Some time ago, the stock market has been maintaining a growth trend, so we must also be wary of liquidity risks in the stock market! Be prepared to deal with liquidity risks! So, what is the liquidity risk in the stock market?

2017 has been a year of rapid growth for global stock markets - as of the end of the first half of this year, Hong Kong's Hang Seng Index has increased by 18.47%, South Korea's KOSPI index has increased by 16.64%, and the S&P 500 Index has increased by 8.68% (the information technology sector has increased by nearly 23%).

China's "Nifty 50" - the Shanghai Composite 50 Index also rose as high as 16%.

However, predictably, "Black Friday" has finally arrived.

On August 11, driven by high valuations, continued low volatility, earnings season, and renewed geopolitical risks, “panic selling” occurred in global markets such as U.S. stocks, Hong Kong stocks, and China A-shares—as of

At the close of last Friday, Hong Kong's Hang Seng Index closed down 2% at 26,883.51 points; the Shanghai Composite Index closed at 3,208.54 points, a three-week low, down 1.63%, the largest single-day decline in eight months. Resource stocks fell sharply across the board.

This round of global slump actually stems from the correction of U.S. stocks.

Last week, the S&P 500 index fell 1.4%, the Dow Jones Industrial Average fell 1.1%, the largest weekly decline since the week of March 24; the Nasdaq Composite Index fell 1.5%, the largest weekly decline since June 30.

However, U.S. stocks finally rebounded after three consecutive days of decline, closing slightly higher on the last trading day last week.

“Global stock markets are expected to continue to rise due to unexpected earnings reports, but as for Hong Kong stocks, we need to be wary of liquidity shocks at the end of August (the depreciation of the Hong Kong dollar may cause the Hong Kong Monetary Authority to intervene, and overseas central banks may begin policy tightening), as well as geopolitical risks.

" Zhao Wenli, chief strategist of China Merchants Securities International, told China Business News.

Miao Zimei, chief investment director of Robeco China and Chinese fund manager, told reporters that compared with U.S. stocks, emerging markets with significantly improved profits this year will outperform, and under the weak dollar cycle, funds will continue to flow into emerging markets. "We are still optimistic about 2017."

In the Chinese stock market in the second half of the year, history shows that the MSCI China Index performed better than the emerging market index, with the exception of the past three years, but now it has returned to the trend. "U.S. stocks took the lead in recovering from the "sell-off" this time, caused by the escalation of geopolitical risks.

The S&P 500 and the Dow posted their worst weekly losses in nearly five months.

The South Korean won fell nearly 2% against the U.S. dollar and gold prices soared.

However, U.S. stocks also recovered after the sharp decline on the 3rd. The S&P 500 index closed up 3.28 points, or 0.13%, at 2441.49 points; the Dow closed up 15.26 points, or 0.07%, at 21859.27 points; the Nasdaq closed up 39.91 points,

It rose 0.64% to 6256.78 points.

The panic index VIX fell by nearly 4% on August 12, Eastern Time, but still stood above 15.30. The day before, it had hit the highest level of 16.04 since the US election last year, rising by more than 44%.

The VIX index rose nearly 50% last week.

"I think investors are just looking for an excuse to sell, and the recent geopolitical risk is that," said Scott Wren, chief global equity strategist at Wells Fargo Investments. "This is a healthy pullback," and in the eyes of investors, high valuations

As well as subsequent uncertainties in monetary and fiscal policies, this has led to this "long overdue" correction.

In addition, financial reports from Macy's and Kohl's showed that same-store sales are expected to continue to decline, which also hit stock prices.

In this round of decline, technology stocks and biotechnology stocks were hardest hit, while the stock prices of the most insurance companies rose.

Since 2017, the strength of U.S. stocks has rarely been interrupted. This is mainly due to strong corporate earnings growth, the continued recovery of the U.S. economy, and the synchronized growth of the global economy.

Before this crash, the Dow once set a record high for nine consecutive days, and rose above 22,000 points for the first time on August 2.

"A correction is inevitable, but in the context of the U.S. economy showing no risk of recession and earnings growth continuing to increase, the market correction in the second half of the year is still the time to buy, and large-cap stocks will still outperform." Managing Director, Research Department, BOCOM International

Supervisor Hong Hao previously told China Business News.

At present, mainstream investment institutions do not seem to be worried about the risk of a sharp correction in U.S. stocks.

On the last trading day last week, the technology sector of the S&P 500 index led the market rebound, with the technology sector rebounding as much as 0.7%, heavyweight Apple jumping 1.3%, and Microsoft, Facebook, and Alphabet rising nearly 0.5%.

Be wary of liquidity risks in Hong Kong stocks. Following the overnight decline in U.S. stocks, Asian markets generally fell on August 11.

The Hang Seng Index opened 1.6% lower last Friday, at 27,000.43 points, with blue-chip and technology stocks in the broader market falling almost across the board.

The nearly 2% drop was also the Hang Seng Index's largest single-day drop since the U.S. election last year.

However, on the same day, Morgan Stanley raised the target point of the Hang Seng Index from 28,000 points to 29,000 points; it also raised the target point of the Hang Seng State-owned Enterprises Index from 11,600 points to 11,700 points.

Zhao Wenli said that this reincarnation is reasonable.