Wind information data shows that since the implementation of the Shanghai Hong Kong stock connect, as of November 17, the total transaction amount of northbound funds has reached 37.36 trillion yuan, and the accumulated net inflow has reached 1.12 trillion yuan. The total transaction amount of the southbound Hong Kong stock connect (including the Hong Kong stock connect under the Shanghai Hong Kong stock connect and the Hong Kong stock connect under the Shenzhen Hong Kong stock connect) reached HK $13.85 trillion, and the accumulated net inflow of southbound capital was HK $1.64 trillion.
According to the trend of changes in recent years, as of November 17, the total transaction amount of northbound funds reached 18.25 trillion yuan, accounting for 10.15% of the transaction volume of a shares, significantly increased. In 2017, 2018 and 2019, the proportion was 2.03%, 5.21% and 7.69%, respectively. In addition, northbound funds also continue to buy a shares. As of November 17, the net inflow of northward funds was 1270.21 trillion yuan. In 2017, 2018 and 2019, the net inflow of northward funds was RMB 1997.38 billion yuan, 294.218 billion yuan and 351.743 billion yuan respectively.
Why does smart money continue to love a shares? Zhang Xinyuan, head of the strategy team of Huatai Securities Research Institute, told Securities Daily that in recent years, the net inflow of northward funds has been maintained for four main reasons: first, policy factors. In recent years, the continuous improvement of the opening-up level of the domestic capital market is one of the key factors for the continuous inflow of foreign capital; second, the economic fundamentals, and the existence of economic relations between China and the United States The economic cycle difference and interest rate spread are the important factors to attract foreign investment in RMB assets; the third is the asset allocation factor, and the allocation gap and risk dispersion value are the other important factors for the long-term continuous inflow of foreign capital into a shares. From a global perspective, the weight of major markets in the international index roughly matches the market share of the market, while the weight of A-share in the international index is significantly lower than its market share, and the expectation of closing the long-term allocation gap will lead to long-term active capital increase; in addition, the correlation between A-share stock price and global equity market is low, and it has strong risk diversification value, so increasing a share can help to improve Under the foreign investment evaluation system, the Sharpe ratio and other benefit indicators of the portfolio; fourth, the cost-effectiveness factor, the quality of A-share assets has been further improved, and the horizontal comparison valuation is lower than the main overseas markets.
In terms of this year, there are two driving forces for the continued inflow of funds from the north. Zhang Qiyao, chief strategic analyst of Guosheng securities, told the Securities Daily that, first of all, the global economy suffered heavy losses due to the epidemic situation, while Chinas epidemic situation took the lead in effectively controlling and the economy took the lead in the global recovery. Therefore, from the perspective of global asset allocation, the investment value of Chinas assets has an obvious time advantage; secondly, since the second half of this year, the US dollar has witnessed a significant increase in investment value With the continuous weakening of RMB, RMB has entered the appreciation channel, which will further promote the attraction of RMB assets and further promote the pace of foreign capitals A-share allocation.
Expected to maintain long-term inflow
According to wind data, as of November 17, Guizhou Maotai is the most valuable A-share held by northbound capital. According to the reporters analysis, among the top 10 A shares held by northbound capital, there are 3 in the food and beverage industry, 2 in the household appliances and 2 in the bank.
For the trend of northward funds in the later period, Zhang Xinyuan believes that it is expected to maintain the trend of continuous inflow. First of all, from the perspective of relative fundamentals and the interest rate spread between China and the United States, the current RMB assets have better relative fundamentals and larger long-term interest rates. Foreign investment is expected to flow into RMB assets with better relative fundamentals and higher risk-free interest rates. Secondly, with the deepening of capital market reform, the asset structure and asset quality of A-share are expected to be further improved, and the overall attractiveness will be further enhanced; finally, with the continuous expansion of the capital market and the continuous increase of A-share weight by MSCI and other international indexes, the pace of A-share internationalization will continue to accelerate, and foreign capital is expected to maintain a continuous inflow trend in the future.
In the short term, foreign investment is expected to continue to flow in, benefiting from the faster than expected promotion of vaccine research and development and the boost of global risk appetite. Zhang Qiyao believes that in the medium term, after the global epidemic situation is effectively controlled, the global economy will usher in a comprehensive recovery, and the US dollar may usher in a repair. At that time, there may be a rebalancing of global asset allocation. In the long run, China is still an important engine of global economic growth, and A-share assets still have a high cost performance ratio, and the proportion of A-share foreign capital is still significantly lower than overseas mature In the future, with the further promotion of Chinas opening-up policy, northward funds will still maintain a long-term inflow trend.
Source: Yangqian, responsible editor of Securities Daily_ NF4425