"Huh, why is market capital speculating on the 'SOE Reform' concept?"
After the market opened in the afternoon, noticing that the market sub-line of "State-Owned Enterprise (SOE) Reform" was receiving increasing attention from active capital on the floor, and that more and more small- and mid-cap stocks related to this concept were surging vertically, Jia Yongxiang, trading team leader of the "Huarui Excellence Growth No. 1" fund product trading room at Huarui Fund Management Company who had been observing the board, said in surprise:
"I really didn't expect this line to rally again. There hasn't been any positive news regarding 'SOE Reform' in the market recently, right?"
Hearing Jia Yongxiang's words, fund manager Song Shaopu chimed in with a light laugh:
"The story of 'SOE Reform' has always been a favorite speculative main line for market capital. As long as market sentiment supports it and there's even a tiny rumor inside or outside the market, as long as capital is willing to hype it, it can trigger a wave.
However, it's quite clear that this 'SOE Reform' thematic concept line currently being hyped is actually an overlapping concept layered on top of the 'Big Infrastructure' main line.
Look at the 'SOE Reform' concept stocks moving in the market right now—basically all of them are moving because they overlap with sector concepts under the 'Big Infrastructure' main line.
My personal take is that this represents a deeper fermentation of the 'Big Infrastructure' main line.
The short-term hot money speculating on the floor realized that relying purely on 'Big Infrastructure' policy tailwinds made it hard at this level to support large amounts of other floating active capital continuing to follow high, so they excavated and layered on this sub-line to drive the trading, creating stronger board expectations and trend-following sentiment."
"So... is this a good thing?"
Jia Yongxiang turned around to look at Song Shaopu and asked.
Song Shaopu nodded slightly and replied,
"It should be a good thing. After overlaying more sub-line expectations, the board's expectations and trend-following sentiment are strengthened, which should allow this wave of 'Big Infrastructure' main line speculation to go further. The turnover of bottom chips will also become more thorough, benefiting the long-term trend of this core main line."
"Unfortunately, it's not very friendly to us since our position isn't full enough," Jia Yongxiang said. "We can only watch the market rise without being able to build up our positions on a large scale."
Song Shaopu responded:
"To begin with, very few major institutions lay in ambush ahead of time in low-lying sectors like real estate, coal, steel, non-ferrous metals, and construction. Even an institution like 'Huayi Capital' likely only entered this core main line recently and doesn't hold an overly heavy position yet.
So basically, everyone is at the same starting line right now. How this core main line of 'Big Infrastructure' moves going forward and how far the market trend can go depends entirely on the combined force of the market, as well as how much various major capital players agree on the fundamental reversal and future expectations of this core main line. It's not up to any single major fund, nor can anyone dominate or control the board."
"I guess even an institution like 'Huayi Capital' didn't expect that after their seat bought in, the 'Big Infrastructure' main line could ferment like this in the short term, right?" Jia Yongxiang said. "Speaking of which... why didn't Huayi Capital buy stealthily when building their position? Instead, they exposed their trading seat right from the start with great fanfare, along with their motives for driving the board."
"How many pairs of eyes across the entire market are watching the position concept stocks of Huayi Capital's 'Huayi Expedition No. 1' fund product to make trades?" Song Shaopu smiled and said, "There are at least eight hundred, if not a thousand, right? So many eyes are fixed on studying Huayi Capital. Once this institution buys heavy positions in related stocks, it's hard for news not to leak, and it's equally hard not to leave traces on the board.
You have to realize that based on its latest published net asset value, the scale of the 'Huayi Expedition No. 1' fund product has already reached over 60 billion yuan. Under current market liquidity, how could a massive fund product of over 60 billion yuan buy in on a large scale without leaving a trace?
Therefore, when Huayi Capital built large positions in 'Big Infrastructure' chips, the appearance of their trading seats on the Dragon and Tiger list was very likely something beyond their control.
Furthermore, the 'Big Infrastructure' main line involves numerous stocks and can accommodate a massive volume of capital.
Besides, after more than half a year of continuous decline, virtually all stocks across the entire main line are in an obviously oversold state, with quite a few trading below net asset value. Under these circumstances, if Huayi Capital's goal is a long-term investment target rather than a short-term one, buying 10% lower or 10% higher really makes no difference.
Moreover, their capital volume is huge. By continually adding to positions intermittently, even if they temporarily buy high, they can quickly dilute their average cost. They don't need to worry about missing short-term ideal buying points at all."
"That's true." After listening to Song Shaopu's analysis, Jia Yongxiang nodded and said, "The larger the capital, the higher the tolerance for error on short-term buying points. But... President Song, with the market developing like this, how should we operate? Keep waiting and watching, or continue adding to our positions according to plan?"
Song Shaopu pondered for a moment and replied,
"Let's stick to the plan and continue adding positions. As I said just now, if we were trading short-term with short-term goals as our focus, we would need to time the market. But if our trading goal is primarily long-term, we don't need to care too much about timing. As long as the underlying logic hasn't changed and the target stocks are still at low price levels, we can keep buying. Just stay focused on the logic and valuations."
"Alright." Jia Yongxiang nodded again. "Then I'll follow our established position-building plan and have everyone continue buying."
With that, without waiting for Song Shaopu's reply, he quickly issued trading orders to the traders in the trading room, directing them to keep buying target stocks in the 'Big Infrastructure' main line.
As his orders were handed down, accompanied by the traders tapping away on their keyboards to inject capital into the target stocks of 'Big Infrastructure'...
On the trading boards across both markets, the active capital groups and trend-following retail investors were still focusing heavily on the 'Big Infrastructure' main line.
However, because the 'SOE Reform' sub-line siphoned off a portion of the active capital, the momentum of concentrated capital pushing up and speculating on small- and mid-cap concept stocks within 'Big Infrastructure' actually faded somewhat, failing to create a more unified wave of limit-ups.
After that...
As trading time progressed.
At 1:40 PM, with popular stocks in the 'Big Infrastructure' main line pushing to intraday highs and many small- and mid-cap concept stocks locked at their upper price limits, active trend-following funds on the floor began spilling over from real estate, steel, coal, non-ferrous metals, and construction into consumer and financial sectors.
This brought varying degrees of active buying support to the board for white goods, baijiu, insurance, and banking sectors, as well as their corresponding core stocks.
At 2:08 PM, 'Xinli Financial', as a concept stock in the insurance sector, surged to the limit-up board, driving a rebound among a slew of heavily oversold stocks in the 'Internet Finance' sector.
At 2:17 PM, in the steel sector, Lingang Shares and Shaogang Shares were locked at limit-up under continuous large main orders. As the market began expecting a merger between 'Wuhan Iron & Steel Group' and 'Baosteel', numerous small-cap steel stocks surged in tandem.
At 2:33 PM, the Shanghai Composite Index approached a 2% gain, displaying a pattern of consecutive large bullish candles. Meanwhile, the ChiNext Index remained weak, barely maintaining a slight positive gain.
At 2:46 PM, as trading entered the final 15 minutes of the session, active capital spilling over from the core main line—or rather profit-taking funds worried that 'Big Infrastructure' would experience divergence and pullbacks tomorrow—began flowing out of hot sectors such as Real Estate, Non-Ferrous Metals, Steel, Coal, and Construction, shifting into heavily oversold sectors like Technology and New Energy Supply Chains to execute a high-to-low sector rotation.
After 2:50 PM...
The ChiNext Index surged rapidly during the final 10 minutes, narrowing its gap with the Shanghai Composite Index.
During this period, the Shanghai Composite Index drifted down from near its 2% gain, showing a late-session dive.
Finally, as 3:00 PM arrived and both markets closed:
The Shanghai Composite Index froze at a gain of 1.38%, while the ChiNext Index closed up 0.79%, narrowing the gap between them to within 1%.
Aside from index performance, on the overall board:
Although sectors in the 'Big Infrastructure' main line—such as Real Estate, Steel, Coal, Non-Ferrous Metals, Building Decoration, Building Materials, etc.—experienced a degree of divergence in the final ten minutes, causing many constituent stocks to dive lower into the close;
Taking the full day's trend into account, the market's main active capital groups remained predominantly concentrated in the 'Big Infrastructure' main line.
Meanwhile, stocks related to Technology and the New Energy Supply Chain, which had briefly spiked in the last ten minutes, still underperformed the broader market. This indicated that the market's main style had not shifted.
It was simply that as the 'Big Infrastructure' core line continued its aggressive rally on expanding trading volume, much of the profit-making capital previously lying in ambush—including retail traders, hot money, and institutions—began taking profits and rotating from high to low to rebalance their positions.
"Although capital showed a minor divergence toward the close, overall there's no big issue with this trend; it aligns quite well with expectations."
Facing the settled market figures after the close, Xu Qiao did a quick review in the "Shanghai Ultra-Short Band" main hot money group and said with a smile.
"The market is still revolving around the 'Big Infrastructure' main line," Old Zhang chimed in. "However, it's clear that in the final 10 minutes of the session, the core active capital and lurking profit-taking capital gathered in 'Big Infrastructure' were a bit impatient to take profits."
"The late-session rotation from high to low will likely impact tomorrow's market open," Old Wu added at this moment. "I expect tomorrow's market to see significant intraday divergence. At the very least, capital that chased high during today's session might find it hard to walk away with intraday profits."
"There were indeed signs of funds front-running toward the close,"
Brother Chen said after reviewing the flow of main capital in several popular stocks during the final ten minutes.
"Tomorrow's market divergence is almost a certainty. The main suspense now is whether the 'Big Infrastructure' core main line can withstand the sentiment divergence tomorrow, continue opening up upside space, and transition from weak to strong."
"Brother Chen, what do you think?" Xu Qiao asked. "Is tomorrow's market divergence a buying point or a selling point?"
Brother Chen pondered for a moment, smiled, and said:
"That depends on what trading perspective you take and what logic you use to judge. From a short-term trading perspective, tomorrow's divergence is very likely a selling point, but judged from long-term logic, tomorrow's divergence is a buying point."
"How so?"
Old Zhang asked in confusion.
Brother Chen explained patiently:
"The outbreak of this wave of 'Big Infrastructure' main line was rather rushed. Before the entire grand main line erupted across the board, various funds in the market, including the 'Huayi Capital' institution managed by Brother Su, probably didn't have corresponding expectations nor built positions in advance.
That is to say, within this core main line of 'Big Infrastructure', low-level ambush positions are very few.
The vast majority of players on the floor are retail traders trapped after entering during last year's bull market or during the circuit-breaker stock crash early this year, along with a few major institutional funds that haven't finished cutting their positions over the past six months.
In other words, the explosion of this 'Big Infrastructure' main line was created entirely through the combined force of market retail investors, hot money, and institutions.
Moreover, whether newly entered institutions, retail traders, or hot money, none hold any cost advantage—everyone's cost basis is roughly the same.
However, while costs are similar, trading motives are different. Hot money trades short-term, seeking profits from price spreads after a stock surges in the short term, and the operational logic of most retail investors is the same.
Institutions, on the other hand, enter this 'Big Infrastructure' core main line on a large scale mostly because they sensed a fundamental reversal in the real estate industry.
They expect that under policy tailwinds like 'Supply-Side Structural Reform', the 'Land and Maritime Silk Road of the New Era', 'New Infrastructure', and 'New Urbanization Construction', along with a continually warming national housing market, core stocks in the 'Big Infrastructure' domain can thoroughly improve their fundamentals and unleash explosive earnings.
Their position targets and expectations are long-term. This means institutions, hot money, and trend-chasing retail investors have contradictory trading logics.
Furthermore, during this time frame, many large institutions on the floor haven't acquired enough chips. This implies that once a major board divergence occurs in the 'Big Infrastructure' core main line, these institutions will very likely continue buying chips and increasing their positions. That is why I said tomorrow is both a selling point and a buying point."
(End of Chapter)