The Management Finally Got It Right Again

2007/11/21 15:36:59

Today, the most important news concerns the ordering of A-share and H-share listings. Today's relatively official statement proves that the importance of A-shares has once again been strengthened. The fate of Hong Kong stocks being absorbed is irreversible—it's only a matter of time. More importantly, what this ID has been loudly calling for everywhere over the past N months—to dramatically increase the float ratio of large-cap A-shares—has finally found a concrete solution. Going forward, the issue is that newly issued large-cap stocks must meet a minimum 10% float ratio. The speculative blue chips of the past will no longer appear.

Today's news has both positive and negative implications. Positive effects: 1. The importance of A-shares will increase dramatically. 2. The current illegitimate speculative blue chips will paradoxically become rare commodities—once index futures launch, the significance of controlling these stocks will increase even further. Negative effects: 1. How to resolve the historical problem of formerly low-float blue chips. 2. Future expansion pressure will further intensify—since float ratios are increasing, excessively high prices will be affected.

Currently, the broader market is technically in a mid-shade phase, and policy-wise it's the same. Therefore, the breakout direction of this mid-shade phase is very important. Of course, a downward breakout wouldn't be the end of the world—it would just leave room for next year's market.

The biggest variable going forward remains the futures issue.

In terms of individual stocks, today was about PetroChina splitting, so the broader market saw amplified up-and-down gyrations—this was also a good test of market control. For the broader market to truly hold, PetroChina must first stabilize in unison.

The moon is nearly full, and everyone is getting restless. Whether there'll be another farce of "heaven-and-man becoming one"—we'll find out very soon.

As for other individual stocks, this ID doesn't feel like talking about overly small-cap stocks right now. Like that geometric progression stock—this time during the adjustment, it got chopped in half in one go. That's the risk of small-cap stocks. Actually, this ID recently started a new arithmetic progression stock: slightly bigger market cap than the geometric one, priced at just over 7 yuan after rising, with an even smaller market value than the geometric one, but it's also ST—so I've never mentioned it. Other stocks are all waiting for opportunities from the tossing around, but with the broader market direction undecided, this ID still has aspirations of turning reality into dreams.

Having reached moderate prosperity, the next question is whether to aim for comprehensive moderate prosperity or the more ambitious goal of full prosperity—this is indeed a very practical question. But one thing is certain: as I said yesterday, even if there's another breakdown, the probability of it being a trap increases.

Another phone call—they say the person has arrived. No choice, can't say more, have to go.

Logging off now. See you.