Views on this round.

Let's start with the conclusion, this market trend is simply because the government is out of money and wants to get some money from bank depositors. The Shanghai market is driven by policies, while Hang Seng is purely speculative.

1. The reason for the market trend is due to allowing major shareholders of listed companies to loan money to buy government bonds, then use the bonds as collateral to swap out funds, with an interest rate of 1.5%. Shanghai market has a market cap of 70 trillion, and only 300 billion is prepared for loans, accounting for 0.4% of the market cap. Assuming all is disbursed, 2600*1.004=2610.4, the large cap will only rise by around ten points. However, the large cap has risen by 500 points, peaking at 1000 points. If there was undervaluation before, it wouldn't be undervalued by 25-50%.

2. Strictly investigating loans from depositors entering the stock market, a policy announced in just two days (8th-10th of this month). Loans entering the stock market is a normal market phenomenon and cannot be fundamentally eliminated. Banks usually charge 5% interest on collateral loans. Since Chinese commercial banks only provide collateral loans, if unsecured loans are needed, interest rates are usually above 15%. The rushed announcement of the policy clearly shows that the Chinese government did not anticipate the market's frenzy and the various secondary loans entering the stock market.

3. After reaching 3700 points, the large cap started to plummet. The reasons for the decline are two-fold: shareholders of companies selling off and block orders funds leaving. This indicates that both company shareholders and block orders are not bullish on the current price. Clearly, both of these are long-term holders of the company's stocks, showing that neither side has high expectations for the stocks in the future.

4. Chinese local governments have a large amount of local debt and growing expenditures. On the contrary, residents' savings have been continuously increasing. After the continuous deterioration following the stagnation in real estate, there is an urgent need to find a way to resolve the debt. Since the Chinese market interest rate is lower than that of the USA, it cannot attract foreign capital. Additionally, issuing bonds cannot solve the deficit issue within three months, the best way is to target the money in the hands of depositors.

As a result, a closed loop is formed, first by lowering deposit rates through interest rate cuts in the USA to force depositors to withdraw money. At the same time, since the company's shareholders borrow money through government bonds, the interest rate on government bonds will not be high. Then release bullish news to deceive investors into entering the market to take over.

So what are you doing following the excitement in the Hong Kong stock market.