Foreign Capital Flowing Into A Shares Will Continue In The Future.

Chen Li, chief strategist of UBS Securities, who highly emphasized the good role of Shanghai and Hong Kong Securities, once again stressed the importance of Shanghai and Hong Kong in promoting the internationalization of the A share market.

He said that from the short-term market reaction, it is possible that there will be speculative capital and some absolute profit oriented investors before the formal opening of Shanghai and Hong Kong.

But in the medium to long term, capital flows into the A share market through Hong Kong and Shanghai will continue in the future.

Chen Li predicted: "in the coming year, overseas investors will become a very important investor on the A share market, which will have an important impact on the A share market and some stocks."

Chen Li said that the legal issues of international capital allocation and taxation are the main obstacles that impede A shares from being included in the MSCI emerging market index. However, these problems are expected to be solved through the continuous improvement of Shanghai and Hong Kong's links.

If A shares are included in the MSCI emerging market index next year, large global public funds will have to configure A shares.

The entry of a large number of international institutional investors will change the current investor structure and valuation system in the A share market.

According to Chen Li's estimate, "Shanghai and Hong Kong pass 300 billion of the quota, QFII is expected to increase 700 yuan, 80 billion yuan in the next year, RQFII increase 160 billion to 180 billion of the quota, then by the end of 2015, the size of overseas investors can reach 900 billion yuan.

This is equivalent to 9% of all A shares' free market capitalization, which is equivalent to 75% of all China's public fund holdings.

The Shanghai and Hong Kong through the Hong Kong stocks through the institutional views are more cautious.

Lu Wenjie, a H-share analyst at UBS Securities, believes that mainland institutions have continued to reduce their positions in the Hong Kong stock market in the past four quarters. There will be no strong willingness to raise positions after the Hong Kong stocks are opened, and most of the individual investors have no reliable channels to invest in Hong Kong stocks, and are expected to become the main participants in the initial stage of Hong Kong stocks.

Reporters also learned that investors in Shanghai and Hong Kong through the process generally optimistic about opportunities brought by Shanghai and Hong Kong through.

Some people who participated in the Hong Kong and Shanghai mutual promotion activities said they were very concerned about the new investment opportunities brought by Hong Kong stock exchange. Hong Kong and Hong Kong's cross generation will quickly dispel the barriers between the two markets. The two-way flow of capital, parallel comparison of assets, mutual coverage of research and exchange of personnel visits will become the common concern of the two investment circles.

For the type and pace of international capital inflow into A shares, agencies generally believe that the first batch will be dominated by small hedge funds.

Because of the need to renew legal documents and regulatory authorities for approval, the public fund can not use Shanghai and Hong Kong through the first time.

Index funds are more passive, and they need to wait for the decision of the relevant index establishment.

The investment target of international funds in the A share market will be chosen around the three criteria of cheaper market, high dividend yield and Hongkong market, and the benefit of China's economic growth.

Such sectors as military industry, environmental protection and large scale medicine are considered the most attractive to international funds.

For the earliest possible investment

A small and flexible hedge fund, Chen Li commented: "this type of investor is very different from the current QFII style.

The main investment entities are sovereign funds and large public funds, while overseas investors in Shanghai and Hong Kong through the initial stage are mainly small and flexible hedge funds. Their strategies for stock selection will also vary, and most of them will be invested in A shares with relatively cheap stock.

Liu Jinjin, chief China strategist at Goldman Sachs, said that in the US roadshow, some pension funds and insurance funds were interested in increasing the allocation of the A share market through Shanghai and Hong Kong. Moreover, "some overseas investors are considering shifting their positions in Southeast Asia to China".

Liu Jinjin told reporters: "

The valuation is relatively cheap, and the earnings ratio of around 8 times is especially attractive for investors in the medium and long term overseas.

In addition, the current allocation of overseas investors in the Chinese market is very low, but with the launch of Shanghai and Hong Kong, the strategy of overseas investors will undergo tremendous changes.

"Combining the Hongkong and A share market will form the second largest trading market in the world, which is important for overseas investors from a large scale."

Liu Jinjin said.

"Overseas investors are concerned about the dividend yield of A share 4-5%, which is also a channel for them to diversify their portfolio risk."