Why is China’s stock market so bad?

In the past month, China’s A-share market (Shanghai Stock Index) has fallen back from its two-year high of close to 3,300 points, and is once again approaching the 3,000-point mark. Although the market was only a technical adjustment that fell less than 10%, it caused great complaints and shirk of responsibility from the market. After all, this round of adjustment and decline caused the evaporation of nearly 4 trillion in market value of the Shanghai and Shenzhen stock markets, especially some previous Concept stocks that have attracted ordinary investors to pursue them have suddenly turned downward, and have even halved from their previous highs. The prices of more than 1,200 stocks have returned to below 2,638 points, causing panic in the market.

There are endless complaints from the market, and the main direction of attack is strict investigation by government regulatory authorities. There are also some so-called financial professionals or financial Internet celebrities who talk about the government regulatory authorities' neglect of market feelings and "only rules and no feelings" type of regulatory operations, which has made some institutions and individuals dare not to create and pursue The market concept has resulted in thin trading in the A-share market and cautious investment.

We are surprised by such irresponsible market complaints, and even more disturbed by this kind of shirk of responsibility for the "cause of China's A-shares". Why are government regulations blamed for every drop in A-shares? Maybe only by venting on government regulations can we achieve a deep understanding of China's capital market?

Chinese investors are not willing to seriously reflect Why do A-shares lack sustained and stable mid- and long-term investors? Instead, large-capital groups, private equity fund alliances, and independent large-scale backroom manipulations frequently succeed, creating conceptual hype again and again, allowing speculative trading to dominate China's A-share market. mainstream. This is diametrically opposed to the explanations given by Buffett and Munger, who had just held a shareholders' meeting, on China's stock market problems.

Buffett bluntly said: "Speculation is not a very smart approach. China is now a relatively emerging market, and now it also has a stock market with universal participation. China may have more troubles that make the market speculative. , will become speculative in this regard, and it will take a lot of luck to do this." And Munger is more direct: "We have such an opportunity, but we do not have a criterion to restrict the development of a certain market." This is the fundamental reason why Buffett and Munger are unwilling to participate in China's A-shares.

There is no rule without rules. Buffett and Munger's evaluation of China's A-shares also represents the views of international investors on China's A-shares. In a market with imperfect rules, lack of effective supervision, and the urgency, accuracy, and comprehensiveness of information cannot be guaranteed, who dares to be a medium- and long-term investor? MSCI (Mingsheng Index) investigates China A Although A-shares have not been included in the list for many years, it is not difficult to understand why.

For the same Chinese companies, although the prices of Chinese concept stocks in Hong Kong, the United States, and Europe also fluctuate, their perfect market management mechanisms have still allowed their stock prices to gain recognition from international investors. recognized. China's A-share listed companies have the same concept as those in the international market, as well as Chinese companies that are listed in Hong Kong, the United States, Europe and other places at the same time. The stock price performance in A-shares is much more intense than in other markets. This is because the market is too speculative. , caused by investors' own disregard for the market regulatory environment and rules.

The impact of the Central Bank of China’s management of monetary liquidity on A-shares is a technical discussion and a comprehensive consideration of macroeconomic development. It cannot be simply understood as the root cause of the sluggish performance of the A-share market. . The three commissions of banks, securities companies and insurance companies have focused on rectifying financial chaos, standardizing the use of funds in the financial market, straightening out the financial order, and creating a more standardized and efficient Chinese financial market. This is a further improvement of China's financial reform. Only in this way can it be recognized by international investors, make more funds willing to stay in the A-share market for a long time, and form a healthy Chinese stock market that is stable and sustainable. Such regulatory operations should not be misunderstood or complained by the market.

Do you still remember the "Bird's Nest 200,000 people received money" scam not long ago? Thousands of people from all over the country gathered at the Beijing National Stadium (Bird's Nest). Even after the police promptly refuted the rumors and clarified the rumors and on-site dissuasion, they still There are hundreds of elderly people who don't want to leave. Taking this as a lesson, how many Chinese investors are similar to these deceived old people? They are unwilling to believe the truth and prefer to stay in the beautiful ideas and scams. Even if someone exposes the scam and restores the truth, instead of reflecting on their own mistakes, they blame the exposer for "doing everything."

As the famous economist Wu Jinglian said, short-term interests and long-term interests are usually contradictory. There is also an old Chinese saying that “long-term pain is worse than short-term pain.” Therefore, the strengthening of supervision of China's financial market and the improvement of China's A-share system are the end of long-term pain and the beginning of long-term benefits. We should face up to and support government supervision, and we hope to establish a Chinese capital market that is recognized and trusted by the world as soon as possible.