The last trading day of the Year of the Tiger, northward funds continue to sweep the goods! Tailgate bidding net buy nearly 1.5 billion yuan, all day net buy 9.256 billion yuan, for 13 consecutive trading days net buy. Among them, the Shanghai stock pass net buy 4.211 billion yuan, deep stock pass net buy 5.046 billion yuan.
Since this week, the northward funds cumulative position of 48.515 billion yuan, a single week of net buying amount hit the second highest ever, only slightly lower than the record of 48.8 billion yuan set in December 2021. since January, the northward funds have accumulated a total of 112.531 billion yuan of net buying, a new Shanghai and Shenzhen stock pass single-month net buying a new high. And, this figure has exceeded the total annual net buying in 2022 (90.020 billion yuan), while also exceeding the total annual net buying in 2014, 2015 and 2016.
Why the big return?
The big buying by northbound funds since the start of 2023 has exceeded the expectations of many organizations. As of the close of trading on January 20, northward funds bought a total of 112.531 billion yuan this month, more than the total net buying in 2022 (90.020 billion yuan), while this figure also hit a new high in net inflows in a single month since the opening of the Shanghai and Shenzhen stock passes.
"The level of this foreign capital inflow has indeed exceeded our previous expectations." Shenwan Hongyuan Securities in the research report bluntly. Shenwan Hongyuan believes that the substantial return of foreign capital and the sharp appreciation of the yuan at the same time, reflecting the typical economic fundamentals of the "strong U.S. weak" expectations. The speed of RMB appreciation has also exceeded expectations, and since the beginning of the year, the RMB median price has appreciated by the second largest margin in history since November 2014, indicating that foreign investment in China's post-epidemic recovery has a very high degree of recognition.
CICC believes that the recent inflow of foreign capital behind may contain a variety of factors: first of all, the pace of Fed rate hikes eased, the global liquidity environment is marginally better; secondly, the domestic policy changes, the factors that suppress the economy is expected to gradually ease, the recent economic fundamentals to repair the expectations of the faster; once again, the part of the industrial policy of the marginal changes in the impact of the market's risk appetite, overseas investors more concerned about the 2022 the end of the central economic work conference on the platform economy and other industries, and the recent marginal changes in some industrial areas, such as the resumption of the issuance of overseas game license numbers and so on.
Industry Securities mentioned that the recent large inflow of foreign capital is by no means a "whim". From the point of view of global asset allocation, 2022 overseas capital allocation of Chinese assets weakened momentum, and even once a significant outflow, but the current whether the economy, the risk of real estate, or the Fed's interest rate hike concerns, are significantly alleviated and improved. China's assets cost-effective enhancement is attracting foreign capital to accelerate the return of flow.
While the mainstream institutions' expressions are different, but their core viewpoints are consistent is that foreign capital for China and overseas economic fundamentals, expectations for domestic policy, superimposed on overseas interest rate hikes slowed down after the exchange rate changes, *** with the result of a substantial return of foreign capital.
Explosive buy weighted blue chips
From the inflow structure, 2023 since the beginning of the year northward funds are re-layout of their positions in the industry, presenting an overall equal proportion of the characteristics of the increase in positions, the inflow of panels to the financial, consumer-oriented.
From the buy amount, the northward funds equal proportion of the characteristics of the position is reflected in its continued to buy large consumption, large financial, new energy three big direction of the leading stocks.Choice data show that Guizhou Maotai, Ningde Times, Wuliangye, Ping An and other benchmark stocks of the northward net buy amount of funds year-to-date have exceeded 5 billion yuan, of which the Ningde Times with more than 8 billion yuan of money topped the list.
Midea Group, LONGi green energy, China Merchants Bank, BYD, Gree Electric Appliances, Aier Ophthalmology and a host of other "Ning portfolio" "Mao index" constituent stocks of the net buying amount also ranked the top of the first.
From the northward capital holding proportion change, Exton with 2.82 percentage points of the increase in holding amplitude ranked first in Shanghai and Shenzhen. In addition, Yunlv shares, Dongfang Risheng, Anke biological shareholding ratio increase also more than 2 percentage points.
CICC analyzes that the recent market repair process, foreign capital positions in the consumer, pharmaceutical and other industries have performed more strongly. After more than a year of retracement of the foreign equity positions in the stock style, the recent repair is obvious, and there is still room for upward movement. CICC said its fitted index of foreign-weighted A-share holdings currently has a forward price-to-earnings ratio of 10.0 times, which sits at 0.57 times standard deviation below the historical average since 2018, and is still 42% worse than the valuation high of February 2021 (17.2 times).
However, Societe Generale Securities split the northward funds from the perspective of the trading disk and the configuration disk, arguing that the northward funds configuration disk and the trading disk have a clear **** knowledge in adding positions in industries such as food and beverages, household electrical appliances, banks, non-banking financials, and pharmaceuticals and biotechnology, but the two types of funds for power equipment, transportation, utilities, agriculture, forestry, animal husbandry and fisheries, machinery and equipment, communications and basic chemicals, etc., there is a greater divergence.
How much room is there to add to your position in 2023?
It is worth noting that in the 2023 annual strategy released by the brokerage firms earlier, "the return of foreign capital" is the unanimous expectation of the institutions. CITIC Securities said that foreign capital is one of the main sources of incremental capital in 2023 A shares, with the slow appreciation of the yuan in 2023, the net inflow of foreign capital is expected to return to more than 100 billion level.
CICC expects that the annual net inflow of overseas funds (QFII/RQFII plus northbound funds) into A-shares in 2023 may range from 300 billion yuan to 400 billion yuan.
Industry Securities said, looking back at 2017 to 2022, northward capital inflow has a clear "open door" effect, foreign capital in previous years will be in January to February to significantly increase positions in A shares, accounting for the proportion of the annual net inflow of the scale of the median of 20.9%. Foreign capital at the beginning of the year significantly increased positions in the industry is expected to continue to lead the market.
From the historical market point of view, in addition to a brief period of pressure in 2022, the northward capital since the opening of the annual net buy-in amount also basically showed year-on-year growth. At the same time, through the historical experience review, northward capital inflow after a month of A-share market can often get more obvious gains.
Guangdong Securities selected 10 trading days within the net inflow of northward funds of more than 50 billion yuan as a representative point of time as the object of study. From the performance of the All-A Index, GEM Index and CSI 1000 Index, one month after a similar rapid and significant inflow of northward funds, the probability of the aforementioned three major indices rose by more than 70%, but the probability of A-share gains as well as the cumulative gains after three months have fallen, and the momentum of the net inflow of northward funds has also further decayed.