Foreign Capital Bet On A Shares Is Unique.

Here world clothing shoes The Xiaobian of the hat net introduced the 200 points of A shares' low rebound, and foreign capital inflow hit a new high of 6 years.

With the withdrawal of hot money from developed markets such as Europe, emerging markets are once again popular. China's equity funds account for about 70% of the total emerging market.

China's economy seems to be relieved by the rebound in economic data, ample liquidity and the effectiveness of reform measures. Although the securities and Futures Commission [micro-blog] pointed out on Friday that the specific date for the launch of the Shanghai and Hong Kong links has not yet been determined, the amount of foreign capital flowing into the last week of July still shows that the A share market deserves attention.

Tencent finance quoted the latest strategy report of micro-blog, Shenyang (micro-blog), pointing out that foreign investment accelerated into A shares and shares in China on 24~30 days, and 2 billion 140 million dollars in July 31st, plus $2 billion 580 million in July 31st, with a single day peak in July 30th ($760 million). On the whole, the weekly volume has exceeded the peak of foreign capital inflow in December 2012, a record high since April 2008.

Reporters noted that this round of foreign capital inflow and the fourth quarter of 2012, the same round of foreign capital inflows, capital flows into Hong Kong stocks first, and then to A shares, when foreign capital flows into A shares and China concept stocks for 24 weeks, of which nearly half of December, after a large amount of inflow, continued to push up the Shanghai stock index rose 13.7%.

　 Huge net inflow for two consecutive weeks

In the week ending July 30th this year, the net penetration of global emerging market stocks reached more than $2 billion, a record high of 77 weeks, of which China's stock base net turnover amounted to $1 billion 440 million, according to EPFR, a professional fund monitoring firm.

In the past week, international capital continued to flow into China's stock market, with net inflow of $1 billion 220 million in the week ending August 6th, the fourth highest level since the week of January 2, 2008. According to statistics from the daily economic news, China's equity fund has achieved net inflow for two consecutive weeks. As of the 32 week since January 1st this year, China's equity funds have realized net weekly turnover of $38 million 840 thousand per week, of which 15 weeks are net inflows.

In fact, a large part of these international capital comes from the stock market of developed markets. Data show that, due to the euro zone Italy and other countries in recession, coupled with the tension in the Middle East geopolitical situation, the European stock base over the same period net outflow of more than 1 billion U.S. dollars.

Since the fourth quarter of last year, there have been 4 large-scale inflows of international capital into A shares, respectively, in November, January, June and July. For the first time in November last year, China's top executives announced the decision on several major issues of deepening the reform, and foreign investors rekindled confidence in China's stock market. According to data released by EPFR, as of November 27th last week, China's share based net turnover amounted to $573 million, a record high in the past 10 months.

　　 A shares The market also showed a sharp rise. According to statistics, from November 15, 2013 to December 4th, the Shanghai composite index increased by nearly 8%, and from November 27th to December 4th, Shanghai index rose by 4%.

The second intensive inflow took place in January of this year. In the week ending January 15th this year, China's stock base net inflow reached US $660 million, a record high in the past year. As of January 29th, China's stock market has achieved a net inflow for 6 consecutive weeks, indicating that international capital is continuing to flow. Coincidentally, A shares bottomed out from January 20th to February 20th, and the Shanghai composite index rebounded by 9%.

The third large-scale net inflow took place in June of this year. According to statistics, from the week ending June 11th to the week ending June 25th, the fund has been flowing into China's stock market for 3 consecutive weeks, with a total net turnover of US $1 billion 200 million. The Shanghai Composite Index dropped to 2010.53 points in June 20th, reaching a new low of 1 months, and from June 21st to now, the Shanghai stock index has rebounded 10% at most.

　　 Foreign capital bet on A shares is unique.

What is the impact on the A share after the net inflow of the same scale in the end of July this year? The daily economic news reporter found that, since the second half of 2008, the only thing comparable to the scale of the hot money inflow at the end of July has been traced back to the week ending December 12, 2012. At that time, the Chinese stock market attracted a net inflow of $1 billion 436 million, which not only succeeded in absorbing gold for 14 consecutive weeks, but also created the largest single weekly net income since April 16, 2008.

In fact, the crazy capital inflow has lasted for more than 3 months. Over the 14 weeks from September 12, 2012 to December 12th, more than 30 Chinese stock bases attracted a total net inflow of US $6 billion 600 million.

EPFR pointed out in the report at that time that the market expected the Chinese government to implement a series of economic reforms in the early 2013, coupled with the recent favorable economic data to jointly boost investors' enthusiasm for China's stock market. From the industry that was inflow, energy, industry, raw materials and non essentials were most favored by funds, indicating that overseas investors preferred domestic cyclical stocks.

Foreign capital crazily also promoted A shares to go out of a round of rising prices. In December 4, 2012, the Shanghai Composite Index hit a 1949.46 lowest point after a series of months of decline, hitting a new low since January 2009. But from December 5th to February 18th February 18th, the stock index rose by 24% at most. Since December 12th, when the net inflow reached a new high of 4 years, the Shanghai stock index rose at most 17%, which is enough to show that the foreign capital's bet on A shares is quite accurate.

Hong Kong dollar (7.7512, 0, 0%) surge suggests A shares go up

In fact, the exchange rate movements of the Hong Kong dollar also illustrate the problem. In the week ending July 18th, the US dollar touched a minimum of 7.7497 against Hong Kong dollar, the lowest since July 2009, indicating that foreign investment is madly flooding into the Hong Kong dollar, and the purpose is likely to further invest in Hong Kong stocks or A shares.

The Hong Kong dollar movement also forced the Hongkong monetary authority to buy US dollars last week to prevent the appreciation of Hong Kong dollar and further maintain the linked exchange rate system that lasted for 21 years. It is understood that the US dollar maintains a 7.75 to 7.85 exchange rate against the Hong Kong dollar. The HKMA will buy US dollars from licensed banks when the exchange rate of HK $7.75 is HK $1. When it reaches a guarantee of HK $7.85, it will sell US dollars, so that strong and weak convertibility guarantees can operate symmetrically with the HK $7.80 of the linked exchange rate as the central point.

What is interesting is that in the past 5 years, the US dollar against the Hong Kong dollar fell below 7.75, the lower end exchange rate under the linked exchange rate system is corresponding to a A share going up. For example, at the end of October 2008, the US dollar fell to 7.7478 against the Hong Kong dollar. At that time, the Shanghai composite index was still at 1729, but after 1 months, the Chinese government launched the 4 trillion stimulus policy and promoted the Shanghai stock index to 3412 in July 2009. This means that the stock index rose by nearly 1 times in the short 9 months.

Looking back in October 19, 2012, the US dollar fell to 7.7498 against the Hong Kong dollar, when the Shanghai stock index was at 2128, but by February 8, 2013, the stock index had risen 14% to 2432 points. As the stock index rebounded all the way, the dollar rose to 7.7552 against the Hong Kong dollar.

According to statistics, dollar The Hong Kong dollar fell for the first time in June 20th this week, when the stock index was at 2027 points, and has closed up 8% as of last Friday's closing point at 2027.