Overnight, US stocks saw broad gains, primarily driven by the Treasury Department's Wednesday announcement to expand its bond repurchase operations. This caused US Treasury yields to retreat, leading to widespread closing gains across major indices. This measure by the US Treasury is expected to significantly push down Treasury yields, providing substantial momentum for capital market strength.
Asian-Pacific markets also rebounded broadly on Thursday, with both A-shares and Hong Kong stocks showing some recovery, helping restore market confidence. Wednesday had seen a sharp decline across Asia-Pacific markets. While A-share tech stocks dipped at one point, Thursday saw a broad rally in both Shanghai and Shenzhen exchanges. Japanese and Korean markets also bounced back, and the Hang Seng Index continued its upward climb. This largely validates the view I expressed yesterday—that this pullback is an aftershock of July's major decline, not the start of a new downturn, and it should not persist for long. Many tech stocks had already corrected sharply in July, essentially completing the deleveraging process. With limited downside remaining, any further dip could attract bargain-hunting capital, potentially sparking a fresh wave of upside. Maintaining confidence and patience is therefore key.
This tech rally remains the market's primary investment theme and hasn't ended with July's deleveraging. Deleveraging is distinct from a bubble bursting; it's a correction within an uptrend, not the conclusion of the tech cycle. Whenever the market drops, some immediately cry "bear market." The recent buzz around the movie Cow Comes hasn't even faded, yet many are already shouting "Bear Comes." I disagree with this outlook. I believe this long-term bull market could last for years, and a significant pullback is a normal part of that process—not a sign of a bear market but a healthy adjustment within a secular uptrend. Only by understanding this can investors navigate market volatility calmly; otherwise, they risk chasing highs and selling lows, repeatedly incurring losses. Trust in the power of confidence.
The foundation of this tech rally is relatively solid. First, policy support is strong, with central government meetings repeatedly emphasizing the need to boost stock market confidence, support capital market development, and attract long-term funds through various measures—all conducive to market strength. Second, we're in an era of low interest rates and ample liquidity. Interest rates are at historic lows, with bank deposit rates repeatedly cut, many now yielding less than one percent. In this environment, investing in quality stocks or funds through the capital market is a prime way to seize opportunities. Third, the real economy shows significant divergence, with a K-shaped pattern becoming increasingly evident. Many traditional industries struggle, while emerging sectors thrive. Participating directly in these tech-driven industries requires substantial capital and high technical expertise, which many lack. Investing in tech innovation through the capital market offers a low-barrier, low-cost route. The secondary market is the most accessible way for ordinary investors to benefit from economic transformation.
However, as Buffett notes, value investing is simple but not easy. While opening an account and entering the market is straightforward, achieving real profits is challenging. The main reasons: ordinary investors lack market confidence, panic-selling on any dip; and during rallies, they become euphoric, blindly adding positions or even leverage. This often leads to losses in choppy markets. When margin financing balances exceeded three trillion yuan in June, I advised investors to firmly deleverage. Once leverage is added, time becomes your enemy, not your friend—a single downturn could trigger margin calls. July offered many vivid examples; everyone must learn from these lessons and avoid repeating mistakes. Even if the market rebounds, don't hastily add leverage. While the market hasn't yet resumed its uptrend and remains in a consolidation phase, the likelihood of a sustained sharp decline is low, so excessive pessimism isn't warranted.
In commodities, oil prices climbed to a three-week high, and gold continued its surge. US refiners boosted production, and escalating tensions between the UAE and Iran added to regional instability. Brent crude futures rose nearly one percent, settling around $92 per barrel. The UAE accused Iran of firing ballistic missiles at its territory and announced severing all economic ties with Tehran. This escalation follows President Trump's insistence that no negotiations with Iran are underway to end the conflict. This has increased market expectations that the closure of the Strait of Hormuz could persist longer, lending support to crude prices. Higher oil prices could fuel global inflation, which is unfavorable for Fed rate cuts. On gold, international prices continued their sharp rise Wednesday. Following the Treasury's surprise announcement of increased long-term bond buybacks, falling yields provided momentum for gold; a rally in 30-year US Treasuries pushed yields down, and a weaker dollar drove gold prices soaring. Spot gold broke above $4,500 per ounce. When gold briefly fell below $4,000 to $3,800 an ounce recently, I explicitly stated that sub-$4,000 levels represented a "golden pit," offering investors a good entry point. In just two months, gold has rebounded about twenty percent. The long-term bullish case for gold remains intact. De-dollarization appears to be a major trend, with China's central bank having steadily reduced US Treasury holdings and increased physical gold reserves for years, likely continuing to add more. Among base metals, copper prices rose. With substantial deliverable copper inflows into the London Metal Exchange (LME), inventories have recovered, easing the historic tightness in the copper market, though signs of spot supply strain persist.
Overall, the Fed is unlikely to hastily hike or cut rates, and US stocks remain in high-level consolidation without signs of a bubble bursting. Therefore, A-share short-term adjustments may not last long. Investors can maintain an appropriate position based on their circumstances—neither fully invested nor fully in cash—allowing flexibility to attack or defend, calmly navigating short-term fluctuations while positioning for the next recovery wave.
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