Pengyu Market And the Stock Market Overheated as Bank Funds Flowed into the Stock Market

Next, with the recent increase in the amount of North Korean box funds (overseas funds imported into China’s A shares via the Hong Kong Exchange) to the highest level in recent years, foreign investment has been vigorous, and this inflow of foreign funds peaked. The possibility of falling after taking a photo was also cited as a reason for the unpredictability of the bull market in July.

In fact, the recent inflow of North Korean box funds has reached its highest level in four years. However, as the probability of a fall in the North Korean box fund inflow in the future is likely to drop after a high, it is diagnosed that the slowdown in the North Box fund inflow and the increase in the outflow may put a short-term pressure on the share price of A. Indeed, the bookbox funds flowed in for 6 consecutive days from July 2 to 9, and on the 10th, 4.44 billion yuan was leaked.

Another reason for this was the uncertainty surrounding the Corona 19 incident, and the fact that the risk of the’secondary production and shutdown’ in the United States was not small. It is an explanation that the domestic and foreign risks from the re-spreading of the Corona 19 situation can still have a significant impact on the Chinese financial market.

Lastly, the fact that China’s financial supervisory authorities are warning of the Pengyu bull market was also raised for the reason that A’s current bull market is unlikely to continue.

After experiencing the bubble collapse in 2015, the Chinese financial authorities became very aware of the’bubble risk of the Pengyu market,’ and the stock market overheated as bank funds flowed into the stock market through various routes like five years ago. It is a diagnosis that is not tolerated. Indeed, Chinese authorities have previously said they will limit some of the debt-investing activity to avoid the risk of bubble collapse.

For four of these reasons, Xu, chief economist, diagnosed that the Chinese stock market in the future would not be able to continue the recent’Fengyu market’ and that it would be more difficult to reproduce the market in 2015. However, he emphasized that the bull market can be expected in the second half of the year.

Specifically, according to the chief economist’s diagnosis, favorable economic conditions such as the economic recovery trend and the government’s SME loan support policy are expected to continue in the second half of the year. In addition, in terms of liquidity, the direction of monetary policy in the second half is likely to turn into a relatively tightening trend compared to the first half, but as the economy recovers rapidly, funds flow from other markets such as bonds to the stock market, and to weaken monetary policy easing levels. It is expected to offset the impact.

For this reason, chief economist Xu said, “It is highly probable that a bull market will be created in the A state in the second half of this year, but the bull market where the stock price will surge dramatically as in 2015 will not be reproduced.”

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Pengyu Market And the Stock Market Overheated as Bank Funds Flowed into the Stock Market

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