Why does the Chinese stock market, despite several bull markets, still not escape the pattern of rapid rises and slow declines?

Fluctuations in financial markets, with rises and falls, are actually the norm. However, the perception and need for the rhythm of these fluctuations can be completely different from various perspectives and positions.

The players in the market and the managers of the market actually have completely different views on the rhythm of rises and falls.

For any country and economy that values finance, from the national perspective, what is desired is a slow rise under moderate trading volumes.

Now, basically, developed capitalist countries such as the United States, Europe, and Japan have this core framework and pattern for their own financial markets.

However, China, including the market trend that began at the end of September 2024, still has not broken out of the framework of rapid rises and slow declines.

With rapid rises and slow declines, market participants tend to leave after making money. Almost no one is willing to keep their money in the market for decades like a daily routine.

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It's like a relationship between a man and a woman: he just wants to date you, he doesn't want to marry you.However, in the case of slow rises and sharp declines, it's the opposite. People earn money in any market, in any region, and ultimately, all that money converges here. He wants to marry you and live a life together.

This is from a macro perspective, where facts are less important than expectations. What truly influences people's behavior is their anticipation of what will happen.

Controlling and managing this rhythm is the most critical and challenging aspect of the financial market game.

Of course, this is something that the country and regulatory authorities need to consider. If we only look at reality, then the current financial market in China is still characterized by a strong speculative atmosphere.

Don't say that Chinese stock investors and market funds like speculation. In a market that rises sharply and falls slowly, with long-term bearish trends, how can one play without a bit of a gambling nature?

If the Chinese stock market could maintain a stable upward trend for just six months, not to mention five or ten years, even the most cunning speculators couldn't outperform those who hold firmly. Wouldn't the market expectations and styles be completely different then?

Every time there is a bull market in China, there are voices and viewpoints that say "this time it's different." But looking at the essence of the market rhythm, in fact, "every time is the same."

History does not simply repeat itself, but it always rhymes in the same way.

Some key adjustments and management upgrades should still focus on observing the country's ability to manage, guide, and control market fluctuations.Looking back at China's real estate market, is it actually not the ideal pace of slow and steady growth followed by sharp declines?

Comparing it to the stock market, when we look back at the past few decades of the real estate market, the management of the market conditions presents a different picture.

Although starting from 2022, China's real estate market and housing prices have experienced an unprecedented continuous correction and downturn, during the more than 20 years of real estate market development, there has been more growth than decline, and a continuous upward trend, which is undisputed.

Merely from the performance of the market, China's stock market and real estate market are not of the same nature and level, of course, the results are also very realistic. When looking at the economic scale and volume, the development differences between China's real estate market and stock market are huge:

According to data from various sources, the specific value of China's real estate total market value varies.

Some data shows that by the end of 2023, the total market value of China's real estate was about 500 trillion yuan. This data reflects the overall scale and value of the real estate market across the country.

The total market value of the capital market refers to the total value of all listed companies in a country or region on the capital market. According to the latest data, as of a certain point in time (such as the end of 2023 or the first half of 2024), the total market value of China's stock market has reached an impressive level, surpassing many of the main stock markets of developed countries.

Specifically, the total market value of China's A-share market has already broken through the 10 trillion US dollar mark, ranking among the top in the global stock market.

A simple conversion to unify the unit of measurement: currently, the total market value of China's stock market is about 90 trillion, and the real estate market is about 500 trillion.

The age (development time) is about the same, but the scale gap of more than 5 times can actually explain a lot of issues.Setting aside any vested interests and speaking objectively and neutrally, China's domestic economic sectors have, over the past few decades, chosen the real estate market as the primary market for wealth accumulation, rather than the stock market.

The real estate market has been able to develop better and grow larger than the stock market, and the most fundamental reason for this is that it experiences more gains and fewer losses.

However, China's real estate market cannot be described as having a slow and steady rise followed by a sharp decline, an ideal state. If it were, it would not have been mired in a continuous downtrend and difficult to extricate itself since the second half of 2022.

If one must define China's real estate market, it should be characterized as a combination of rapid increases followed by sudden drops. The magnitude and efficiency of the increases are not rapid, but they are also not slow. Driven by irrational factors, the rise over the past 20 years has been a clear overdraw on China's domestic economic environment and the purchasing power of its residents.

Therefore, this round of downward adjustment is inevitable and difficult to reverse.

When it comes to China's real estate market, it is actually the rhythm of the market that is more worthy of study and attention, and that is the Hong Kong real estate market.

The Hong Kong real estate market is a typical example of rapid increases followed by slow declines, and of course, most developed countries follow this pattern.

Have you noticed? In capitalist countries and regions, the real estate market and the stock market are the opposite of what we see in China.

The secret lies here.

The national system determines that for capitalist countries like the United States, the core tools and markets for managing the economy are financial markets.China's approach and choices are not wrong either; it's just that this is a river without stones to feel for, with some experiences and management methods being immature. Learning by doing is inevitable.

Trend Analysis: Without discussing macro jargon, we focus only on the market rhythm. In the future, which has more imagination: China's real estate market or stock market?

In fact, the bull market at the end of September 2024, without discussing macro jargon, policy will, and actual economic conditions, the biggest highlight is actually to see if a sustained and stable slow bull market can be formed in the follow-up.

Whether there is subsequent imagination depends on this point.

If it is still a pattern of rapid rise and slow decline, then the subsequent market has no imagination at all, and the role and significance of the stock market in economic management are just theoretical discussions. Just look through the past few bull markets in China's stock market to know what's going on.

A rush to get in, a scramble to get out, leaving a mess behind.

From this perspective, objectively speaking, China's real estate market actually has more imagination.

However, the premise of this imagination is at the cost of "quickly releasing risks through a sharp decline."

From the national perspective, the mode of quickly declining house prices to clear risks and debts will definitely not be adopted, which is why there is the latest statement of "stabilizing prices and returning to stability" and the release of expectations.Of course, this is also the style of China's economic management: wanting it all, and everyone understands this.

Looking at the foundation and past performance, in fact, from the perspective of the domestic economic environment and market logic, moving forward, as long as the real estate market can stop falling and, along with the economic recovery, can stabilize and return to a slow upward trend, then for market funds and residents' wealth, the imagination is far beyond the stock market, which is often bearish for long periods and bullish for short periods.

This is not to encourage or incite everyone to invest in real estate, but merely an analysis and discussion from a technical and logical point of view. There is no need for misinterpretation, and certainly no need to criticize or curse due to vested interests.

Although the country also has some issues in managing the real estate market, the experience has been accumulated, and it is impossible for housing prices to rise irrationally and be speculated on again. However, considering the scale and real impact, stabilizing the real estate market and guiding a slow bull market is obviously more realistic and less costly than the stock market.

So, let's not discuss the short-term market trends, but when looking at the long term, in the future, China's real estate market, in terms of accumulating residents' wealth, absorbing labor income, and leveraging the economy, still has far more imagination than China's stock market.

For example, just like small and large balls in sports, is it harder for the Chinese men's football and basketball teams to represent China and go out into the world, or is it harder to maintain an advantage and continue to exert effort in the field of small balls?

For the Chinese economy, the basic plate, in the long run, is still the real estate market.