The market, opening with a sharp fall, shocked all investors within it.
Similarly, it also caused panic among countless stock-holding investors and a strong desire to sell.
Thus, after a brief five-minute period of emotional build-up from 9:25 to 9:30, the market entered official continuous auction trading.
Without even a weak rebound, it directly plunged into a unilateral sharp decline.
At 9:45 AM, the Shanghai Composite Index fell by 3%.
In the market, a multitude of heavily weighted stocks with extremely high margin financing balances, as well as leading concept stocks with high short-term capital participation, all suffered heavy losses.
At 10:15 AM, the Shanghai Composite Index's decline expanded to 3.5%, and hundreds of stocks in both markets had already hit their daily limit down.
At 10:45 AM, the Shanghai Composite Index's decline once expanded to 4.2%.
Securities, banks, insurance... these heavyweights supporting the broader market were all in a state of sharp decline.
At this time, at the 'Yinghui Finance' company's trading account data risk control center.
The number of new risk trading accounts screened by the risk control system in a single day reached hundreds, and among these risk trading accounts, those that fell below the warning line and rapidly approached the forced liquidation line were also increasing.
Similarly, in its company's business department office.
All the salespeople had their phones glued to their ears from the moment the market opened.
Aside from 'Yinghui Finance' company.
The same situation was unfolding among hundreds of margin financing institutions in Lujiazui Financial City.
Even many brokerage branch offices also began to see numerous internal margin trading accounts touching the position warning line, and even approaching the forced liquidation line.
"Crazy, crazy, this market trend... it's absolutely insane."
Since the market opened, President Lin, who had been silent with a grave expression, saw his heavily-held stock 'LeEco' hit its daily limit down again, and his composure completely broke:
"Is it just news about clearing off-exchange margin financing? Does it really need to fall this much?"
Seeing that President Lin's account had an intraday loss of 5 million and his total account assets had fallen below the 100 million mark, losing nearly 16 million in profit in about a week, Su Yi couldn't help but say:
"President Lin, do you know how large the scale of leveraged funds in the entire market is currently?"
"How much?"
President Lin inquired.
Su Yi replied:
"The margin financing balance within the market is 2.1 trillion, and off-exchange margin financing is estimated to be around a trillion. The total scale of leveraged funds is at least over 3 trillion."
"What are you trying to say?"
President Lin asked, not quite understanding Su Yi's meaning.
Su Yi continued:
"I mean, a significant portion of the market's daily turnover of over 2 trillion is propped up by leveraged funds, and a part of the bull market's rally is also supported by leveraged funds. Now that regulators have pulled this important support, how can the market not collapse?"
"What's the use of saying all this now?"
President Lin sighed.
His held stocks had already hit their limit down.
Even if he wanted to sell at this moment, he might not be able to offload his shares.
What's more, having already fallen so much, selling at the limit down was something he was internally unwilling to do.
"You, on the other hand, made a fortune this time,"
President Lin said, glancing at Su Yi's account's profit and loss data.
He continued,
"In the months I've been trading here, I haven't seen anyone crazier or more profitable than you."
Su Yi smiled and said,
"I've always had good luck."
At this moment, market trading time had already reached 11 AM, and his holding account's floating profit had reached over 3.4 million.
However, Su Yi still had no intention of closing his position to take profit.
He continued to wait.
He knew that the most panicked moment in the market had not yet arrived.
As the midday close approached, perhaps due to investors' anticipation of positive news at noon, the market rebounded slightly upwards, not closing at its intraday low.
However, once again, it exceeded many investors' expectations.
Faced with the market's sharp decline, the midday news was surprisingly silent, with no positive news released.
Consequently, at the opening of the afternoon session, investors whose expectations were dashed joined the army of panic selling, causing the index to once again form a unilateral sharp decline.
Even by 2 PM.
The massive amount of shares from panic selling directly pushed the Shanghai Composite Index down to a 5% decline.
Following that, feelings of despair and panic began to completely envelop all investor groups in the market.
Numerous market stocks showed a lack of liquidity on the trading board.
All at once, whether retail investors, speculative funds, or institutions, everyone scrambled to flee.
Various leveraged funds, in desperation, blindly cut their positions.
At 2:15 PM, the Shanghai Composite Index's decline reached 5.53%.
At 2:30 PM, the Shanghai Composite Index's decline expanded to 6%.
Weighted industry sectors such as banking, insurance, securities, and oil all began to experience a wave of limit downs.
At 2:42 PM, the Shanghai Composite Index's decline once expanded to 6.75%.
More and more stocks began to lose trading liquidity, directly plunging to their limit down.
At this point, over 1100 stocks in the entire market had hit their limit down, and countless more stocks had a decline greater than 7% on the board.
Finally, when 3 PM arrived and both markets closed.
The Shanghai Composite Index closed down 6.42%, falling below 4500 points.
Meanwhile, the main contract of the China Securities 500 Index futures held by Su Yi plummeted to a 7.05% decline.
After the market stopped fluctuating, no one spoke in the entire trading room.
Everyone's gaze was fixed on the sea of green stocks, frozen on the rows of dazzling limit-down stocks.
A thousand stocks hit limit down!
No one would have thought the market would close in such a state.
Even fewer people anticipated that a mere piece of negative news released by regulators—'clearing off-exchange margin financing'—would directly break the legs of a galloping bull market.
In the minds of many investors.
The article 'Don't Panic, This Is Just a Technical Adjustment' published by a famous financial media last night was still fresh in their minds.
But now, looking back at the market trend...
Can this still be considered a technical adjustment?
Su Yi gazed at the floating profit figure of 4.52 million in his trading account, still not closing his position to take profit.
He knew that when market investors' confidence in the bull market collectively began to waver, and the bull market started to be cast under a thick shadow, then negative news would spread much more easily than positive news.
Moreover, a sharp decline with a thousand stocks hitting limit down is not easily recovered from.
As long as regulators do not publicly speak out to support the market and deliver significant positive news during the upcoming holiday.
Then, Su Yi could be certain that on the next trading day, the market would inevitably experience another inertial drop, as many stocks today had hit their limit down and had not fully released the panic selling sentiment.
Therefore, according to his position plan, this was not the trading position where he should close out for profit.
Allowing profits to continue running with the market's panic was what he should be doing at this moment.
(End of this chapter)
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