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  3. A-share Market Sees Rise of 'Numerology' Stocks - The 'Mystical' Concept Stocks in A-shares
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A-share Market Sees Rise of 'Numerology' Stocks - The 'Mystical' Concept Stocks in A-shares

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  • baoshi.raoB Offline
    baoshi.raoB Offline
    baoshi.rao
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    After the zodiac-themed 'mystical rally' in A-shares, a new wave of 'numerology' stocks—those with numbers in their ticker symbols—has recently emerged, carrying forward the speculative frenzy.

    This 'numerology' trend began with Sanbaisuo's nine consecutive limit-ups and gradually extended to other number-related stocks, especially those containing the digit 'three' in their names.

    However, few of these mystical concept stocks sustain long-term growth, with most retreating to their original valuation ranges after brief surges.

    The 'Mystical' Concept in A-shares

    Since November 10, Sanbaisuo has recorded nine consecutive limit-ups, with its share price soaring from 12.03 yuan/share to a peak of 28.36 yuan/share on November 23, making it the top-performing stock in the leisure products sector year-to-date. Notably, on November 20 and 22, Sanbaisuo gained fame for twice achieving 'limit-down to limit-up' reversals in a single trading session, earning it the nickname 'Trampoline King' of A-shares.

    In a November 22 volatility announcement, Sanbaisuo disclosed a turnover rate of 74.29% on November 20 and 48.89% on November 21. The company warned that its stock price had risen sharply in the short term, far exceeding fundamental valuations, and highlighted risks of irrational speculation. It also stated no significant changes in operations or business environment.

    Sanbaisuo specializes in R&D, design, production, and sales of leisure sports and fitness equipment. Since its October 2022 IPO, the company has faced performance declines due to operational pressures domestically and abroad. Financial reports show: 2022 revenue fell 53.01% year-on-year, with net profit down 48.87%; for the first three quarters of 2023, revenue dropped 44.94%, while net profit plunged 87.25%.

    Other 'numerology' stocks with multiple limit-ups during this period include Yibin Technology, Sanxiang Impression, Sanxiang New Materials, Shanghai Sanmao, and Sanwei Co.

    After nine consecutive trading days hitting the upper limit, Sanbai Shuo abruptly slammed the brakes with two straight limit-downs on November 23-24. However, multiple other "number stocks" simultaneously began relay rallies: Haoyi Pharma recorded 2 limit-ups since November 23, Jiuding Investment saw 4 consecutive limit-ups, and Sihuan Bio achieved 3 straight limit-ups.

    These movements aren't solely attributable to numerical superstition. For instance, Jiuding Investment's rally also reflects market expectations that its private equity management business may benefit from the Beijing Stock Exchange's heated activity.

    However, in its November 24 abnormal trading volatility and risk disclosure announcement, Jiuding clarified it currently has no Beijing Stock Exchange-listed or applying projects in its PE portfolio. Q3 reports show Jiuding's revenue fell 43.53% YoY to 202 million yuan, with net profit plunging 83.37% to 18.6 million yuan.

    Annual Phenomenon, Especially Pronounced This Year

    Wind data analyzed by CBN reveals 13 "number stocks" (including Beijing Exchange and small-cap A-shares) gained over 20% this week, with 3 surging beyond 50%.

    Dragon-and-Tiger榜 data shows retail investors and hot money dominate these speculative trades. The "Lhasa Squad" of active traders and East Money Securities' retail-heavy branches frequently appear on these lists.

    Historically, year-end periods consistently witness such metaphysical market trends, particularly zodiac-concept rallies. Examples include:

    • 2019: Hog producer Muyuan Foods surged 193.74% (Nov 28, 2018 - Apr 25, 2019)
    • 2020: Lianhuan Pharma rose 202.26% (Dec 31, 2019 - Feb 10, 2020)
    • 2021: Golden Bull Chemical gained 125.58% (Feb 8 - Mar 16, 2021)
    • 2022: Hubei Broadcasting (homophone for "tiger") skyrocketed 252.72% (Dec 10, 2021 - Jan 20, 2022)

    From late last year to early this year, stocks with the character 'Rabbit' saw a significant rise, with a cumulative increase of 125% from November 1, 2022, to January 13, 2023, including five consecutive trading limit-ups.

    2024 is the Year of the Dragon, and since mid-October this year, several stocks with the character 'Dragon' have experienced explosive growth. For example, Longban Media has recorded six consecutive trading limit-ups since October 16, Tianlong Co. has seen 12, and Weilong Co. has had three. Shenglong Co. has soared even higher, with 18 consecutive trading limit-ups since September 28, and a stock price increase of 258.49% during this period.

    From zodiac mysticism to speculative trading of 'Dragon,' 'Phoenix,' and 'Kirin' stocks, and even numerical mysticism like 'Three Begets All Things,' the prelude to this year's year-end market rally has been lively. However, few of these mysticism-themed stocks can sustain their upward momentum, with most returning to their original value ranges after brief surges.

    What are the 'main dishes' of the year-end market rally?

    As the year draws to a close, discussions about the year-end market rally are heating up in the industry.

    A Guotai Junan Securities research report points out that the A-share market exhibits a clear year-end rally effect. In terms of seasonal patterns, February and October have higher probabilities of positive returns. Taking the Shanghai Composite Index as an example, over the past decade, the probability of gains in February and October was 69% and 62%, respectively, significantly outperforming other months. The CSI 300 Index also shows a notably higher probability of positive returns in the fourth quarter. The strong performance of major indices around the year-end aligns with the market's 'year-end rally' pattern.

    A China Merchants Securities report also notes that historically, the A-share market is more likely to experience an upward trend from November to January of the following year, with large-cap stocks clearly outperforming.

    Regarding specific allocations for this year's year-end rally, China Merchants Securities believes that with the profit inflection point of listed companies now established and the downward trend of the U.S. dollar index and Treasury yields further confirmed, foreign capital is expected to return to net inflows. The value style, which has dominated for the past two years, may gradually give way to the growth style, with large-cap growth stocks likely to become the dominant trend in the year-end rally. Key sectors to watch include electronics, computers, home appliances and furniture, automobiles, and non-ferrous metals.

    Yuekai Securities analyst Li Xing suggests that during the current earnings vacuum period, investors should adopt a balanced allocation strategy and prepare early for year-end market trends. Key investment opportunities include sectors with improving fundamentals, such as transportation, automobiles, and defense industries. Additionally, attention should be paid to consumption-related themes tied to the "Double Eleven" shopping festival, including food and beverages, consumer goods, e-commerce, and logistics. Continued focus on technology growth sectors is also recommended.

    Zheshang Securities analyst Wang Yang believes that as China's economy improves and the rise in U.S. Treasury yields slows, the A-share market is experiencing dual catalysts. With increasing risk appetite, investors are advised to focus on TMT (Technology, Media, and Telecommunications) and inventory replenishment themes.

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