Of course the short seller loses money, but the short seller believes that there will be a lower price, so he sells short for this reason.

The short-selling mechanism is to borrow other people’s stocks in advance to sell them when it is judged that the market will fall at a high level, and then buy them back at a low level and return them to the borrower to close the position to make a profit. It is different from the current stock buying method. Profiting through rising prices is a reverse operation. Since profits are made through falling prices, a large amount of funds will be attracted to short positions in a bear market. The short selling here is different from what we usually call "short selling". Our current short selling is actually to wait and see. As the stock falls, transactions become less and less active, which is harmful to the market. The introduction of the short selling mechanism Because of the possibility of short-selling profits, a large number of OTC funds can be attracted to enter the market in a falling market. Since investors have different views on the market outlook, some are long, some are short, some are short, and some are long, so it will inevitably cause The amplification of trading volume is very beneficial to active stock market trading.

The introduction of the short-selling mechanism is a great boon to securities companies. As we all know, securities companies’ profits come from three major parts: brokerage (commission collection), self-operation (self-owned funds to buy and sell stocks), investment banking (securities issuance and Underwriting), because short-selling transactions can increase the activity of transactions, which is very helpful to increase the brokerage business volume of securities companies. However, the current actual situation is that in the absence of a hedging mechanism, large funds have only one option in a bear market. Staying on the sidelines, this makes trading volume tend to decrease. At the same time, the advantages of securities firms also make it possible for them to participate in short-selling operations and obtain more profits from the decline than before. Securities firms are an important stabilizing force in the securities market. Regardless of whether it is bull or bear, securities firms must make money in order to maintain Sales department expenses, in the current situation where trading is not very active, are not conducive to increasing the brokerage and proprietary business volume of securities companies. If things go on like this, it will definitely lead to operating risks of securities companies.

The current no-short-selling mechanism in the securities market has also affected the development of securities-related industries, such as the securities brokerage system and the Bank-Security Connect business. Although some securities companies are very enthusiastic about recruiting securities brokers, due to There is no hedging mechanism for OTC funds in the securities market. They are afraid of losing money in the fall and dare not enter the market easily. This makes securities broker practitioners Liao Liao. This is an important reason why this system has stalled. At the same time, it also greatly reduces the funds flowing into the stock market through bank-securities transactions, which is also detrimental to increasing the bank's business volume.

The launch of the short-selling mechanism will definitely become a means of maintaining and increasing the value of the fund industry. Since 2001, there has been a strange phenomenon in the fund industry, that is, funds have held a large number of positions (actively or passively) in a declining market. ), causing its market value to continue to depreciate with the decline. In the long run, it will have a very bad impact on the operating reputation of the fund industry, and may even affect the overall development of the fund industry. In addition, since insurance companies account for a large proportion of the fund's major shareholders, the depreciation of the fund can also introduce risks into the insurance market. With the short-selling mechanism in place, fund managers can change their passive position holding operations to Active hedging operations will help improve the operating level of the fund industry to adapt to the competition and challenges of the international fund industry after China's accession to the WTO.

The short-selling mechanism is conducive to increasing the trading activity in the weak market, attracting funds for various purposes, and entering the market. This is also very helpful in improving the financing function of the securities market. The reason why the stock market exists is that it has a direct financing function. In a declining market, it is difficult to issue new shares. For example, the issuance of new shares was suspended in the second half of 2001. With the short-selling mechanism, no matter what the market conditions are, the stock market always gathers a large number of funds with various purposes, which can greatly activate the level of trading and will also ease the difficulty of issuing new shares.

The risk level of the short-selling mechanism and stock index futures is different, which is determined by its margin ratio. The short-selling mechanism generally requires a 100% margin, which is the same as current stock trading. However, stock index futures are futures types, and the margin cannot be 100%. For example, the current soybean futures is 5%, which means that as long as there is a 5% book loss, Your investment will evaporate, so the common practice in foreign countries is to launch short selling first, and then launch stock index futures to ensure that investors are familiar with this trading variety and operation method. More importantly, you can also make money by cultivating short selling. Change A rudimentary investment method that involves buying stocks indiscriminately without distinguishing between bulls and bears.