The Chinese stock market opened low but closed high on October 13th, so why did it open high but close low the following day? Can the market continue to rise? How should we view future market trends? How can we maintain a healthy stock market ecosystem?
In our previous analysis "Today, China's Stock Market Holds Its 'Victory Parade'", we noted that over the past 35 years, China's stock market has been subject to deliberate sabotage and has experienced multiple internal governance issues. These are the two main reasons for its "short bull, long bear" pattern and its prolonged positioning on the periphery of international competition. While China's stock market has now "entered the city" and secured advantageous resource positions, this is not the endpoint - significant challenges remain in governing the market effectively.
Whether it's IPO pricing issues, major shareholder reduction problems, or systematic fraud by some listed companies, whether it's high-frequency quantitative trading harvesting retail investors or public and private fund manipulation, these are not merely internal problems but manifestations of internal and external forces working together in coordination. For example, previously there was excessive promotion of China stock market indices compiled by foreign entities, with real-time reporting of "northbound capital" flows to induce other investors to follow suit, and having foreign media take the lead in releasing Chinese policy information and economic data. Some people have prevented media from exposing illegal activities of listed companies while tolerating certain media outlets providing "beautification" and "cosmetic" promotion for listed companies, severely damaging the market's information and credit environment.
Regarding external sabotage activities, some people are unaware of them, some are skeptical, some recognize them but deliberately conceal this recognition, some are angry but dare not speak out, while others actively cooperate with external forces in various ways. The latter group hopes to preserve and continue external sabotage activities as this can disguise their corrupt practices. This is precisely where the governance difficulty lies.
From the establishment of the State Council Financial Stability and Development Committee in 2017 to the formation of the Central Financial Commission in 2023, centralized and unified management of China's financial system has finally been implemented, making it possible to "strengthen China's financial system." Regrettably, individuals like Yi Gang have again deceived superiors and subordinates, confused right and wrong, and damaged the "stock market governance ecosystem." This indicates that the financial system, as an "economic strategic area" and key field of international competition, has been subject to long-term infiltration.
The Party Central Committee's decision to establish the STAR Market and implement the registration system was fundamentally aimed at properly handling the relationship between government and market, unleashing market vitality, achieving market-based pricing and competition, improving the regulatory system, enhancing regulatory effectiveness, and maintaining the market's "three fairness" principles. Low-quality issuances, fraudulent issuances, high-price extraction of others' interests, and creation of false trading volumes have nothing to do with the original intent of the registration system. Some people have mixed private agendas into regulatory work, damaged the stock market governance ecosystem, and created confusion, which is infuriating.
Since the release of the "New Nine Articles" in 2024 (State Council Opinions on Strengthening Supervision, Preventing Risks, and Promoting High-Quality Development of Capital Markets), the stock market governance ecosystem has gradually improved, but resistance remains substantial. As a quasi-stabilization fund, Central Huijin Company's timing and methods of intervention are inevitably watched closely and become targets for some to exploit. Some people still attempt to hand over command of China's stock market to others.
We need to clarify: who should command China's stock market? Who should lead intelligence analysis of China's stock market? The practice of constantly using Wall Street, the Federal Reserve, and American media to direct China's stock market must stop. Recently, some experts have become increasingly active, spreading views such as: "retail investors haven't entered the market yet, which shows rational behavior by retail investors," "China's stock market lacks performance support, so it will inevitably decline and cannot rise," "the previous rise was due to investor expectations of US dollar rate cuts, not due to China's economic improvement," "domestic demand cannot replace external demand, and if external demand falls, China's economy won't improve," etc. These statements are extremely one-sided.
Therefore, when we say China's stock market has "entered the city," this doesn't mean everything is settled. We should maintain momentum to complete the mission, continuing to implement strict supervision according to law as required by the "New Nine Articles," adhering to market-oriented principles and practices, and promoting self-reliant opening-up. We must always practice the concept of finance serving the people, highlight people-centered value orientation, more effectively protect the legitimate rights and interests of investors, especially small and medium investors, and better meet people's growing wealth management needs. We also need to continue improving the governance system based on the "New Nine Articles."
After China's stock market "entered the city," the core of governance thinking is: independent and autonomous marketization. That is, supervision must be independent, fair, and effective, and the market baton should be Chinese capital, not foreign capital.
In 2010, I specifically wrote an article titled "Main Strategies of Foreign Investment Banks Manipulating China's Stock Market," published online.