Article/Wu Guoping, columnist of Sina Financial Opinion Leader Column (WeChat official account kopleader)
In fact, the market has come quietly. A new wave of bull market in the future is bound to show up in front of us with an irresistible trend, and this breakthrough must be small and medium-sized enterprises and the GEM, which are our emerging industries and technology enterprises in the future. They must be the key force leading our future new bull market.
On November 17, there was a news that on the occasion of the fourth anniversary of the listing of 50ETF options, after February 9, 2019, three new varieties will be added to the options market, namely, Shanghai Shenzhen 300ETF options, Shenzhen 100ETF options, and GEM ETF options. I believe many people saw this news yesterday. What do I want to say? Since the fourth anniversary of the listing of 50ETF options, we have begun to further expand the capacity. Of course, I think this expansion is fundamentally different from the expansion of the stock market. Because this is a derivative instrument, once the GEM options and Shenzhen Stock Exchange options are expanded, it means that the market is the most active and speculative, or that the market knows how to grasp this part of the funds of derivatives, and his high attention will be extended to the small and medium-sized enterprises.
The ultimate fluctuation of options is rooted in their underlying. For example, once the GEM ETF is launched, the funds invested in it will pay close attention to the overall trend of the GEM. In the original case of ETF options, it was enough to focus on 50 stocks of SSE 50. When ETF options are expanded to the whole market, it means that more funds will focus on GEM and small and medium-sized enterprises. Moreover, active funds focus on these areas, and the further activity of derivatives will in turn boost the activity of the entire stock sector.
In fact, this is the same line as our management's overall idea of stimulating market vitality. Think about it. Looking back over the past four years, the fact is that the SSE 50 is relatively active, and the corresponding SSE 50 is the 50ETF option. It is precisely because of such a derivative instrument that the game of a lot of funds in it is intensified. In the future, a similar scenario will be presented to us. So I personally think this is a great positive stimulus that can make the market more active in the future, which is completely predictable.
Through this information, we can perceive that the whole option market, especially the floor options, will become larger and larger in the future. What will be the impact of this? I will make a bold research and judgment, which will become one of the powerful power sources of the new bull market in the future. The logic is not complicated, because so many OTC derivatives will greatly enhance the enthusiasm of OTC funds to participate in market games. Because this kind of option has leverage, it can expand in a small way, so this is its inherent charm. When some funds outside the exchange see this opportunity, they will pay more attention to the opportunities generated by the linkage between options and their corresponding targets. It turns out that you may simply invest in a stock index or a stock, but with options, you will be more actively involved in the overall operation. This attraction is very meaningful to stimulate market vitality.
We hope or suggest that the management can slowly open more individual stock options in the market in the future, so that more investors can participate in the game of derivatives. Of course, the threshold of individual stock options on the floor needs to be further lowered. The threshold of the floor options is now 500000 yuan. It can be lowered a little more in the future to allow more small and medium-sized investors to participate in it. I think this is not a bad thing. The idea that buyers are conceited has long been very clear in the market. I think the most important thing for the management is to formulate policies, and the rest is to let investors freely participate in the game. I think this is enough. However, if the individual stock options in the market can break through slowly, the fermentation of the new bull market in the future will also bring very positive impetus. Of course, if there is no further breakthrough in individual stock options on the market, the impact on the overall pattern in the future will not be too great. Because the expansion of index options has made a very good breakthrough. It can greatly increase the attention of the whole fund in the future. Another point is that the development of over-the-counter individual stock options is also relatively slowly maturing, which will also stimulate or accelerate the bull market in the medium term. So I think the whole option market must be a gold mine in the future.
This reminds me of the warrant market I have participated in in the past. Many new shareholders may not have this experience, but as old shareholders, I should be very clear. Between 1000 and 6000, in fact, the warrant market was very popular at that time, and there was a call and put of equity certificates in the warrant market. In fact, in essence, its model is somewhat similar to the current options. At that time, the warrant market created one global record after another, such as very amazing trading volume and turnover rate, and extremely high activity was reflected in the warrant market. In the future, if the option market can further and slowly improve the opening system, especially the threshold reduction, I think it is possible to repeat the craziness of the former warrant market in the future.
Of course, when facing the future, we need to take precautions to avoid the mistakes of losing control of the warrant market in the past. In essence, the loss of control at that time was because there were too few underlying securities in the warrant market. If the subject matter of the warrant market at that time could be a little more and the system could be improved in advance, it would not be out of control eventually. Now, why did the management begin to break through after four years of operation in the options market? In fact, it is also a matter of learning some lessons from the past. Although the market is now open to index options, in fact, I think it is also a very important step. If we can enter the market options of individual shares in the future, I think we should learn from the past lessons, and the number must be sufficient. Many people will worry about the diversion effect of capital caused by the expansion of individual stock options, but it is not necessary. Because the individual stock option is a derivative product developed around the individual stocks on the market, it is more to promote the trading activity on the market. It does not mean that a new stock has been born to divert more funds to participate in the game. It is more to improve the game environment on the market and activate the trading activity. So we think that no matter how the future takes such a step, I firmly believe that the new bull market will be launched no later than March next year. Combined with this news, I think this is more of a nail in the coffin, so now we need to be more active in preparing for the future, because the market has come quietly, A new bull market in the future is bound to show up in front of us with an irresistible trend, and this breakthrough must be small and medium-sized enterprises and the GEM, which are our emerging industries and technology enterprises in the future, and they must be the key force leading our new bull market in the future.
We are looking forward to this and everyone is looking forward to it. At the same time, we sincerely suggest that the management must play the cards well. So according to the current progress, we should gradually open up some systems, improve some systems, reduce administrative intervention, improve the quality of listed companies on the market, and carry out more active expectation management. I believe that our domestic A-share market will be able to slowly emerge from a new bull market. Maybe China's economy will have ups and downs in the future, but China's hardest assets in the future and the most promising groups in the future will certainly soar again and continue to grow stronger in the midst of the ups and downs. China's strength will eventually stand in the east of the world, showing strong charm. Our capital market is bound to have new breakthroughs and leaps.
I am very happy to see a new breakthrough in the options market slowly. In the future, we will also combine our years of practical experience and thinking about the options market game, sum up some bits and pieces of the actual combat, sort out some things, and strive to launch a new book on options around March next year. Because we have published books on warrants, commodity futures and stock index futures before, which are all previous historical moments. We have made some interpretations of relevant tools or some practical thinking and experience, and hope to help more investors understand these derivatives more clearly. This is also a mission of our Niusan University. We will also continue to grasp the future development of the whole market, and at the same time, we will share what we have felt in the actual combat, and what we have summarized, whether it is the stock market, futures or options, to more investors, Let's grow, move forward and leap together in the new bull market in the future.
Well, to conclude, I strongly feel that options will become a powerful driving force for the new bull market in the future.
(The author of this article introduces: financial commentator, Sunshine Private Equity Fund Manager, financial best-selling writer, and chairman of Guangdong Yurong Investment Management Co., Ltd. More highlights can be found on Sina Weibo @ Wu Guoping Finance and WeChat official account: cjtgping)
