The Chinese Market Has Become A Global Capital "Haven" A Shares Into A New Value Depression.

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 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.

Citing the latest strategy report of Shenyin and Wanguo, it was pointed out that in July 24 - 30, foreign investment accelerated into A shares and shares in the stock market were $2 billion 140 million, plus $2 billion 580 million in July 31st and a single day peak in July 30th (US $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.

And this round

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%.

Since July, the stock market in Europe and the United States is no longer in the ascendant. A series of uncertain events, such as the crisis in Russia and Ukraine and the debt default in Argentina, are triggering the adjustment of the risk preference of global investors, and China's relatively calm market will undoubtedly become a new "safe haven" for global capital.

In recent years, overseas investors are constantly optimistic about China's A share market.

The latest report by EPFR, a capital flow monitoring agency, showed that over the past week, more than 1 billion US dollars went into Chinese stock funds as of August 6th.

So what advantages of China's stock market have strong attraction to foreign capital?

Zhao Xianwei: mainly two points.

First, our current relative bottleneck market is indeed a safe haven for global capital, because the central bank's regulatory target in the second half of the year will reduce the financing cost of the whole society. If the profit from financing falls, it will be a preference for our stock valuation, that is, the stock index will be favored. This will become a safe haven indeed.

Second, since July, our macroeconomic data gave investors a very clear expectation that the momentum of China's economic stabilization is quite obvious, and the anticipated change will also make China's market favored by funds.

Now

What is more concerned is whether the inflow of foreign capital is enough to continue to push up the upward trend of the stock market.

Zhao Xianwei: in the short run, this market will continue. There are two favorable factors.

First, the macroeconomic data released in China are better now, and export data and CP are relatively low. The overall macroeconomic data are relatively good.

Second, a very critical indicator of the market, the exchange rate of overseas renminbi, has recently seen a very strong appreciation of the RMB exchange rate system, indicating that funds are very optimistic about it.

Since July 29th, the Shanghai and Shenzhen board has ended the previous rally, and the 9 trading days showed strong shocks.

However, the market turmoil did not affect the level of the stock market.

Statistics show that in addition to the IPO listed this year, 80 stocks have hit a record high during the recent market turmoil.

From the industry perspective, the stock in the electrical equipment industry is the largest, reaching 10, followed by four industries such as electronics, machinery, automobile, medicine and biology. Each of the 9 stocks has reached a new high. In addition, four stocks in the chemical and computer industries also have a record high price during the recent market turmoil.

In contrast, none of the 7 industries, including banking, leisure services, food and beverage, commerce and trade, light industry manufacturing, non bank finance, and media, has reached a record high in the near future.

Can such a trend provide useful clues for investors to lay out the next stage of market?

Zhao Xianwei: such a market trend actually reflects a hot spot in the current market, that is, the difference between the plates, the difference between stocks.

Such a difference should be the trend of the whole A share market in the second half of the year, and it can be strong now.

Going down, maybe in the second half of the year, the market is not as strong as those in the front. This kind of plate difference is the way of future stock selection.

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.