Lu Shaojie: Several Aspects to Watch for the Launch of Stock Index Futures - The biggest event affecting China's stock market in 2010 — the launch of stock index futures — has finally been clarified. Its launch brings three major aspects to watch:
1. Will the operations of related conceptual stocks be fleeting like a night-blooming cereus?
The strangest thing after today’s announcement is that the futures conceptual stocks showed no movement during trading hours, with many individual stocks even declining. It is believed that the market had already anticipated today’s news about the launch of stock index futures. Could the mid-afternoon rise yesterday have been the advance digestion of the news by the futures conceptual stocks? Even the fleeting impact of margin trading on broker stocks cannot be seen?
2. Will the launch of stock index futures completely change the current style shift from small-cap to large-cap stocks?
The prevailing market view is that the launch of stock index futures will be beneficial, providing an opportunity for large-cap blue-chip stocks, which are still around 2000 points, to rise, forming the style shift that the market has been discussing. Especially today, the actions of the banking sector have further fueled discussions on this style shift. However, the question remains: Have we transitioned from a phase where one earns no profits despite rising indices to a phase where one can earn from the indices? One point is certain: the chips of large-cap blue-chip stocks will become more important than before. In the current situation where retail investors are still excluded by high thresholds, it will once again become a tool for institutional battles.
3. Is the current market trend simply preparing for the launch of stock index futures?
Since the 3478 point level, the market has formed a large triangular consolidation pattern without making any directional choice, causing a mix of bullish and bearish voices. Is the current market trend simply preparing for the launch of stock index futures? Currently, the first contract is set for May. For the birth of a new entity, how will the market react? Especially regarding the breakout direction of the current triangle and whether the breakout is genuine or fake, this will bring greater uncertainty!
No matter what, the launch of stock index futures will introduce significant variables to the future evolution of the market. How to adapt to the arrival of the era of stock index futures is something each investor needs to face. And for regulators, how to prevent stock index futures from becoming a tool for institutions to manipulate the market and avoid becoming another speculative target for foreign speculative funds will also be a new challenge. (Lu Shaojie)