Recently, the overall market has experienced a rapid adjustment trend, with the Shanghai Composite Index breaking through the support level of 3000 points, and many sectors have seen a pullback. The Hong Kong stock market has also seen fluctuations and a pullback recently, with the Hang Seng Index repeatedly fluctuating around 18,000 points, but the pullback amplitude is smaller than that of A-shares.

First, let's analyze the reasons for this round of downward movement in A-shares. In fact, the market had previously reached above 3100 points, forming an upward trend. However, subsequently, due to the non-fulfillment of some favorable factors expected by the market, the short-selling sentiment of the market once again took the lead. This includes the market's previous expectation that the central bank might promote economic recovery through interest rate cuts. However, we have seen that the central bank has not cut interest rates recently. At an important forum held recently, the central bank governor Pan Gongsheng stated that the main monetary policy goal of the central bank is to stabilize the renminbi exchange rate. If the Federal Reserve chooses to postpone interest rate cuts, or even waits until the end of the year to start the first interest rate cut, the central bank will be more cautious in terms of interest rate cuts. This is because there is already a significant deviation between Chinese and American monetary policies. Currently, the benchmark interest rate of the US dollar has reached 5.25% to 5.5%, while the renminbi deposit interest rate may only be a little over 1%, with a deviation of 4%. The Federal Reserve's delay in cutting interest rates has had a certain impact on our monetary policy. We cannot directly use a significant interest rate cut to boost economic performance and market performance.

Some recently released economic data has also been lower than expected, including the PMI data for May, which has returned below the 50% threshold between prosperity and decline, indicating a contraction in the manufacturing industry. A series of measures to stabilize the real estate market have been introduced in the previous period, and the central bank has implemented the "three arrows" policy, including reducing the down payment ratio, reducing mortgage loan interest rates, and relaxing purchase restrictions in many places. However, these policies have not yet achieved significant effects. In May, the decline in residential loans compared to the same period last year exceeded half, indicating that the enthusiasm for residents to buy houses with mortgages is not high. The real estate market is related to the wealth of thousands of households, and real estate is also a pillar industry of the national economy, with more than sixty industries upstream. Real estate companies are facing tight capital, with low enthusiasm for land acquisition and tight funds for building houses, which may drag down the entire macroeconomy and affect many industries.

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According to data released by the National Bureau of Statistics, real estate development investment has decreased by about 10% in the first five months, and the decline compared to the peaks in previous years is even greater. The decline in real estate development investment has dragged down fixed asset investment. Under the situation where residential loans have decreased by half compared to the same period last year, residents' deposits have increased significantly, with an increase of about 9 trillion yuan from January to May. This means that due to the lack of confidence in investment and consumption, many high-net-worth individuals would rather deposit in banks at low yields of 1% to 2%, rather than invest and consume. This means that the current market is not short of money, but lacks confidence. Therefore, at this time, we need to defend the 3000-point level and boost the performance of the capital market.

Fundamentally, it is still necessary to boost economic performance because the stock market is a barometer of the economy, reflecting everyone's confidence in future economic growth. In terms of the real estate market, it is suggested that the remaining six cities can be opened up as soon as possible to release more rigid demand. The effect of relaxing purchase restrictions in second and third-tier cities is not obvious because not many people have the impulse to buy houses in these cities. However, if first-tier cities can relax purchase restrictions, they will still attract some rigid demand. Of course, people's expectations for the future increase in real estate prices have undergone fundamental changes, especially in the past two years, with China's population negative growth and the degree of aging becoming higher and higher, and the number of newborns has decreased by half compared to the peak. Therefore, people's long-term expectations for housing prices have changed. Now, even if purchase restrictions are relaxed, including those in first-tier cities, there is no need to worry about a recurrence of large-scale speculative housing. Stabilizing the real estate market, many industries will be stabilized.

In terms of the capital market, during this period, the China Securities Regulatory Commission has promoted a series of deep reform measures, implementing the requirements of the new "Nine National Articles" and introducing "1+N" supporting reform measures. The goal is to build a high-quality development capital market, especially by strictly regulating and cracking down on illegal and irregular behaviors, punishing related responsible persons who harm the interests of investors, strictly implementing new delisting rules, promoting market competition, and making value investment and long-term investment the mainstream investment concepts. Poor-performing stocks and thematic stocks may be ignored. Indeed, we have seen that since the promulgation of the "Nine National Articles," the market style has undergone a significant change, with many small-cap stocks, especially ST stocks, experiencing continuous declines, while dividend-paying large-cap blue-chip stocks have relatively resisted declines and achieved significant excess returns. More investors have begun to focus on fundamental research.

Institutional reforms in the capital market are needed for long-term development, but in the short term, it is still necessary to stabilize the market. The market currently lacks confidence, and investors find it difficult to rely on the market's own strength to do more. Therefore, I have repeatedly called for the national team to decisively increase their market entry efforts, not only to support the 3000-point level but also to continue to lift it by about 20% to form an upward trend. As the ancients said, "Seek the best to get the middle, seek the middle to get the worst." If you focus on supporting the 3000-point level, it will not hold. It has been proven many times now. If you only take the 3000-point level as the target for lifting, it will be easy to break through the 3000-point level. However, if you can exert effort and lift it by 20% to form a bull market trend, equivalent to rising by about 1000 points from the low point of 2600 points last year, forming an upward trend, then everyone's confidence will come, the market's profit effect will emerge, and funds outside the market are expected to rush in.

Because now the increase in residents' deposits is substantial, with an increase of 60 trillion yuan in the past three years, these funds will not tolerate low yields of 1% to 2% for a long time. Such low yields cannot even keep up with inflation. The longer the time, the more the purchasing power of these funds decreases. Once they see the opportunity to make money, these funds will move from savings. Now the real estate market is no longer able to serve as a reservoir for the large transfer of residents' savings. The capital market can undertake the transfer of residents' savings. Therefore, on the one hand, everyone should not lose confidence in the long-term development of the capital market. I believe that once the capital market starts to rise and forms a profit effect, it will attract a large amount of residents' savings to transfer and form a bull market trend, and it may even be a big bull market.

On the other hand, when the market is currently below the 3000-point level, we need to maintain confidence and patience. From an economic data perspective, the situation is indeed not optimistic, but if we look from an investment perspective, especially from a contrarian investment perspective, it is a good time to layout. Many good assets have been severely undervalued, and many good stocks are equivalent to a 50% discount from the high point, and some are even at a 30% or 40% discount. Such opportunities come once in a decade. However, value investing is easy to know but hard to do, especially when the market is generally declining, and many investors cannot control their pessimistic emotions, dare not layout at low levels, and even worry that their stocks will be wiped out. But as long as you hold good companies and good funds, there is no such thing as being wiped out. Only those stocks that may be delisted may be wiped out.

Some time ago, the famous contrarian investment master, Oaktree Capital's Max, clearly said that the characteristics of contrarian investors are unique and uncomfortable. It is indeed uncomfortable to be a contrarian investor now because you have to overcome human fear. But it is only when the market is low that contrarian layout can truly achieve excess returns, and you may even achieve several times the return in the future bull market. Successful value investing relies 10% on professional knowledge and 90% on the mindset. Therefore, maintaining a good mindset, correctly viewing short-term market fluctuations, and grasping the layout opportunities of good companies and good funds from a medium and long-term perspective is very important at present.