Northbound net inflows topped trillions! A-share "high light" moment: foreign capital raised to the left and raised to the right

2020/01/03 08:52:57 Source: Oriental Fortune Research Center 2020/01/03 08:52:57

Starting in 2020, the market is here! A shares ushered in a good start in 2020 on January 2, the three major stock indexes strengthened across the board, and the Shanghai stock index once approached the 3100-point integer mark.

Starting in 2020, the market is here! A shares ushered in a good start in 2020 on January 2. The three major stock indexes strengthened across the board. The Shanghai stock index once approached the 3,100-point integer mark. The total turnover of the two cities was 751.5 billion yuan, and the industry sector closed up across the board.

Of the more than 3,000 stocks in the two cities, less than 300 fell, and the rest all achieved general growth, of which 100 stocks reached daily limits.

It is worth noting that the chips were once again stolen by foreign capital! On the eve of the "high light" of A shares, public fundraising funds and foreign capitals took completely opposite actions.

Public Funds Lighten Up

According to the weekly public offering position report released by National Gold Securities on December 23, 56% of fund companies chose to lighten up positions, and 44% of fund companies chose to increase positions.

From the perspective of the top ten fund companies, the number of funds to lighten up their positions is significantly more than that of increasing their positions.

Northbound funds increase

Foreign investment is just the opposite of public offering. Northbound funds again had a net inflow of 11.395 billion yuan on January 2, which was a net inflow of 32 consecutive trading days.

In 2019, the net inflow of northbound funds exceeded 340 billion, a record high for the year. Since the opening of the Shanghai-Shenzhen-Hong Kong Stock Connect, the net inflow of northbound funds has exceeded one trillion yuan.

New funding for Northbound funding in 2019

Although northbound funds have always been considered to favor large consumer sectors represented by food and beverages, household appliances and medical and biological products. But this trend has changed in 2019.

From the change of shareholding ratio, from the beginning of 2019 to December 31, the shareholding ratio of leading companies in a number of sub-sectors, such as Qilianshan, Oupai Home Furnishing, Sofia, Yixintang, Dean Diagnostics, and Qiaqia Food, increased significantly.

On the other hand, technology stocks have become the key objects of northbound funding, such as a series of electronic and computer technology stocks represented by China Testing, Industrial Fulian, Huichuan Technology, Guangxin Ring Network, and Guanglianda. The concentration of Northbound capital holdings has also risen rapidly.

Among them, the proportion of Northbound funds held by Huatest has also increased by over 13 percentage points in 2019.

Some institutions said that A shares will be included in MSCI and other international indexes in 2019, and the inclusion factor has been increased to 20%, which can be said to be a relatively large improvement. In the future, the inclusion factor will inevitably be further increased, and the allocation of foreign capital to A-shares will increase, which will inevitably trigger more foreign capital inflows into the A-share market.

How to treat "in and out" of northbound funds?

Of course, the feeling of northbound funds to retail investors is also "in and out." How should we treat this problem?

Some brokerage analysts pointed out that northbound funds can also be divided into two types: allocation and transaction. Transactional funds may be macro hedging or partial quantitative fund investment. This part of the transaction constitutes short-term fluctuations of northbound funds.

CITIC Securities said that the higher turnover rate of Northbound funds is mainly derived from customers who are hosted by foreign brokers, which may include some high-frequency transactions of hedge funds, accounting for about 26.3% of Northbound funds. The overseas funds with the characteristics of "value investment" account for about 67.9% of the total. Tracking such funds can better reflect the long-term logic of foreign investment and have more reference value.

CITIC Securities believes that the proportion of northbound funds that better reflect the long-term logic of foreign investment is about 70% of the total, which is the vast majority, which is also in line with A-share investors' consistent perception of foreign investment. There are currently few signs of significant withdrawals from such funds. Differentiating the different types of investors represented by different custodians helps to analyze the buying logic of Northbound funds in different sectors in different periods.

Anson Securities Research believes that there are two main categories of factors that affect foreign capital allocations to A shares. The first is to increase the proportion of emerging market assets in the global allocation of foreign capital. This is usually related to the performance of US stocks and global risk appetite. At this time, funds tend to flow into emerging markets, and when global hedging demand increases, funds tend to return to developed economies;

The second category is to increase the proportion of China ’s A-shares in emerging market asset allocation. China ’s economic fundamentals, the progress of international index integration of A-share assets, exchange rate trends, and the process of financial liberalization will all affect this proportion.

2020 Outlook: Institutional optimism with caution

So does the spring market start? From the perspective of many securities firms, although the institution is optimistic as a whole, it is also cautious in optimism.

CITIC Securities proposes that the main macro factors that suppress the profitability of A shares in 2019 will be significantly reduced in 2020, and the fundamentals will stabilize and rebound under the effects of countercyclical policies, credit expansion and replenishment of inventory. Under the macroeconomic victory, capital market reform, and corporate profits, the A-share market is expected to usher in a "well-off bull" for 2 to 3 years.

And more institutions believe that the next A-share market is more likely to deduct a structural bull market.

Shenwan Hongyuan Securities said that the profit growth of A-shares will improve slightly in 2020, and the room for valuation improvement will be restrained. The overall opportunities in 2020 will be limited, and the grasp of structural phase opportunities may determine the outcome.

GF Securities believes that in the history of A-shares, valuations can continue to rise for two consecutive years. In 2020, profit-driven probabilities will replace valuations and become the dominant, and continue the "financial supply-side slow bull" pattern. The expected return rate is lower than in 2019 but with a high probability. To be positive, the rhythm is to share first and then debt, value first and then grow.

China Merchants Securities believes that A-shares ushers in a two-and-a-half-year upward cycle every seven years. 2019 is the starting point of this round of upward cycles. It is expected that the market will be dominated by structural market in the first half of 2020 and accompanied by inflation in the second half of the year. The downturn and the opening of monetary policy space, the market is expected to continue to rise in a more relaxed environment.

What stocks to choose in 2020?

In terms of stock selection, institutions are more optimistic about technology stocks.

Tian Biao Securities strategy team Xu Biao said that the excess income of the technology sector will be the main battlefield in the follow-up, behind which is the support of the industrial cycle. Xu Biao believes that the technology industry cycle is expected to erupt, and the core factor affecting the stock price is performance trends rather than short-term valuations.

Zhang Yidong, Global Chief Strategy Analyst of Industrial Securities believes that core assets will still be the main line of the market in 2020, but technology stocks and value stocks will become the protagonists, including technology in the first half and value in the second half. Based on the new impetus of China's economic transformation, we are optimistic about the opportunities for technological empowerment, including 5G-driven "To C" and "To B" development of the entire industrial chain, new energy vehicles, chemicals, power equipment, machinery and other leading technological innovation capabilities .

Tong Yugen, chief strategy analyst of Haitong Securities, stressed that technology and securities firms will become the leading industries in this round of bull market. Technological progress and policy bonuses will boost the performance of the technology sector. With the advent of the era of equity financing, with the future diversification of business, the performance of securities firms is expected to recover.

Orient Securities believes that in 2020, A shares will still show a relatively obvious structural market, the trend of leading stocks will not end, and the trend of growth stocks is gradually rising, and structural opportunities throughout the year can be expected. Investors are advised to “hold up and find new” in 2020.

"Baopu" lies in the style of "holding" leading stocks: Although the performance of leading stocks will slow down in 2020, they will not stall and are expected to maintain stable growth; ROE can also be maintained at a high level. We believe that we need to lower the 2020 yield expectations of leading stocks, and do not even rule out the possibility of excessive valuation correction. We need to focus on stable EPS growth rate returns.

CICC said that the industry allocation in 2020 may be more complex and dynamic than in 2019. The factors to be considered are as follows: the new and old economy, growth and value valuation are more differentiated, the over-allocation of the new economy, the under-allocation of the old economy; overall growth The pressure may encounter structurally high prices in stages, affecting the rhythm of market performance; the medium- and long-term trend of China's consumption upgrade and industrial upgrade is still continuing; the technology cycle will be driven by 5G and related applications after bottoming out in 2019 and will continue in 2020 deepen.

For investors' reference only, does not constitute investment advice

(Responsible editor: DF358)

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