Active Layout Of Hedge Funds, Hong Kong And Shanghai Through Hong Kong Stocks May Be A Shares

In addition to frequent contacts with foreign investors, foreign investment banks in Shanghai and Hongkong have actively promoted the market interaction and strategic speeches. UBS, Nomura, Standard Chartered and many other investment banks have used investors' annual meetings and lectures to give timely feedback to investors from Shanghai and Hong Kong. A number of Chinese and foreign investment banks' research shows that hedge funds are expected to become the main force in Shanghai and Hong Kong through the initial stage.

Goldman Sachs research pointed out that over the past three months, with hundreds of international investors in Europe, Asia Pacific and the Middle East, hedge funds and retail investors have been very positive about Shanghai and Hong Kong.

Sun Yiqian, managing director of Goldman Sachs stock exchange, said that the participation of overseas investors in the initial stage of Shanghai and Hong Kong will depend on market sentiment and other factors. It is expected that retail investors and hedge funds will be more interested in the early stage of the plan because they do not have direct investment in the A share market before the implementation of Shanghai and Hong Kong.

A large number of funds continue to flow into the market.

EPFR data show that in the week ending September 10th, about $1 billion 300 million of capital flows into Hongkong and Mainland China stock markets, and capital inflows rebounded sharply from last week's low level.

At the same time, ETF, which tracks A shares overseas, has a 280 million dollar inflow. The strong momentum of China's reform and the close proximity of Shanghai and Hong Kong have prompted capital to flow into China's stock market.

Guotai Junan Hongkong research summary shows that the hedge fund is the first batch of investors through Shanghai and Hong Kong, but the scale is not sure.

Previously, the cost of investing in A shares by QFII channel was very high, and the cost was about 1.2%-1.5%. It was directly through Shanghai and Hong Kong through 3/1000. Before and after the opening of Shanghai and Hong Kong, some early stage hedge funds may lock in the proceeds ahead of schedule.

According to historical experience, short-term hedge fund entry will increase market volatility, but because more than 80% of A shares are individual investors, the impact should be limited. In other emerging market countries, the proportion of international investors may exceed 30%, so in the long run, it will reduce market volatility.

Hedge funds and price difference traders may buy some investors who borrow part of the QFII quota, and then buy shares directly through Shanghai and Hong Kong.

The agency also believes that the Hongkong Asset Management Co's views on Shanghai and Hong Kong are inconsistent, and some of them are on the sidelines; the index funds are relatively passive.

If the index is included in the two quarter of next year, the index fund will invest only if the A shares are included. Although the initial laws and regulations can not be solved at the beginning, it will not have a very important impact.

Managers should invest in A shares to update prospectus, and regulators should approve. The first wave is not expected to participate in Shanghai and Hong Kong.

Liu Mingdi, director of China stock research at Nomura, said

Investors are very interested in buying A share market shares through Shanghai and Hong Kong through channels. If the amount of Shanghai stock exchange can be prepared at any time, it will attract more overseas long term funds to buy.

The reason why overseas investors see the major stock market is that it is hard to find such undervalued and high dividend investment targets in the world except for a few political risks.

Goldman Sachs research report believes that the long term fund will not abandon the important market of China because of the detailed rules of Shanghai and Hong Kong, or reduce the corresponding amount of funds.

Their concerns are also gradually being eliminated, which can effectively capture China's growth opportunities in A shares. The micro factors of stock selection will be based on the scarcity value, the correlation with GDP, the relatively high rate of return, the QFII position and the appropriate management incentive mechanism.