Hong Kong stock market liquidity, Moutai price drop, Fitch rating
Yesterday during the closing session of the Hong Kong stock market, around 4 PM, several stocks plummeted by over 90%.
For example, Tianrui Cement, which was widely discussed yesterday, dropped 99%, wiping out a billion-dollar market cap stock with just 24.38 million HKD.
Another example is Haosen FinTech, which lost over 90% of its value with just 670,000 HKD yesterday, only to surge six to seven times at today's opening.
Many netizens started speculating that this was part of the "China-US financial war," with the Hong Kong market becoming a battleground for short-selling.
Actually, that's not the case. This is simply a liquidity crunch during a major bear market in Hong Kong.
If it were a financial war, short-selling a few small companies wouldn't make sense. Even if these companies collapsed, it wouldn't have much impact on the Hong Kong market.
The most interesting part is how 24.38 million HKD caused a billion-dollar stock to drop 99%, and 670,000 HKD caused a 700-800 million market cap stock to plunge 90%. The sell-off started at 3:45 PM, and the Hong Kong market closes at 4:10 PM. In just 25 minutes, the market couldn't absorb such a small amount of selling pressure—and this was in HKD.
This speaks volumes about the liquidity in the Hong Kong market.
......
Yesterday's closing turnover for both markets was 796.3 billion. Today's morning session was similar to yesterday's, but last month's turnover was around a trillion. Clearly, trading volume has declined recently.
This means hot money, speculative capital, and quantitative funds are pulling back. I think there are several reasons:
1. April is peak earnings season, so funds are tightening their positions to avoid major risks.
Quantitative strategies, for instance, often buy hundreds of stocks at once, making it impossible to thoroughly research each company's fundamentals. Plus, the recent market crash hurt quant funds badly—small-cap stocks are hard to exit when liquidity dries up.
2. The Fed's CPI data is out tonight, and China's social financing data may be released this week.
The Fed's CPI directly affects rate-cut expectations, so it's a major focus for global markets. China's social financing data will reveal key metrics like household medium-to-long-term loans and corporate loans, which reflect economic confidence. The PBOC doesn't have a fixed release date for this data—it's usually between the 8th and 15th of each month. Generally, the later it's released, the worse the data.
3. Technical resistance for the Shanghai Composite Index.
The market is stuck between 3000 and 3100 points. Without fresh capital, it can't rise, and with the "national team" propping it up, it can't fall either. This leaves hot money unsure of what to do, so many are just sitting tight.
......
1. Today, Jack Ma posted on Alibaba's internal forum. He said: "In the internet industry, three to five years is like a century—enough for earth-shaking changes. The AI era has just begun, and everything is just getting started. We're right on time!"
Today's rally in Chinese internet stocks might partly be due to Jack Ma's comments. Ironically, the AI sector, seen as the future, tanked today.
2. Reports say Berkshire Hathaway plans to issue its first yen bonds since the Bank of Japan raised rates. Speculation is rife that Warren Buffett may increase his investments in Japan.
3. Liquor stocks plunged this morning, likely due to Moutai's price drop. On PDD, Moutai is now just over 2400 yuan.
Recent price declines may stem from:
-- Moutai increasing direct sales, pocketing the spread between the 1169-yuan wholesale price and 1499-yuan retail price.
-- Post-Lunar New Year and pre-Mid-Autumn Festival is traditionally a slow season for liquor sales.
-- Weak demand from real estate and infrastructure sectors, which traditionally drive liquor sales.
Moutai's price drop doesn't hurt itself much—it's still far above the 1169-yuan wholesale and 1499-yuan retail prices. But it's terrible for other premium brands like Wuliangye and Luzhou Laojiao, which lack Moutai's pricing power. Lower demand means lower prices, directly hitting their profits.
4. Ping An Trust: "Our overall performance is stable, and operations are sound."
We can't discuss this much, but since they issued a statement, it's worth questioning its validity. There's no smoke without fire.
5. On April 10, Fitch Ratings maintained China's sovereign credit rating but changed the outlook from "stable" to "negative." Fitch highlighted fiscal sustainability risks, citing rising fiscal deficits, local government debt, and financing platform debt.
This likely caused today's afternoon sell-off.
The Ministry of Finance responded: "We had extensive discussions with Fitch, but their rating fails to reflect how our 'moderately expansionary, efficiency-focused' fiscal policy will stabilize macro leverage by boosting growth."
The Shanghai Composite dipped slightly in the morning before plunging in the afternoon. Northbound outflows hit 3.1 billion yuan. As of writing, there's no sign of a rebound—it's unclear if the national team will step in.
Today's leaders were internet stocks, likely buoyed by Jack Ma's comments. Alibaba also led gains in Hong Kong.
Defensive sectors like coal, banking, dividends, and state-owned enterprises edged up slightly amid recent lackluster markets.
Everything else fell—some more than others.
That's all. See you in the comments section for 『Sudden Crash』.
The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.
