Bombarded by positive news across market information and market sentiment alike, and fueled by the intense focus and fierce discussions of countless investors, the following day arrived: Wednesday, August 3.
Before the market had even officially opened, inside the hearts of countless investors, the core leading stocks within the "Mega-Infrastructure" main theme had already hit their daily limit-up.
"President Su, this market sentiment is fermenting to a degree that feels a bit too overheated,"
Hou Baolong, fund manager of the "Huayi Expedition No. 1" product, reported to Su Yi around 15 minutes before the pre-open inside the trading room at Huayi Capital in Shanghai, after browsing through market news and conducting pre-market analysis.
"This rapid consensus in sentiment makes it extremely easy to drive market expectations too high, thereby overdrawing the market's bullish capacity."
"In a bear market, sentiment comes quickly and leaves just as fast," Su Yi smiled softly. "It doesn't matter. As long as this core main theme of 'Mega-Infrastructure' is backed by fundamental underlying logic, possesses long-term investment value, and the expectations of a fundamental and cyclical reversal remain intact, the impact of any short-term market volatility will be limited.
Furthermore, our position targets... were never meant for capturing short-term gains and profits in the first place, so naturally we don't need to pay too much attention to how short-term price action unfolds. If there's no good buying point, we wait; if there is, we simply keep buying."
Patience is the primary element in financial market trading.
What's more, with the fund's capital volume reaching its current scale, the entire product can no longer engage in short-term trading.
Since it is a long-term investment, even greater patience is required.
Therefore, he could now view short-term emotional spikes in the market and speculative day-trading behavior with complete equanimity.
Moreover, their entire "Huayi Expedition No. 1" fund product currently held a position weighting of less than 8% in the "Mega-Infrastructure" main theme. Even if this sector experienced excessive short-term volatility, its impact on the net asset value of the overall fund would be close to zero.
"I'm not worried about whether we can secure shares or face excessively high position-building costs," Hou Baolong said. "My concern is that the price action of the 'Mega-Infrastructure' main theme, driven by extreme emotional reactions, might disrupt the overall market trend or impact our holdings in other major heavy-position main themes like 'pharmaceuticals', 'baijiu', 'white goods', and 'security camera lenses'."
Su Yi turned his head, smiled as he looked at Hou Baolong, and said, "Manager Hou, I'll repeat what I said before: as long as the underlying logic supporting these core main themes and our heavily weighted stocks remains intact, there's no need to overthink it. You only need to monitor the underlying investment logic of these stocks, follow industry dynamics, and track fundamental industry conditions.
Leave short-term market price action to the active short-term speculative capital groups in the market.
We cannot predict short-term market movements, nor can we interfere with them every single time.
As long as the underlying logic is sound and share prices have not yet realized most of their expectations, we can hold our positions securely and patiently wait for expectations to materialize.
Of course, if the underlying logic loosens and fundamental industry recovery falls short of established expectations, accompanied by sustained signs of major capital withdrawing from the main theme and expectations shifting completely from consensus to divergence, then even if short-term prices are still rising, it will be time to exit, take profits, or cut losses."
"Understood, President Su." Hearing Su Yi's analysis, Hou Baolong nodded, turned his attention to the various trading desks, and issued the day's trading tasks.
With his instructions given... market trading time slid to 9:15 AM, marking the arrival of the call auction session.
The moment the call auction commenced, virtually all the high-profile "Mega-Infrastructure" main-theme stocks that commanded the attention of market investors opened at their daily limit-up.
However, limit-up formations prior to 9:20 AM can be deceptive.
After all, buy and sell orders can still be canceled before 9:20 AM.
Even so, this initial call auction opening scene significantly exceeded the expectations of the vast majority of retail and institutional investors across the market.
"With last night's positive stimulus, this is literally adding fuel to the fire!"
Noticing the overwhelmingly better-than-expected initial call auction scene, Song Shaopu, fund manager at Shanghai's Huairui Fund Management Company in their "Huairui Performance Growth No. 1" product trading room, chuckled.
"All 8 stocks in the real estate sector opened at the daily limit-up in initial call auction, and almost all related concept stocks opened more than 5 points higher. Across the entire 'Mega-Infrastructure' main theme—including coal, steel, non-ferrous metals, architectural decoration, building materials, and cement—the total number of stocks opening at the limit-up in the initial call auction reached an astonishing 32," added Jia Yongxiang, the trading desk head, with visible astonishment. "We haven't seen a spectacle like this in a while. It seems the market consensus expectation for this core 'Mega-Infrastructure' main theme has fully formed."
"Indeed!" Song Shaopu sighed with emotion. "Pity we didn't buy more yesterday."
Jia Yongxiang said helplessly, "Who could have known there would be so many positive news items dropping overnight? But thinking about it now... it feels like quite a few of the institutions that chased the buy yesterday must have had insider information, right?"
"Hard to say," Song Shaopu replied. "Regardless, China's real estate cycle is indeed climbing out of the trough and returning to cyclical prosperity. Coupled with the policy catalysis of 'supply-side structural reform' and the 'New Era Land and Maritime Silk Road' strategies, it's only natural for the 'Mega-Infrastructure' main theme to continually capture the attention of domestic and foreign institutional capital, decoupling from other market sectors and charting an independent rally!"
"It's just that this fermentation is happening a bit too fast," Jia Yongxiang noted. "It doesn't give us a comfortable window to build positions leisurely."
Song Shaopu said, "Let's wait and see. If it's a long-term logic, we don't need to fight over two or three trading sessions. Short-term speculative capital will experience a frenzy and then quickly retreat; we can always build positions again when the market pulls back later. For now... there's no need to chase it aggressively."
"Understood," Jia Yongxiang acknowledged.
When he raised his head again to look at the trading room's main market display screen, trading time had crossed 9:20 AM, pushing the two exchanges into the real, non-cancellable call auction trading phase.
Following the first five minutes of call auction, the market tape presented at this moment had pulled back quite a bit compared to 9:15 AM.
The real estate sector index gain had retreated from its initial 5.32% to 3.21%. The number of concept stocks maintaining gains above 5% had shrunk to just 12, with only 3 concept stocks still holding firm at the daily limit-up: Capital Group, Yukaifa, and Shahe Shares.
As for the coal, steel, non-ferrous metals, architectural decoration, and building materials sectors linked to real estate, their pullbacks were relatively more pronounced.
However, hot tickers such as PHM Coal Energy, Shenhuo Shares, Beijiang Communications, Tianshan Cement, and Bayi Steel were still maintaining their limit-up formations at this stage.
As trading time progressed further— 9:21 AM, 9:22 AM, 9:23 AM...
the number of stocks holding limit-up continued to dwindle, and the index gains of core sectors kept retreating.
Finally, as 9:25 AM arrived, the call auction for both exchanges concluded.
The real estate sector index gain settled at 2.74%. Within the sector, only Capital Group maintained a straight-line limit-up (one-word limit-up) formation, while the rest maintained high openings ranging from 0.5% to 8%.
Meanwhile, sectors like coal, steel, architectural decoration, building materials, non-ferrous metals, and cement all opened lower than the real estate sector, posting gap-ups between 1.21% and 1.95%.
Among them, PHM Coal Energy gapped up 8.11%, Shenhuo Shares gapped up 9.33%—just a step away from the limit-up board—while several other hot stocks hovered around 5% gains.
As for non-hot main themes, pharmaceutical, consumption-related sectors, and the financial sector showed slight gap-ups or flat openings.
Technology and emerging-industry-oriented main-theme sectors like "mobile internet", "film & media", "new energy industrial chain", and "electronic information" all presented minor gap-downs.
Overall, the entire market continued to display a "Shanghai strong, Shenzhen weak" pattern, or rather, a structural dynamic where the A50 Index vastly outperformed the ChiNext Index.
The market's primary active capital and institutional funds remained clustered within the "Mega-Infrastructure" main theme and defensively strong main sectors like pharmaceuticals, consumption, and finance.
"Phew, this opening is pretty much in line with expectations."
After the call auction concluded across both exchanges, Li Jinshi remarked in the "Foshan Faction" hot-money chat group.
"Capital Group hitting a straight-line limit-up is somewhat beyond expectations, right?" Chen Guiyun replied. "I originally expected this ticker to offer an opening buying opportunity."
"Not beyond expectations," Liao Guoxiang said. "After all, we had last night's positive news stimulus."
"Shenhuo Shares opened quite nicely," Li Jinshi noted. "Unless something unexpected happens, once trading officially begins, this ticker should hit a flash limit-up."
"Old Li, did you add positions just now?" Chen Guiyun asked.
Li Jinshi replied, "Didn't have time. Let's see after the official open; not sure if I'll be able to get a fill."
"If you can't get PHM Coal Energy, that ticker should work too," Chen Guiyun said. "I'm planning to place orders to sweep shares of PHM Coal Energy."
"Brother Liao, what about you?" Li Jinshi asked.
Liao Guoxiang smiled and replied, "I spread my bets evenly. I've already placed orders to sweep Capital Group, Shenhuo Shares, PHM Coal Energy, Beijiang Communications, and Tianshan Cement. With sentiment this good, no matter which one breaks out, I won't lose."
"Damn..." Hearing that Liao Guoxiang had laid out a diversified spread, Li Jinshi was stunned and couldn't help praising, "Brother Liao's vision is truly broad."
"These tickers should have no problem continuing to hit limit-up today," Chen Guiyun said. "Market sentiment is fantastic, and they didn't open excessively high. Profit-taking chips accumulated yesterday didn't make much profit, so there's no desire to dump shares. With strong buying support at the open, they'll definitely keep climbing."
"Aside from the hot 'Mega-Infrastructure' main theme and pharmaceuticals and consumption—where dominant institutional capital has huddled all along—the other main sectors still look conspicuously weak," Li Jinshi observed. "I guess today's market action, apart from the 'Mega-Infrastructure' line, won't have much else worth mentioning in other main or secondary themes."
"Can't be helped," Liao Guoxiang said. "Overall market trading volume is limited, and incremental capital is extremely scarce, only able to support the fermentation of a single core main theme. In fact, if other main themes genuinely started rallying, that's when we should worry, because once active market capital disperses, the height of the rally is bound to be discounted."
The reason he dared to place heavy orders right after the call auction to spread across all core hot stocks in the "Mega-Infrastructure" main theme was precisely because he saw that it was the only strong main theme in the entire market.
In weak market conditions, capital naturally clusters around strong stocks and strong sectors—a mindset almost habitual to him through years of short-term trading.
"Haha... President Liao makes total sense," Li Jinshi laughed. "Let the rally come even more fiercely!"
As his voice trailed off... market trading time crossed the 9:30 AM threshold.
The moment the two exchanges entered the official continuous auction phase, multiple high-visibility hot stocks where Liao Guoxiang had spread his bets—including PHM Coal Energy, Shenhuo Shares, Tianshan Cement, Beijiang Communications, Bayi Steel, Yukaifa, and Yungui Copper—were instantly flash-sealed at their daily limit-up prices under continuous waves of massive buy orders.
At the exact same time, associated sectors of the "Mega-Infrastructure" main theme—such as real estate, coal, non-ferrous metals, steel, architectural decoration, building materials, and cement—also surged rapidly under the intake of heavy buying support, expanding their sector index gains while core leading stocks within these sectors released heavy volume and climbed sharply.
As the "Mega-Infrastructure" main theme was jointly attacked and aggressively bought up right at the open by active short-term speculative capital and various institutional capital groups, the Shanghai Composite, Shenzhen Component, CSI 300, and A50 indexes were instantly dragged upward in tandem.
However, market "technology" stocks guided by the ChiNext Index and CSI 500 Index, alongside technology-oriented main-theme sectors like "mobile internet", "new energy industrial chain", "electronic information", "film & media", and "semiconductors", along with their corresponding core stocks and growth concepts, experienced a siphon effect on their capital, resulting in counter-trend declines and prompting angry curses from investors trapped in those sectors.
(End of Chapter)