On the 12th, the global financial market plummeted, and the situation was terrible. How bad?

According to incomplete statistics, the US stock market, the Brazilian stock market, the Canadian stock market, the Thai stock market, the Philippine stock market, the Pakistan stock market, the South Korean stock market, the Indonesian stock market, the Mexican stock market, the Colombian stock market, and the Sri Lankan stock market. . If you add the Kuwaiti stock market that had been blown out during the previous trading day, the stock market in 12 countries has triggered the blowout mechanism due to the plunge in the past week.

March 12 may become the "global stock market fuse day" to witness history.

US stock market Dow Jones chart chart.

Three fuses in U.S. stock history, two have happened this week

"Fuse-off", a term that is only relatively understood by financial market professionals, has become the most frequently used "unfamiliar" keyword in global media reports this week. It was quickly popularized by science and well-known by netizens.

Affected by the spread of the global new crown pneumonia epidemic and the impact of oil price wars, global stock markets have plummeted and this week has ushered in a "melt tide".

On March 12th (Thursday) local time in the United States, it only opened for 5 minutes. As the S & P 500 index fell by 7.02%, the market fuse mechanism was triggered, and the US stock market was suspended for 15 minutes. This is also the third time in the history of US stocks.

According to media reports, some market players have teased: US stocks have only happened three times in the history of circuit breakers. The last time it was blown back to March 9, 2020. My memory was very deep that day, and it felt like a few days ago.

In fact, the first real meltdown in US stock history was October 27, 1997, when the Dow Jones Industrial Index plummeted 7.18%. Twenty-three years later, on March 9, 2020 (Monday), U.S. stocks had a second meltdown in history. On the 9th, the US stock market fell by 7% at the beginning of the session, which triggered the fusing mechanism.

Outside the US stock market, the 10 countries' stock markets are now "fuse"

Subsequently, panic sentiment triggered by the collapse of U.S. stocks spread to the global financial market, and the "fuse" of the stock market became popular. On the 12th, the outbreak was concentrated. In addition to U.S. stocks, 10 countries' stock markets triggered the meltdown mechanism due to the collapse. transaction.

For example, on the 12th, the Brazilian stock index plunged 12%, triggering the third fuse this week. After trading resumed, it fell 15% and triggered the fuse mechanism again within a day. The Toronto Stock Exchange index of Canada fell 9.17%, once again the primary market meltdown triggered by the plunge, and stock trading was suspended.

In addition, on March 12, the Colombo Securities Exchange in Sri Lanka suspended trading for 30 minutes. This is not the first time that Colombo has stopped trading this week. On March 10, the Standard & Poor's Sri Lanka 20 Index fell 5% shortly after the market opened. The Colombo Stock Exchange suspended trading for 30 minutes in early trading immediately.

On the same day, the Thai Stock Exchange (SET) announced that as of March 12, 14:38, the stock exchange index was 1124.84 points, down 125.05 points (-10.00%), which caused the Thai stock market to trigger a fuse mechanism and suspend trading for 30 minutes. The time is from 14:38 to 15:08. This is the first time that the Thai stock market has triggered a fuse mechanism since October 27, 2008, 11 years and 4 months.

The major stock markets in the Asia Pacific stock market closed down on the 12th.

In addition, on March 12, the Korea Composite Index 200 (KOSPI200) index futures plummeted more than 5% on the 12th, resulting in a five-minute suspension of trading. This is the first time that the South Korean stock market has temporarily suspended trading since October 2011. On the same day, the Indonesian stock market fell more than 5%, triggering a suspension mechanism.

On March 12, local time, the Philippine stock market closed at 5736.27 points, a drop of 9.7%, down 616.99 points, the largest single-day drop since October 27, 2008. At about 14:53 pm that day, the stock market triggered a fusing mechanism. This is the second time the Philippine stock market has been triggered since the mechanism was created in 2008, and the first was on October 27, 2008.

Is the global stock market plummeting like this?

In fact, it's not just the meltdown. Due to the continuous major declines in major global stock markets, the MSCI Global Index has fallen more than 20% from its peak in February, and has entered a technical bear market range. The MSCI Index is the benchmark index most commonly used by portfolio managers worldwide.

On the 11th, the World Health Organization (WHO) for the first time characterized a new coronavirus epidemic as a pandemic. The Chicago Mercantile Exchange, more than 1,200 kilometers from Wall Street, has announced that it will close the Chicago Trading Hall after Friday's close to reduce staffing. By then, all CME Group products will continue to be traded on the online platform CME Globex.

Market analysts warn that there will be more shocks, "We are witnessing the end of a bull market."

On March 12, the three major U.S. stock indexes closed down more than 9.4%, the largest one-day drop since October 1987. Among them, the Dow Jones index closed down 2352.60 points, or 9.99%, down to 21,200.62 points; the Nasdaq index closed down 750.25 points, or down 9.43%, to 7208.80 points; the S & P 500 index closed down 260.74 points, down 9.51%, to 2480.64 point.

Data Map: New York Stock Exchange.

Former Fed Deputy Chairman and economist Alan Blinder said the U.S. economy may have fallen into recession due to the new crown pneumonia epidemic. "I wouldn't be surprised if we reviewed the data thereafter and finally determined that the recession began in March."

At present, US stocks have fallen by more than 20%, entering a technical bear market. Some people believe that the 11-year bull market in US stocks may end. Investors generally believe that a 20% decline in the stock market is a sign that US stocks have entered a bear market. This development is often accompanied by long-term pessimism and more declines.

State Street economist Will Kinlaw said that with the decline in U.S. stocks, the possibility of the United States falling into a recession rose to about 75%. If U.S. stocks give up all the gains of the past 12 months, the possibility of the U.S. economy falling into recession will Rose to 80%.

However, US President Trump said in a national speech on the 11th, "This is not a financial crisis, this is only a brief moment, and we must unite to overcome this epidemic." Trump also announced that the US government will take Measures boost the economy to ensure that "this is not an economic crisis."

Can A shares become a safe haven?

International stock markets have plummeted, and whether A-shares can survive on their own is still the most important issue for domestic investors.

On March 12, the Shanghai Composite Index fell 1.52% to 2929.49 points; the Shenzhen Component Index fell 2.31% to 10941.01 points; the GEM Index fell 2.64% to 2045.93 points.

China's major stock indexes closed on the 12th.

"The Chinese economy is relatively better than the situation in overseas economies. RMB assets have certain hedging characteristics. Domestic capital markets, including A shares, will perform better than overseas markets." Pan Xiangdong, chief economist at New Times Securities, told reporters. However, we must also be aware that if the overseas economy drops significantly, it may cause further damage to China's industrial chain and exports, which will have an impact on the Chinese economy and A shares. "

"With the start of resumption of labor and production, China will lead the world in economic recovery. The safe haven function of the A-share market will also be reflected in the medium and long-term allocation." Huaxin Securities believes that March will be a froze market, due to the external market A high degree of uncertainty may result in a one-day panic, but it is not sustainable, but an opportunity for layout.

Author: Cheng Chunyu