishing features whatsoever.
Moreover, throughout the entire bull market, under the core theme of "reform of central state-owned enterprises and state-owned enterprises," its stock price did not rise much.
No major institutions were optimistic about it, and large funds rarely paid attention to it.
But it was precisely such a stock with poor fundamentals,
no expected growth potential, very unpopular, and not favored by large funds – a so-called "junk stock."
However, precisely because its shares were clean, it had a pure "state-owned enterprise reform" concept, coupled with virtually zero gains throughout the bull market, after the continuous release of regulatory rescue measures, once a wave of panic sentiment had been vented, it suddenly soared, becoming the leader in short-term market sentiment speculation.
Su Yi reflected on all his memories regarding this stock.
He planned to start with this stock, follow the regulators' market rescue strategy, align with the policy's demand for long positions, stir up market sentiment, and replicate the historical trajectory of this stock.
(End of Chapter)
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