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Original title: Net capital inflows from the north during the year exceeded 140 billion yuan. Experts predict that foreign capital will continue to buy over the next 5 years
Our reporter Wu Xiaolu
Since the beginning of this year, despite the turmoil of the epidemic, the enthusiasm for foreign investment in A shares has remained unchanged. According to data from Oriental Fortune Choice, a Securities Daily reporter found that as of November 26, the net inflow of funds from northern China was 144.278 billion yuan during the year, including the net inflow of Shanghai Stocks. Connect was 44.531 billion and Shenzhen Stock Connect’s was 99.747 billion.
The return of capital from the north in November is evident
In terms of time, the net inflow of funds from Beijing this year was concentrated from April to July, and the funds from Beijing were net purchases for 4 consecutive months. Among them, the net inflow of funds from the north in April and June exceeded 50 billion yuan, which is the two months when the net inflow was relatively high during the year.
Wang Delun, chief strategic analyst at Industrial Securities, told the Securities Daily reporter that the continued net buying of funds from April to July was mainly due to the fact that the new coronary pneumonia epidemic was fundamentally under control, the resumption of the work and production proceeded in an orderly fashion and the economy was the first to recover and recover. In addition, the lifting of restrictions on QFII / RQFII quotas in the financial sector, the expansion of the QFII / RQFII investment scope and the launch of SPSA centralized management services by the Hong Kong Stock Exchange (Shanghai-Shenzhen-Hong Kong Stock Connect Northbound Trading Optimization Measures), etc., demonstrate the determination of the Chinese financial market to open up to the outside world. Favored by global investors.
The reporter noted that since this year, as of November 26, the net inflow of funds from the north on some trading days has exceeded 10 billion yuan, which could be directly related to the opening of the capital market and the implementation of reform policies. On June 19, a net inflow of funds from the north was 18.233 billion yuan, and on that day, the FTSE Russell Index increased the A-stock inclusion factor from 17.5% to 25%. On 9 October the “Opinions of the Council of State on the further improvement of the quality of listed companies” were released. On October 9 and October 12, Beijing Capital’s net purchase exceeded 10 billion yuan for two consecutive trading days of 11.267 billion yuan and 135.1 billion yuan, respectively. 100 million yuan.
In November, the return of funds from the north was evident. According to data from Eastern Fortune Choice, as of November 26, the cumulative net inflow of funds from the north reached 50.513 billion yuan since November, second only to April and June. Among them, on November 9, funds northward set a new high in net purchases in one day during the year, with a net purchase of 19.699 billion yuan.
In this regard, Wang Delun said that entering in November, due to factors such as the gradual clarity of the US general election situation and the considerable progress made in developing the new coronary pneumonia vaccine, the risk appetite for investments foreigners rebounded. “Overall, there are two main reasons for the continued net inflow of funds from the north during the year. This year, the Chinese economy has taken the lead in the world to recover and the economy is basically preparing; dividends the opening up of the financial sector to the outside world continue to accelerate and improve efficiency “.
Zhang Qiyao, chief strategy analyst at Guosheng Securities, believes the dollar has continued to weaken since June of this year and the renminbi has entered an appreciation channel, which has promoted the attractiveness of renminbi assets and further promoted an increase in the allocation of A shares by Beijing funds.
Foreign capital will continue to flow in over the next 5 years
From the layout point of view, this year, the capital from the north has accelerated the influx of the technology sector. According to data from Oriental Fortune Choice, a Securities Daily reporter found that as of November 26, foreign investors had the highest net purchases of shares in the electronics industry this year, with more than 1.4 billion shares, followed by chemicals and steel. Net purchases exceeded 1.3 billion shares.
“Going forward, core assets will continue to grow independently. Since this year, foreign capital has embraced core assets in a broader sense.” Wang Delun said that the flow of capital from the north has three characteristics this year. First, Shenzhen Stock Connect far surpasses Shanghai Stock Connect. The accumulated net inflow of Northbound funds from Shenzhen Stock Connect is around 100 billion yuan, while the net inflow of Shanghai Stock Connect is only more than 40 billion yuan. Secondly, the small and medium-sized innovation sector has performed well. Over the past three years, the net inflow of funds from the main board to the north far exceeds that of small and medium-sized enterprises. The board of directors and the growing business market showed a “world in three parts” model this year; third, the traditional foreign-funded financial and consumer sectors have performed poorly this year. The most important sectors for net capital inflows from the north are industry, information technology and materials.
“This shows that foreign capital not only buys blue chips and consumes white horses, but the fundamental resources and superior leaders of various sectors, especially the emerging growth represented by ChiNext, will become one of the key directions for foreign capital to continue to unfold in future, “explained Wang Delun.
From a Beijing Capital Holdings’ market value perspective, the three industries of food and beverage, medical biology and home appliances hold the highest market value. Zhang Qiyao told the Securities Daily reporter that from the point of view of the sector allocation of northbound funds, consumption is still in a heavy position and core businesses with stable profit yields are still favored; from the perspective of position changes, northbound funds have had some impact on the tech and cycle sectors this year. Increase your position and lighten your position in the financial sector.
Regarding the future flow of funds to the north, Wang Delun believes that “At the moment, the world’s best assets are in the Chinese stock market. I am optimistic about the continued inflow of trillions of foreign capital over the next five years. Medium-term , China’s high-quality equity assets are cheaper: China’s economic recovery is clearer, valuations have advantages, and capital market reforms and innovations will help increase foreign capital’s focus on Chinese assets. ” .
“In the long run, first, the correlation coefficient between A shares and the US stock market is low, reflecting the benefits of multi-market allocation; second, a weaker US dollar is good for emerging markets. and China will benefit the most; third, the volatility of A shares has decreased and has a higher allocation value; finally, At present, foreign holdings represent only 5% of the market value of A shares, compared 15% in the US and 30% in Japan and South Korea. The proportion of foreign shares in A shares still has room to double, “Wang Delun said.
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