Starting with a fully invested A-share portfolio to become a capital...

Chapter 64 The Speculative Stocks Have Emerged
[joker]: The four major banks and Huaxin Securities continued to weaken in the opening auction, with the interval between the white dots in the auction becoming wider and the volume above shrinking. The "Cross-Strait Financial Cooperation Agreement" does not seem to have changed the downward trend, and caution is advised.

"call out--"

The message was sent out.

Not a moment.

Group messages were flying everywhere.

[Lonely Wolf]: So, today is just another day of wasted time?

[Invincible Little Jie]: Seriously? Such a huge positive development didn't even push up bank stocks? What exactly are the major players trying to do?
[Beloved Xiaoqian]: @joker, I have a question. After Changan Automobile experienced a significant pullback and three consecutive limit-up days, is it still a good time to buy in?
[Rabbit Doesn't Eat Grass]: Why do we have to wait for banks and securities to start rising? Does the A-share market become useless if they don't rise?

Zhang Yang didn't answer questions about individual stocks; he provided intraday alerts, not stock trading advice or stock analysis.

After looking around, he answered the question, "Rabbits don't eat grass," by saying:
"In the A-share market, they are similar to macroeconomic indicators. When the macroeconomy is not good, it is difficult for the microeconomy to make breakthroughs. Group members with entrepreneurial experience in the past two years should have a deep understanding of this."

As soon as the message was sent, group members immediately jumped out to agree.

[Midnight Drinks]: I can definitely relate. I just graduated in 2002 and opened a restaurant with a friend without knowing anything. The first few years were good and the income was quite stable, but the subprime mortgage crisis came in the last two years and I lost more than 30 yuan in just two years.

[Xiao Chenchenchen]: I'm even worse off. I saved up over 100,000 yuan working and invested in a milk tea shop in early 2007. Just two months after the renovation was completed and the shop opened, we encountered the wave of millions of migrant workers returning to their hometowns, and everyone had no money to spend.

[Qingyuan Confucianism]: This means that if you start a business in a favorable environment, you are not guaranteed to succeed 100%, but if you start a business in a poor environment, your chances of success will be even slimmer.

Anyone who has studied macroeconomics knows that it is not a good time to start a business when the economic environment is bad. During an economic downturn, the key is to have cash flow reserves and preserve the value of assets.

By applying economics to the A-share market, we can understand why it's not advisable to enter the market when the overall market is fluctuating and weakening.

The most obvious example is the 6000-point peak in 2007, which is equivalent to a microcosm of the economic turning point. If you don't believe it, then you can only see it at 1800 points.

……

After issuing the intraday warning, Zhang Yang stopped checking the VIP research report group and instead focused his attention on the A-shares market, which was about to open.

At 9:30 a.m., the A-share market opened.

The banking sector experienced another pullback, with the four major banks leading the decline. China Construction Bank fell to 4.29 yuan, a drop of 1.38%, while Industrial and Commercial Bank of China fell 1.79% to 3.96 yuan. The banking sector dragged down other sectors such as securities and insurance.

The market's continued decline after opening lower has drawn widespread complaints from investors on online stock forums, with many technical analysts maintaining a pessimistic outlook.

[Feng Ge's Stock Trading Tutorial]: It's over, the A-share market is really over. It plummeted by 2.94% on April 22nd. Although it was slightly positive on the 23rd, it has now seen two consecutive days of decline. This is definitely a top trend!
[Jianghu Xiaosan]: The market has fallen below 2400 points. The current support level is 2379 points, which was on April 9th. If it falls below the 20-day moving average, then I'm sorry, I'm directly looking at 2000 points, which was on March 3rd. I'm not kidding.

[King's Attack]: Please stop falling, please stop falling, A-shares! I just went all in last week. If it falls any further, my wife will want to divorce me.

[Cola-flavored chicken wings]: I'm begging you, A-share daddy, please raise the price! I'm from western Jiangxi, and my girlfriend's dowry is 18 yuan. I'm counting on you to rise by 20% to get married.

Market sentiment has become noticeably pessimistic, with four consecutive days of decline leading to a surge in profit-taking.

Why is it said to be a four-day decline?
Because beneath the slightly red rising index lies a devastating drop, littered with corpses.

Many retail investors have experienced this: their own stocks, or even the entire market, have plummeted, but the overall market is still slightly up. This is actually no different from a decline.

"Ok?"

When the overall market was performing poorly, Zhang Yang suddenly noticed a sector that bucked the trend and surged. Huaxin Securities' sector concept activity alerts showed that only this sector turned positive.

"Shigella acid".

Zhang Yang muttered to himself, as if recalling something. He clicked the mouse and noticed that stocks related to shikimic acid were collectively rising in volume.

The first stock to hit its daily limit was Rhine Biologics, which reminded Zhang Yang that Rhine Biologics was a highly controversial market concept stock in 2009.

Why is it considered controversial?

If Zhang Yang remembers correctly, it is not a true leader in shikimic acid production, but rather a product of speculative investment.

The reason it has the concept of shikimic acid is that after the outbreak of the H1N1 influenza in March, Rhine Biologics immediately organized the procurement of raw materials, carried out the production of shikimic acid, and obtained 10 sales contracts with a total price of 31.747 million yuan.

It was precisely because of market speculation that Rhine Biologics' stock price rose from the opening price of 13.73 yuan on the 27th to the peak price of 50.5 yuan.

As a speculative stock in the first half of 2009, Professor Wang Xingbang even mentioned it in class and analyzed its fundamentals, summarizing it in nine words: a concept-driven stock without any support.

Since his rebirth, Zhang Yang has been paying attention to the medical sector, but the memories are too distant, and even he doesn't know when the medical drug boom will occur.

The emergence of the "shikimic acid concept" at this time also unearthed his long-buried memories, allowing him to find a memory anchor.

"It seems that the WHO's declaration of the H1N1 influenza outbreak in Mexico and the United States as a 'Public Health Emergency of International Concern' on April 25th was the starting point for the rise of influenza drug stocks in the A-share market."

"If Rhine Biologics isn't the true industry leader, then who is?"

An amazing idea flashed through Zhang Yang's mind. He immediately sent a message to He Jing, asking her to help him find out which company was the leading enterprise in shikimic acid.

Currently, speculative funds have already secured 190 million lots of shares at the daily limit. It is virtually impossible for Zhang Yang, who does not have a speculative fund seat, to buy Rhine Biologics.

Abandon speculative stocks?

Sorry, I can't do that!

Since they can't buy Rhine Biologics, they can simply "create" one themselves.

He Jing, who had just gotten up, saw Zhang Yang's message and, without even washing up, also began searching the internet for any clues about the real leader.

Two hours later, He Jing compiled a list of companies related to shikimic acid and sent it to Zhang Yang via QQ file, asking, "Do you want to chase up pharmaceutical stocks?"

"almost."

Zhang Yang responded by typing.

Then, Zhang Yang compared the companies collected by He Jing with the companies he had collected, selected five leading companies for further comparison, and finally discovered the real shikimic acid company stock - Jianfeng Group.

The predecessor of Jianfeng Group was Jinhua Cement Plant, which was founded in 1958. It underwent shareholding reform in 1988 and was listed on the Shanghai Stock Exchange in 1993, becoming the first listed company in China's cement industry.

Those who haven't looked into it might wonder how a cement company could be associated with shikimic acid, a raw material for flu medication.
In fact, the company truly associated with shikimic acid is not Jianfeng Group, but its subsidiary, Jincheng Jianfeng Natural Products Company.

Its "Technology for Extracting Shikimic Acid from Star Anise" passed the expert evaluation organized by the Tianjin Municipal Science and Technology Commission in 2006, and the conclusion was that it was "domestically leading technology", emphasizing its significant advantages of short production cycle and low environmental pollution.

After finding the "true dragon," Zhang Yang began to think about how to leverage its power.

Because he only has 100 million yuan at most, it's impossible for him to lock the price up; he needs the help of large funds.

Currently, the only speculative investor he knows is "Jumping Bro," with whom he has followed each other.

Of course, he could also take a different approach and rally hundreds of retail investors in VIP research report groups and discussion groups to work together, but that would be too big a target, and if reported to the China Securities Regulatory Commission, he could easily be accused of "market manipulation".

(End of this chapter)