On October 9th, the A-share market suffered a heavy blow on the second trading day after the National Day holiday. The three major indices of A-shares all opened significantly lower, with the Shanghai Composite Index down 1.79%, the Shenzhen Component Index down 2.92%, and the ChiNext Index down 4.84%. Nearly 5000 stocks in Shanghai, Shenzhen, and Beijing plummeted.
After opening low on October 9th, A-shares continued to show weak and volatile performance. The Shanghai Composite Index once fell by more than 6%, while the CSI 300 Index experienced a significant drop of over 7%. Most sectors were in the red, creating a gloomy market atmosphere.
On the market, newly listed stocks saw a significant retreat, and cyclical sectors like real estate, tourism, and food witnessed notable corrections in their stock prices.
Newly listed and newly established stocks opened significantly lower, with C Wireless down nearly 30%, and companies like C Changlian, C Hehe, Knight Dairy, Cube Holdings, and Awaitec opening more than 10% lower.
Core assets in the market experienced widespread declines, with stocks like Elens Vision, Amico, CATL, Jinlongyu, and JA Solar dropping by over 6-8%.
A netizen expressed frustration on Weibo, saying: “I opened an account specifically during the holiday, hoping to make a big move after the break, but the market is all in the red now, and I dare not enter.”
Financial reports indicate that such sentiments represent the current mindset of many new stock investors. They had prepared eagerly to enter the stock market, only to face a tough market reality.
According to China Securities Depository and Clearing Corporation Limited, new securities accounts submitted from October 1st to October 8th became officially tradable as of October 9th. This means a large number of new stock investors will formally enter the market at this juncture. However, the market’s trend seems to have not warmly welcomed them.
Since the policy measures introduced on September 24th to stimulate the market, A-shares had seen a continuous surge over the course of six trading days. Professionals and rational long-term investors in mainland China believe that the market has lost its rationality.
As reported, a wave of new investors sparked the frenzy of opening accounts. Red Star News interviewed post-2000s and post-2005s among these new investors. Some had just turned 18 this year, carrying their earnings of 5000 RMB from summer jobs, getting ready to enter the market after the extended break.
On the eve of new investors entering the market, numerous large brokerage firms sent letters to these investors, advising them not to rush and to set clear investment goals. They cautioned against the mindset of making quick money in the market. The brokerages emphasized disciplined investing over emotional decision-making, urging investors to plan their finances wisely, invest idle funds, and avoid risking everything in one go to prevent financial setbacks.
Several major securities firms issued constructive suggestions targeting first-time market participants on October 8th. CITIC Securities stated that long-term money is more profitable than short-term gains. For new investors who lack a deep understanding of the market and investments, short-term speculation equal to gambling, they suggested focusing on long-term strategies to accumulate returns.
Guoxin Securities also shared a similar perspective, emphasizing that short-term excitement is short-lived, while long-term gains are vital. They warned new investors that while short-term gains may bring temporary excitement and profits, the likelihood of enduring losses is higher. In a bull market cycle, new investors should establish clear investment objectives and manageable investment amounts from the outset, cautioning against raising expectations and adding funds along with market hype. The lessons of starting small and ending up heavily indebted from previous market cycles are numerous and profound.
Looking at the trading volume in the A-shares market at the morning session today, both Shanghai and Shenzhen markets saw the turnover surpassing 1 trillion RMB within the first half hour of trading, indicating a decrease of nearly 210 billion RMB compared to the same period yesterday. This data reflects a reduced level of market trading activity and reveals investors’ cautious attitude in the current market environment.
On October 8th, the absence of additional stimulus measures from the State Development and Reform Commission of China during a press conference left investors hoping for more momentum in the stock market disappointed. The rebound of the Chinese stock market has lost its steam.