At 9:25 AM, both markets opened significantly lower without any apparent negative news.
At 9:30 AM, after a brief 5-minute period of emotional build-up, large groups of capital, seeing the market open below expectations, began to rapidly dump their shares.
At 9:35 AM, concentrated selling by on-market funds further intensified market panic.
Consequently, the volume of active selling grew larger and larger, and the market's buying support became increasingly weak.
For a time, all the popular market mainlines that had rebounded in the previous two days, along with related popular stocks, plunged rapidly, and the market completely lost support.
Subsequently...
An even more intense panic instantly erupted like a flash flood, pouring out unstoppably.
At 9:37 AM, many 'SME-GEM' concept stocks lacking liquidity in both markets began to plummet towards the daily limit, while the three core indices—the Shanghai Composite, Shenzhen Component, and ChiNext Index—all saw their declines approaching 3.5%.
Among them, the 'CSI 300 Index', directly linked to the circuit breaker mechanism, had already fallen by 3.78% intraday.
"Holy crap, this trend... it's really terrifying."
Seeing the 'CSI 300 Index' intraday decline once again approaching the 5% circuit breaker threshold, Zhao Qiang couldn't help but complain in the 'Yuhang Faction' main speculative fund group.
"I originally wanted to play a rebound in the morning, but I got buried instantly."
"The index has completely broken down, but it seems 'Zhongyida' stock can still be played!"
"With such terrible market sentiment, I certainly dare not follow. I bought millions of shares at the open, and they all got buried. Looking at this situation, the index is heading straight for the circuit breaker again."
"The hard-earned rebound of two days was wiped out in less than 5 minutes after the open."
"It feels like the market's circuit breaker mechanism is worse than having none at all. With the circuit breaker acting as an impediment, as soon as the index falls by more than 3%, the entire market completely collapses. Many funds no longer care about logic or fundamentals; they simply flee in a headlong rush."
"Without a doubt, sentiment has collapsed."
"Just watch, today's trend will definitely hit the circuit breaker threshold."
"Alas... I really shouldn't have been greedy for the rebound of the past two days. Damn it, it opened lower and plunged rapidly at the start, heading straight for the daily limit before I could react. There's no time to clear positions."
"It feels like a market crash is here!"
"I also feel like 'Stock Market Crash 3.0' has arrived; there's no decent buying support across the entire market."
"Damn it, it's hopeless. One-click sell-off at the daily limit."
"Stop loss. If you don't stop loss, you'll probably lose your shirt."
As messages rapidly refreshed within the 'Yuhang Faction' main speculative fund group...
The speculative fund bigwigs in the group who held positions quickly cut their losses, while those without positions who had intended to enter long at the open instantly abandoned the idea of entering.
Those who had already entered at the open, amid complaints and curses, had already given up resistance.
At the same time...
Across the country, countless retail investors and major institutional groups were gripped by the same panic.
Inside 'Jufeng Asset Management Company' in Modu.
In the trading department of the 'Jufeng Future Growth' fund product, fund manager Lu Xiangxiang, seeing the market once again plummeting rapidly towards the 5% circuit breaker threshold, felt her heart in her throat.
Without any hesitation, she immediately instructed Yu Xiaolu to aggressively cut prices and seize market liquidity, frantically reducing all stock positions held by the fund.
Yu Xiaolu was also shocked by the market's wild trend at this moment.
She gritted her teeth, and without waiting for Lu Xiangxiang's further instructions, she urged all traders in the trading room to place sell orders directly at the daily limit price, exiting their positions at extreme lows while the market still had liquidity.
Under these circumstances, on-market sentiment had completely collapsed, and all sell orders were overwhelming.
She simply couldn't afford to think about the cost of reducing positions.
It's crucial to understand that during a market liquidity crisis, the most important thing is to stop losses promptly and seize market liquidity as quickly as possible.
If one hesitated, unwilling to sell.
One would only be swept up by the market's collapsing sentiment, locked into the market, leading to expanded losses.
Under Yu Xiaolu's directive for traders to place sell orders at the daily limit and seize market liquidity, with their extreme selling, the 'new energy industry chain' mainline, especially the core stocks in the 'lithium battery' sector, almost showed a "three thousand feet drop straight down" trend, flash crashing straight to the daily limit.
Witnessing these stocks plunge directly to their daily limits.
At this very moment, inside 'Nuoan Capital', in the trading department of the 'Nuoan New Energy Industry Growth Mixed Fund' product, fund product manager Yang Shengfan was completely numb.
Compared to the 'Jufeng Future Growth' fund product.
The 'Nuoan New Energy Industry Growth Mixed Fund' product he managed was larger in scale and held a greater position size in the core 'lithium battery' mainline.
Because on January 4th, after the market trend first triggered a circuit breaker.
During the subsequent brief rebound, he did not decisively take trading actions to significantly reduce positions.
At this moment, facing the market's full-scale collapse, even if he wanted to follow with massive selling to reduce positions, he couldn't, because market liquidity was simply too scarce.
"General Manager Yang, 15 stocks in our fund's holdings have already hit their daily limits,"
reported Bao Yongquan, the trading team leader, as Yang Shengfan frowned, his heart growing cold.
"In less than 10 minutes since the open, our fund's overall loss has already exceeded 7%. If it continues to fall like this, even before the index hits its daily limit, our fund product's net value will likely hit its daily limit first."
"Alas... having lost the initiative, it's impossible to exit on a large scale now,"
Yang Shengfan sighed helplessly.
Bao Yongquan said,
"We can't just sit here and wait to die, General Manager Yang. Sell as much as we can. It feels like a market crash is here."
"Sell, sell!"
Yang Shengfan gritted his teeth and said.
Before the New Year's Day holiday, he was extremely optimistic and confident about the market trend of the 'new energy industry chain' mainline, particularly the 'lithium battery' core mainline, and held significant heavy positions in it.
He even once mocked General Manager Su from 'Financial Street Fuxing Road' for lacking long-term thinking logic.
And a grand investment perspective.
Yet, unexpectedly...
Less than ten days had passed, and his initial judgment and formulated trading strategies had been completely invalidated by the market.
Under an extreme market liquidity crisis, even the strongest underlying logic was useless.
Because when funds are fleeing in a rush, people simply don't look at fundamentals.
In fact, at this time, stocks with slightly better fundamentals and relatively ample market liquidity will face even greater selling pressure.
It was only then that he realized.
The judgment of the 'Financial Street Fuxing Road' capital on the macro trend of the market was truly outstanding.
Hearing Yang Shengfan's instructions, Bao Yongquan no longer hesitated.
He immediately instructed all traders to place sell orders at the daily limit price for all non-daily limit stocks in the fund's holdings, regardless of whether there was buying support, following the principle of selling as much as possible, liquidating their shares to the extreme.
Meanwhile...
Inside 'Huaxi Capital', 'Huaxin Securities Proprietary Investment Department', 'Huayin Asset Management Trading Center', 'E Fund Management Co., Ltd.'... and a series of other large asset management institutions in the industry, facing a complete loss of market liquidity and utterly collapsed market sentiment, were all implementing unconditional stop-loss and position reduction strategies.
Furthermore, due to the circuit breaker mechanism's siphon effect.
Active retail investors, major individual investors, and speculative funds in the market, in despair, were also unconditionally stopping losses and clearing their positions.
Of course, across the entire market, almost all investor groups were in extreme panic, compelled to race against time to place stop-loss orders.
At this very moment, in 'Huayi Capital', the 'Huayi Expedition No. 1' fund product trading department.
Qu Zecai, the trading team manager, and the traders in the department, although still showing immense shock in their hearts and on their faces, deep down, each felt a considerable amount of excitement and joy regarding the market's repeated violent plunges.
Because the 'Huayi Expedition No. 1' fund product was currently in an empty position.
With a fund size of 20 billion, it was awaiting position building.
With the fund in an empty position, it was naturally in their best interest, as well as the company's, for the market to fall as drastically as possible and for the index to drop as low as possible.
After all, only then could they acquire a very favorable entry point.
Only then could they, with such a massive amount of capital, freely establish positions in high-quality stock shares with strong underlying logic, excellent fundamentals, and extremely high cost-effectiveness.
"No wonder General Manager Su asked us to maintain empty positions and wait for opportunities,"
someone couldn't help but exclaim.
"General Manager Su is truly a genius; it seems he predicted such a sharp market decline early on."
"Hehe, General Manager Su has always been a legend in the A-share market."
"In the first few trading days of the year, our fund, being in an empty position, should have outperformed the performance of most major fund products from asset management institutions in the market, right?"
"Be more confident, we've definitely outperformed 90% of fund products in the industry."
"I really didn't expect that by doing nothing, we've already outperformed most institutions in the industry."
"This is where General Manager Su's brilliance lies."
"Haha... I have a feeling that under General Manager Su's leadership, our 'Huayi Expedition No. 1' fund product will definitely become a star fund product in the industry, and absolutely a legendary fund product in the industry, as well as a top product in terms of asset under management scale."
"Does this even need predicting? It's a sure thing."
"The key is that with this market dip, our entry opportunities are truly much better than before. To be honest... I'm already eyeing the valuations of some high-quality stocks in the market with envy."
"Even if you're envious, you can't act. It feels like the Shanghai Composite might not even hold the 3000-point mark this time."
"It's already a liquidity crisis; I feel the Shanghai Composite absolutely cannot hold 3000 points."
"Quiet down."
Noticing the increasingly noisy discussions in the trading room, Qu Zecai couldn't help but glance at the traders in the room and reprimanded,
"Although General Manager Su hasn't assigned any trading tasks, we can't just be idle. The market downturn phase is precisely an excellent time to research subsequent market mainlines, various core high-quality stocks, and formulate future trading ideas. Watching the market, watching the market... doesn't just mean staring at the screen. Before today's close, submit the analysis report I just mentioned."
"Manager Qu, the market is likely to close early today. The time you mentioned... can it be extended a bit?"
said a trader named Ma Xiaojian, raising his hand.
"How about before 3 PM? Looking at this, the siphon effect of the market circuit breaker has already occurred, and hitting the circuit breaker is imminent. Even with our fastest hands, we won't be able to complete this task you assigned."
Qu Zecai glanced at Ma Xiaojian, thought for a moment, and corrected himself:
"Alright, then before 3 PM."
Then, as soon as he finished speaking.
On the market, after breaking through a 4.2% decline, the 'CSI 300 Index' flash crashed to the 5% decline threshold in less than two minutes, amidst the panic effect of liquidity exhaustion under the circuit breaker mechanism, triggering the first circuit breaker and causing thousands of stocks to hit their daily limits again.
Immediately after, following the market's brief circuit breaker.
During the five minutes of halted trading, the entire market's panic not only failed to dissipate but intensified further.
Even funds that hadn't had time to place sell orders when the market first hit the circuit breaker, and on-market funds that hadn't previously considered selling, took advantage of the brief market halt to place sell orders at the daily limit.
And then...
Five minutes later, the market resumed trading.
As the market dashboard flickered again, all stocks that had not yet hit their daily limits, without exception, plunged towards the daily limit.
Panic and overwhelming selling pressure, fueled by extreme fear of a liquidity crisis, had transformed into a raging tide.
No individual or major institution could stop it or turn the tide.
9:56 AM, 9:57 AM, 9:58 AM.
Only a brief 3 minutes after the market resumed trading.
The market was forced to trigger a second circuit breaker.
The CSI 300 Index's decline rapidly expanded to 7%, while the Shanghai Composite, after a swift plunge, stabilized at a 7.23% decline.
As for the SME Board Index, ChiNext Index, and Shenzhen Component Index, they all settled at declines above 8%.
At 9:59 AM, the entire market froze.
Less than half an hour after both markets officially opened at 9:30 AM, they closed.
And A-shares, having just made new history, once again broke records just two trading days later, setting the earliest closing record in history.
Facing the utterly brutal market trend and individual stock performance.
Facing the A-share market, which had once again made history.
Facing the Shanghai Composite, which had fallen below 3100 points and was about to trigger another '3000-point defense battle'.
Across the entire market, hundreds of millions of investors—whether retail investors, major individual investors, speculative funds, private equity, public funds, state-owned asset management institutions, foreign investment capital... countless participants, as well as staff within the financial system, and even employees from various departments of regulatory agencies.
Everyone stared intently at the market dashboard, their thoughts.
Seemed to have briefly crashed, much like the abruptly halted market trend, completely losing the ability to think and react.
It can be said...
This historic scene had never been witnessed or predicted by anyone before.
Even the regulatory leaders who devised the circuit breaker mechanism were in a complete state of mental shutdown at this moment, failing to understand how the market had suddenly turned out this way.
(End of Chapter)