My fintech empire.

Chapter 1427 [Beware of Departure from Reality to Virtuality]

As time went by, by the afternoon, the market indices of the three major A-share markets maintained a unilateral upward trend across the board.

At around 13:17, the New Securities 50 Index successfully surpassed the 4900-point mark, with the gain expanding to 3 percentage points. The distance to the 5000-point mark has been shortened to within points, and funds from all walks of life in the entire market are boiling.

大金融板块也在午后13点20分过后快速拉升，其中券商板块一度涨超6个百分点，突破了去年11月19日的高点。

In the current market situation, the short positions have been defeated. As long as you go long, it is difficult to lose money even if you buy randomly with your eyes closed.

As of the closing, the three major A-share indices all closed with large increases in volume.

新证50指数大涨+3.35%，报4945.19点；沪指大涨+2.68%，报2754.36点；深成指大涨+3.95%，报8446.92点。

The total transaction volume of the three major trading markets was 17231 billion yuan. The volume of transactions in the two neighboring cities was also very obvious, adding up to more than 5000 billion yuan. The transaction volume of the SGX market today once again broke the historical record, with a transaction volume of 11754 billion yuan, becoming the largest single-day transaction volume since the opening of the SGX market.

……

New city, quiet villa.

At this moment, Tian Jiayi was reporting to Fang Hong: "The influx of overseas hot money is obvious, and it is certain that the off-market funds that missed out on opportunities are accelerating their entry into the market, and leveraged funds are definitely increasing, including off-market financing."

Upon hearing this, Fang Hong said straightforwardly: "Let the SGX strictly investigate, control and regulate the entry of leveraged funds into the market, especially over-the-counter financing."

Today, the trading volume of the SGX market not only returned to the single market level of breaking through the trillion-level trading volume, but also broke the historical record. The daily trading volume reached an astonishing 11754 billion, and the off-market funds that missed the opportunity rushed into the market.

Among them, there are many people who have leveraged their funds again. There are too many good news in the current market, and they are all real and heavy good news. Now there is a meeting at this point in time, and everyone is looking forward to some good news for the financial market at the meeting.

Not only has domestic capital begun to secretly increase leverage and engage in margin financing, but foreign capital inflows have also surged. More and more international hot money is also pouring into the SGX market. The strengthening of the offshore RMB exchange rate since the beginning of the new year is a good reflection of this.

Fang Hong said in a deep voice: "The SGX market is going to rise, there is no problem with that. The general direction is to maintain the upward momentum. There is no problem with the trillion-dollar market becoming the norm, but this money cannot be leveraged, otherwise the disastrous market in 2015 will repeat itself."

As long as there is not too much leverage in the funds in the market, there will be no big problem. Even if the sentiment ebbs, there will be no stampede. After all, the SGX market has many guarantee mechanisms such as the trillion-dollar stabilization fund.

而且方鸿也早就在去年压制了空间高度，去年10月份那会儿新证50指数就冲到了4500点关口之上，若不压制去年11月19日那天说不定就已经突破了5000点。

After reaching 10 points in October last year, it entered a phase of adjustment and even pulled back to 4500 points at the end of the year.

In order to reserve space for 2019, Fang Hong is letting the SGX market compete with the Beijing Mei Capital Market in market value. However, this does not mean that the market will soar blindly. We cannot rely on the fact that the SGX is in its "adolescence" stage and engage in crazy overdrafts.

Another thing is that we have to wait for the value of the company itself to grow. The market bubble and value growth cannot deviate too much. The return on investment can be significantly ahead of the stock market.

The key is to strictly control the entry of leveraged funds into the market. The high return on investment in the stock market has also magnified human greed. The Xinzheng 50 Index has been heading towards 5000 points. The bull market has lasted for more than three years, and many people have forgotten the pain of 2015.

The necessity of controlling leveraged funds is self-evident.

If left unchecked, it will not only be bad for the market itself, but will also gradually drive the entire nation towards "de-materialization" and repeat the mistakes of the prison system. How much leverage have been added to the various financial derivatives and hedge funds in the prison system's capital market?

If leveraged financing is left alone, no one will have to work, and no one will want to work. If the stock market can make you rich in the short term, everyone will come to speculate in stocks to get rich. Who will be willing to continue working? Who will be willing to go to work? Who will be willing to engage in the real economy?
If this continues, within ten years, the country's economic fundamentals will inevitably move towards "de-materialization", which will inevitably lead to the hollowing out of internal industries. Isn't this the path that Laomei is taking now?
Facts have proved that without the support of the real economy, the virtual economy will be a dead end if it becomes dominant. In the end, it will be like drinking poison to quench thirst and eventually explode on the spot.

Fang Hong will not go to extremes, but rather seek a balance between the coexistence and prosperity of the physical economy and the virtual economy. Going to extremes is not an option.

The two cities next door are in another stage. For quite a long time, the villagers believed that if the stock market continued to rise in a bull market, it would be detrimental to people's struggle. If they could make money easily from the stock market, they would not want to work and would want to get something for nothing. Therefore, they came to the conclusion that the stock market could not rise.

This is a typical example of going to the other extreme. Except for a few financial rentiers who have reaped the rewards, the vast majority of people have been left with empty pockets. The result is sluggish consumption, which is then stimulated and inflation is released, but the funds cannot flow to the lower levels and can only idle in the financial system, leading to a huge temperature difference between inflation for the rich and deflation for the poor, and the two groups cannot empathize.

Fang Hong now has the ability to make changes, so he naturally won't go to extremes. The real economy and the virtual economy should seek a balance and coexist and prosper together. The stock market must rise, but the real economy cannot be abandoned.

In other words, we should prevent the general public from considering the wealth appreciation from financial assets as the core and main source of income.

But it is also a fact that human nature is greedy. When under normal circumstances one can be sure of making a steady profit of 10 yuan, one would think of adding ten times leverage to directly make 100 million or even 1000 million yuan.

Obviously, such greed must be resolutely eliminated.

Fang Hong allows someone to earn 100 million or even 1000 million, but he does not allow him to do so by leveraging funds. If he can earn the same amount of money without leveraged funds, it means that he has contributed enough real wealth to society.

At its root, it is still a question of wealth redistribution, but it is a redistribution in the capital market.

Trying to leverage funds ten times or even dozens of times to get huge profits in the short term, to put it bluntly, is that people who are supposed to get one share are greedy and want to take ten or dozens of shares more than others. Such distribution will eventually go wrong, and the problems will explode in the form of a concentrated outbreak, which is the so-called bloodbath, and the whole place will be a mess.

Tolerating leverage means letting the current group of people take all the benefits, leaving nothing for those behind them, and only letting latecomers take over. The latecomers may suffer losses and be fooled a few times, but they cannot be fooled all the time. In the end, they will either stop playing with you or directly overturn the table.

At this moment, Tian Jiayi looked at Fang Hong and asked, "Where is the influx of international hot money?"

Hearing this, Fang Hong said calmly: "Don't worry about it. There is an upper limit on the shareholding ratio of foreign capital in SGX-listed companies. Hot money can't make waves anymore. If there is too much short-term hot money, there will be less long-term patient capital. Let them gamble on this."

If there is more long-term patient capital in foreign investment, the share of short-term hot money will be smaller, and it will not be able to make waves; vice versa, if there is a larger share of short-term hot money, there will be less long-term patient capital, and when the hot money leaves, patient capital will take over.

Because the upper limit of foreign capital's shareholding ratio in SGX-listed companies is currently fixed, no matter how they act, it will not affect the tone of the entire market. At most, it will only cause some impact in the short term, which is completely controllable.

……

(End of this chapter)