In mature stock markets in Europe and the United States, investors can either go long or short, without setting limits on rise and fall. However, in the A-share market, in order to protect the interests of the majority of small and medium-sized investors, not only has a limit on the rise and fall, retail investors cannot even short. If small and medium-sized investors want to make money, they can only rely on active long activities.
So, what are the sequelae of A shares not allowed to short sell? First of all, retail investors cannot hedge long and short products, resulting in the risk of buying one-way rises and the losses also increase. Since A-shares cannot short, there are also restrictions on rising and falling rates. Once negative news comes, retail investors have no long and short products to hedge, resulting in the unilateral buying and rising risk amplification, and the loss rate will also increase.
Furthermore, since the stock market cannot short, there is no bull market. The reason is very simple. Stock investors cannot short, which will lead to valuation disorder, and junk stocks, theme stocks, monster stocks, and new stocks, are unscrupulously hyped. Because we cannot short, the risk of speculation has decreased instead. Because there is a lack of short-selling competitors, institutions can use their advantages to capital chips to raise stocks without any scruples.
Due to the short selling mechanism of the US stock market, it is impossible to experience a roller coaster market with rapid rise and fall. Because after the stock price is pulled wildly, there are constraints from the reverse short selling force, so it can get out of a long-term slow bull market. Due to the lack of a short selling mechanism for A-shares, it is easy to experience a market that saw a 800-point market surge in March and April this year, and then re-enter the roller coaster market with a rapid fall in the bear market.
In addition, due to the inability to short, junk stocks, theme stocks, and even delisted stocks can be speculated to the sky. If we look at Hong Kong stocks, these stocks will not only have their market value but also their prices will also have their prices fall very low, and they may even become sacred stocks, with transactions per day of less than 10,000 yuan. In reality, delisted stocks and counterfeit stocks have a market value of more than one billion or even billions. The valuable listing resources are wasted, and the stock price of , non-, is also given enough time to reduce holdings at high levels.
Finally, investors suffered a large proportion of losses, which is also a problem that short selling is not allowed. The Chinese A-share market falls 85% of the time, which often leads to a long-term decline in the market. If you can short, investors can still make some money during the decline, but cannot short. They can only watch their stocks fall every day but can do nothing. On the surface, short selling is not allowed to protect investors, but in fact, investors cannot make money in the opposite direction, they can only make money in long, while A-shares can only lose more and win less, and that can only be the more they lose more and more.
Starting from May this year, institutional investors can make money by shorting stock index futures, but small and medium-sized investors can still only make money by longing, and there is no open short selling mechanism. Without a short selling mechanism, retail investors can only make money by going long, and the stock market is likely to lose money when going long. At the same time, if retail investors encounter negative news in the market, they cannot hedge risks by short selling, and the losses will gradually widen. More importantly, because A-shares cannot short, there have been many demons such as poor performance stocks and delisted stocks. A-shares often rise and fall sharply, and it is difficult to see a long-term slow bull market.
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