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Cheng Dan, a reporter from the Securities Times
Recently, several international investment banks have publishedPowerballpreviousresultsThe A-share marketPowerballpreviousresultsWith the sound of "optimistic", foreign investors are also voting with real money. Wind data show that since the beginning of this year, northbound capital has accumulated a net inflow of about 68 billion yuan, far exceeding the cumulative net inflow for the whole of 2023.
Yang Delong, chief economist of Qianhai Open Source Fund, said that the stabilization and rebound of China's economy will further stimulate domestic economic growth, and foreign investment may continue to flow into the Chinese market. The allocation of foreign capital still tends to be in the direction of large market capitalization, low valuation and stable industry logic, which will allow some domestic institutions to adjust their strategies and follow the investment, thus attracting more domestic investors to intervene.
Foreign investors sing more A shares
Recently, a number of foreign institutions have adjusted their positive views on the A-share market. Goldman Sachs raised the target of the Shanghai and Shenzhen 300s from 3900 to 4100, which is about 15 per cent higher than the current level, which is the target at the end of this year.
Goldman Sachs is optimistic about the logic of the A-share market: first, the economic recovery is resilient and the economic recovery is stronger; second, the valuation of A-shares is still low, attracting domestic and foreign capital to enter the market; and third, various policies to support economic growth are gradually coming into force. and it will have an effect. Various factors promote the confidence of the A-share market, and A-shares have now entered the rising stage on the right side.
Coincidentally, JPMorgan Chase also maintains an optimistic outlook for the A-share market. Liu Mingdysi, chief Asia and China equity strategist at JPMorgan Chase, said that the basic scenario expectation for the target level of the MSCI China Index is 66 points, and the basic scenario expectation for the CSI 300 Index is 3900 points. At present, the performance-to-price ratio of Chinese stocks is improving, and many listed companies have reduced costs in the past year, and their profits and cash flow have improved. The growth rate of capital expenditure has declined, and this year is a period of performance recovery, and the stability of asset prices will help to sustain the recovery.
Liu Ming dysprosium said that since February this year, a series of new measures by regulators have stabilized the confidence of investors at home and abroad, including regulators relieving pressure on leveraged funds, and the State Council issued the third "National Nine articles." the proposal of strict access to issuance and listing, strengthening delisting, and strengthening the supervision of cash dividends have all stimulated the upward trend of the A-share market.
In the latest China stock strategy released by Meng Lei, a China equity strategist at UBS Securities, he believes that the A-share market has become of higher strategic importance to economic development. New quality productivity and self-controllable all-round development can not be separated from the stronger financing support of the stock market. Driven by the net inflow of global capital, the Chinese stock market has rebounded, and it is expected that the valuation discount of A shares relative to other emerging markets will narrow.
Lu Weiliang, head of Greater China Equity at Schroeder Investment, also said that policy support for real estate, especially in the financing of real estate developers and project completion, may help the market bottom in 2024, and market concerns about prices are beginning to lessen. Various industries are expected to achieve a balance between supply and demand by 2024, which are positive factors in the Chinese economy.
Real money and silver invests in A-shares
With the sound of "bullish", foreign investors are also voting with real money. Wind data show that since 2024, the cumulative net inflow of northbound funds has been about 68 billion yuan, while the cumulative net inflow of northbound funds for the whole of 2023 is only 43.7 billion yuan.
Recent buyback announcements of a number of listed companies show that compared with the end of the first quarter, foreign institutions such as JPMorgan Chase and Merrill Lynch International have increased their positions in A-share listed companies. Hongchuan Wisdom announced on May 14 that as of May 9, JPMorgan Chase held 1990 shares.Powerballpreviousresults.98 million shares. According to the quarterly report, the agency owns 1907 of Hirokawa Wisdom.Powerballpreviousresults.33 million shares. As of May 6, Merrill Lynch International and Barclays Bank have become the top 10 outstanding shareholders of Fantou, with a shareholding of about 695800 shares and 624000 shares respectively. Fantuo created a quarterly report showing that the two foreign-funded institutions did not appear among the company's top 10 circulating shareholders.
In addition to the stock market, foreign investors are also more active in the distribution of domestic bond assets. Foreign institutions held 4.05 trillion yuan of bonds in the interbank market as of the end of April, accounting for 2.9 percent of the total custodian volume of the interbank bond market, according to data released by the Shanghai headquarters of the people's Bank of China.
With regard to the reasons for the recent frequent increase in the size of China's stock market and bond market, China International Capital Corporation said that the recent inflow of foreign capital not only reflects the compensation of global capital underallocated to the Chinese market, but also verifies the improvement of China's economic fundamentals. whether global capital can continue to flow into China may ultimately depend on the prospect of economic repair. If the policy continues to make efforts to promote further economic repair, it is expected to help China's economic fundamentals continue to repair and enhance the confidence of global funds in the allocation of Chinese assets.
Foreign capital inflows may continue
The strong support of the policy of opening to the outside world has provided a boost for foreign capital to enter the Chinese market. Recently, the people's Bank of China, the Hong Kong Securities Regulatory Commission and the Hong Kong Monetary Authority jointly issued a document supporting the further optimization of the "swap" mechanism, guiding the infrastructure institutions of the two financial markets to launch standardized interest rate swap products in line with international standards, improving the supporting functions of duration management, and implementing other system optimization and fee preferential measures.
The CSRC has also co-ordinated the high-level institutional opening of the capital market by relaxing the range of eligible products of stock ETF under the Shanghai-Shenzhen-Hong Kong Stock Connect, including REITs into the Shanghai-Shenzhen-Hong Kong Stock Connect, supporting the inclusion of RMB stock trading counters into Hong Kong Stock Connect, optimizing mutual recognition arrangements for funds, and supporting leading mainland industry enterprises to list in Hong Kong.
With the successive landing of various promotion policies, the willingness of foreign capital to allocate Chinese assets will continue to increase. In the view of Cao Zhe, chief investment officer of Evan Zhilo, with the enhancement of the willingness of foreign capital allocation, the domestic capital market will get more financial support and investment opportunities, which will further promote the prosperity and development of the capital market. At the same time, the entry of foreign capital will also promote the system construction and standardized development of the domestic capital market.
In terms of allocation tendency, Cao Zhe observed that international capital is more inclined to allocate assets with stable returns and growth potential, such as Hong Kong stocks, A shares and RMB bonds, and also pays more attention to asset decentralization and risk management. This new allocation trend reflects the high attention and confidence of international capital in the Chinese market.
Wang Yi, a strategic analyst at Great Wall Securities, believes that the current scale of A-share incremental funds is still relatively limited, and the obvious warming of northbound funds has gradually become an important factor affecting the marginal changes in market style. Northbound funds are expected to continue to maintain steady net inflows throughout this year. rhythm.