[Mooer Discusses Hot Topics] The volatility of China concept stocks has intensified, how do we view the future market?

Background of the Event

Recently, the major indices in the Hong Kong stock market have been declining, with many China concept stocks such as Tencent, Meituan, and Kuaishou experiencing pullbacks. The market for China concept stocks has become more volatile, and the overall market sentiment is relatively subdued. In the U.S. stock market, as of the closing on July 5th, several popular China concept stocks suffered heavy losses, with DiDi falling by over 20%, KE Holdings by over 10%, and Bilibili by over 9%; in the following days, China concept stocks continued their weak performance. On July 9th, China concept stocks generally saw a slight recovery in the market.

Mooer followers are all paying attention

With the recent pullback in China concept stocks, Mooer followers have engaged in intense discussions about the future market trends. The Mooer followers are showing their strengths in this "martial arts competition", where three major factions have emerged. Which are these three major factions? What kind of "masters" and "moves" will there be? Let's find out together with the popular sister.

What signal does the strong regulatory release for China concept stocks indicate?

What is the macro logic behind the technology stocks correction?

How do you view the recent downturn in China concept stocks and their future prospects?

What signal does the strong regulatory release for China concept stocks indicate?

@侃见财经：

Recently, regulators have begun to strictly and heavily manage China concept stocks. On the one hand, this reflects the development of our country's economy, and on the other hand, it is a restriction on the wild growth of capital.

In the past five years, companies in the internet plus-related sector have shown a rapid growth trend, under the impetus of capital, going public within one to two years is not a difficult task.

However, companies expedited by capital often skip many essential stages in their growth path, leading to numerous issues being exposed after their IPO.

I believe that the current economy has reached a stage of high-quality development, therefore, it is necessary to regulate the previous unruly capital expansion behaviors and also impose corresponding restrictions on internet companies, in order to nip many issues in the bud.

What is the macro logic behind the pullback of technology stocks?

@港股解码 :

Entering the summer, economic recovery, fluctuations in oil prices due to oil-producing countries failing to reach a consensus on production increases, may increase inflationary pressures, sparking speculations in the market about the Federal Reserve reducing bond purchases and withdrawing from loose policies in advance.

Prior to this, the strong flow of the US dollar liquidity has driven capital markets to repeatedly hit new highs, so the central bank's latest stance has influenced the change in market sentiment. If the central bank suddenly changes its attitude, a capital outflow will lead to pressure on the stock market, especially on stocks with relatively high valuations, which will become the focus of selling pressure.

Once the interest rate is raised, market interest rates rise, and the cost of capital and valuation will change, weakening the attractiveness of technology stocks.

How do you view the recent decline in China concept stocks and future trends?

Bullish view

@27757962 :"People abandon me, I abandon people." In the stock market, there are "seven losses, two draws, one gain," so to make money from it, you need to be able to endure loneliness and have reverse thinking. Investment is not about finding generals among the dwarfs; it's about picking "diamond companies" on the gold track. Instead of dreaming of getting rich from growth stocks in a pile of companies, better to find stocks that you can hold from well-known companies. Remember what the old Ba taught, "Buy stocks is to buy equity," "No Margin," "No short selling." Stick to the right investment approach. Stick to your faith. Do what you believe in. Buy more of value stocks as they fall.

@Queen女王 :When it comes to investing, one should consider a broader perspective, timing the market is a very difficult task. Instead of timing the market, it is better to choose not to time the market to resist. Just like what is said in the Bible, "For to every one who has, more shall be given, and he will have abundance; but from him who has not, even that which he has shall be taken away". Strong enterprises will get stronger, and various resources will also be concentrated towards the strong. Therefore, worrying today about how these giants are doing or worrying about stock prices is unnecessary. Time will smooth everything out, so from now on, only buy and do not sell. In a few years, you will be better off.

"Bearish" camp.

@立正小不点 :It is highly probable that the Hang Seng Index will fall below 27,000, and continuous declines may face resistance rebounds, but the downward trend is unlikely to change. Many people are willing to buy more now, indicating that it is not yet the best buying point. Some stocks have experienced significant declines, such as Xiaomi which is showing resilience now, but whether to buy or not, for example, companies like Meituan that performed well during rebounds. Personally, it might be better to wait and stabilize instead of buying now.

@港股解码 :A storm is gathering over internet companies, whose valuations have been deemed "Too good to be true" in the past, and now it may be the time to raise this question because there are more negative factors than positive factors, and valuations are at unprecedented high levels. Hence, their pullback is likely not a short-lived event, future interest rates and regulations will play a crucial role, and the risk of a downturn remains.

"Calm" faction

@燕子回時 :

Recently, the decline of China concept stocks has been relatively large, including Alibaba, PDD Holdings, and Meituan. The retracement from the year's high points has been significant.

Firstly, we can confirm that these companies do not have major issues, as most of us use their services every day. Secondly, when investing in good companies, avoid chasing high prices. Finally, during market downturns, do not follow the crowd, as the company's fundamentals may not have actually changed; you might just be deceiving yourself.

Many of the products of China concept stocks are used daily by us, the users who understand these companies the best. Therefore, holding their stocks, I think, is a stable form of happiness.

@韭菜专业户 :In fact, the valuation of China concept stocks is now just reasonable. Tencent's valuation is slightly higher. It's just that everyone used to think that the internet was a good track, so they bought a lot and drove the valuation very high, much higher than those behemoths in the US stock market. This year, when the policies came in, they just went cold. A good track also changes frequently, but good companies don't need to care about what a good track is, as long as they deliver results. The US stock market doesn't have the concept of a good track. As long as the cash flow keeps growing for any stock, the stock price will keep rising.

@大汪财经 :For a long time in the past, internet companies that were regarded as growth models have lagged behind under the dual pressures of anti-monopoly policies and intensified industry competition. The Hang Seng Tech Index also performed relatively weakly in the first half of the year. Overseas China concept stocks also performed poorly under the influence of factors such as a certain overseas fund's liquidation, changes in extracurricular training policies, especially in the e-commerce and education sectors.

Changes in the attitude of some industry policies have led to a decline in valuation, reflecting concerns about future uncertainties.

The stock market is so dramatic; liquidity and emotional changes will always be faster than the actual operational changes of the companies themselves, and the stock price reaction will always be exaggerated each time.

@江芜129号 :

Consumer cohorts are changing, platforms are differentiating. For example, if pdd holdings penetrate the lower-tier market, alibaba's user growth will be very weak. The total population is limited, and the traffic has almost reached its peak, leading to intense competition between platforms.

Due to the epidemic last year, internet platforms became popular, with obvious growth. It will be even harder to make breakthroughs this year. As the tide rises, there will also be times of ebb. Therefore, the decline of China concept stocks is quite normal.

On the national policy level, the government does not allow the internet industry to undermine the real economy. The reasons are reduced tax revenue and the lack of vitality in offline stores affecting local consumption. Regulations are gradually improving, and supervision of internet companies will become more stringent.

The core reasons are the first two points, while policies serve a regulatory role. Therefore, it is still unknown when the market correction will end. The fundamentals are sound, it depends on who can persist until the moment of takeoff.

Note: The above insightful views were selected based on comprehensive considerations of content views and interaction volume. In order to ensure smooth reading, while retaining the original opinions, some modifications were made to a few comments from mooer users. If you have any objections, please feel free to contact today's popular feedback.

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