On December 5th, Shenzhen-Hong Kong Stock Connect ushered in the second anniversary of “opening the carâ€. The data shows that foreign investment is active, and the average daily turnover of Shenzhen Stock Connect has risen more than five times from the first month of opening to nearly one month, and the accumulated net purchase of two years has reached 266.873 billion yuan. In the “sweeping goods†list, new economic enterprises have been favored.
At the time of Shenzhen-Hong Kong Tongqing, Huluntong entered the countdown stage. On the evening of December 4th, the Exchange announced that CICC UK became the first Huluntong Global Depositary Receipt (UK) cross-border conversion agency to complete the filing, which means opening soon. With the acceleration of the opening up of the capital market, a number of seller analysts estimate that the incremental foreign investment will be in the range of 300-500 billion next year.
Foreign capital is optimistic about Shenzhen high-tech enterprises
On December 5th, the Shenzhen Stock Exchange released the "Resignance Sheet" for the second anniversary of Shenzhen-Hong Kong Stock Connect. The total turnover was 4.15 trillion yuan, which has become one of the important channels for overseas investors to invest in China.
In the past two years, the acceptance of Shenzhen-Hong Kong Stock Connect by foreign investors has increased. The data shows that the daily average turnover of Shenzhen Stock Connect has increased from 1.541 billion yuan in the first month of opening to 9.629 billion yuan in the most recent month, an increase of 524.85%.
From the perspective of capital flow, Shenzhen-Hong Kong Stock Connect has continued to maintain a net inflow of cross-border funds for two years, with a cumulative net purchase of 266.837 billion yuan.
This year, with the expansion of the daily quota and the northward see-through mechanism, a series of measures have been successively launched, and long-term overseas funds have entered the market. Take the change of A shares by MSCI into each time node as an example. After being officially included on May 31, the average daily turnover of Shenzhen Stock Exchange within three months (May 31-August 31) increased significantly. The average turnover was 9.010 billion yuan, an increase of 6.26% over the previous three months. After the proportion increased to 5% on August 31, the Shenzhen Stock Connect transaction was further active. The average daily turnover in the most recent month has increased to 9.629 billion yuan. .
In terms of investment preferences, the investment value of the new economy is recognized by international investors. From the perspective of the distribution of funds in Shenzhen Stock Connect, international investors prefer emerging industries and high-tech enterprises in Shenzhen, with small and medium-sized board and GEM transactions accounting for 55.87%, and holding stock market value accounting for 46.29%. As of December 5, among the 5 targets of Shenzhen Stock Connect, which accounted for more than 10% of the shares, 4 were small and medium-sized board and GEM stocks; of the newly-held shares holding more than 5%, 61.54% were small and medium-sized enterprises. .
In fact, in addition to the “eye-catching†of Shenzhen Stock Connect, in the near future, the overall trend of foreign-invested A-shares has accelerated. Just in the past November, the net inflow of funds to the north reached 46.913 billion yuan, becoming the second highest peak in the year. In the first three trading days of December, there was still a net inflow. According to Wind statistics, in 3-5, the land stock exchanges ushered in increment funds of 12.141 billion, 4.292 billion, and 1.139 billion, totaling 17.572 billion.
A brokerage analyst in East China said in an interview with a 21st Century Business Herald on the 5th that "mainly because of the multiple rounds of regulatory release, such as the liberalization of mergers and acquisitions, the improvement of the repurchase system of listed companies, the new regulations of bank financial subsidiaries, etc. Sino-US trade relations are improving. In this context, A-share investment sentiment is picking up, and foreign investment has a willingness to buy."
100 billion "ammunition" is on the way
The pace of capital market opening is clearly accelerating. At the time when Shenzhen-Hong Kong Stock Connect was two years old, another pilot of the interconnection mechanism was “open to traffic†soon, and Huluntong will land this month.
On the evening of December 4th, the Shanghai Stock Exchange announced that China International Capital (UK) Co., Ltd. had filed a Huluntong Global Depositary Receipt for the UK cross-border conversion agency, and CICC UK became the first overseas brokerage company to complete the filing. And 3 days ago (1st) Huatai Securities issued GDR and listed on the London Stock Exchange has been approved by the China Securities Regulatory Commission. This means that Huluntong has entered the countdown.
For the foreign-invested A-shares next year, analysts generally predict that 300-500 billion "live water" will enter the market.
Tian Chen Securities analyst Liu Chenming recently said that in the future, in the expectation of increasing MSCI ratio and successful enrichment, we can expect more incremental funds. It is predicted that this number can reach between 400 billion and 500 billion.
Guosheng Securities analyst Zhang Qizhen estimates that in the short-term, if the A-shares include the FTSE Russell Index and the MSCI inclusion factor can be upgraded as scheduled, the foreign investment in 2019 will increase to about 370 billion. In the long run, the capital allocation of foreign capital is expected to reach trillions of dollars after it is fully integrated into the international index system.
The CITIC Securities Strategy Team believes that the policy restrictions on foreign investment in A-shares are gradually being liberalized. It is expected that the proportion of foreign-invested A-share market capitalization in the next decade is likely to increase to around 20%. In their view, foreign capital will become the institutional investor with the highest share of the stock market, twice as many as the public fund and three times the insurance asset.
Among the foreign-invested institutions, Gao Ting, China's chief strategist at UBS Securities, said on the 3rd that optimism, earnings forecasts and market views have become more biased. “If the tariffs imposed in July 2018 are completely removed (optimistic scenario), the MSCI China and CSI 300 indices are expected to grow at a rate of 10.3% and 8.9% respectively in 2019. In this scenario, H shares and A The valuation of the stock market will pick up."
Some foreign-funded institutions have expressed cautious wait and see. A small private equity fund partner in Hong Kong said in an interview with the 21st Century Business Herald on the 5th that "the A-share decline this year exceeded our expectations. Although the valuation is already very cheap, we feel that the operating space will not be too Big.†He is mainly worried about the impact of overseas market volatility on A-shares. “US stocks are facing adjustments, and A-shares will be more affected by external influences as they accelerate.â€
A Hong Kong-based brokerage analyst said on the 5th that its foreign-invested institutional clients were concerned about the slowdown in China's economic growth. “At present, A-shares are at a low level, and institutional customers may rebound. However, in the medium and long term, institutional clients are more cautious about earnings data, which is considered to be a relatively large repressive factor.†In his view, incremental foreign capital still relies mainly on Driven by passive funds.
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