What Does Overseas Capital Flow Into A Shares?

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Xiaobian network to introduce to you is A shares open the door, overseas funds favor scarce varieties.

At present, both institutional investors and individual investors are still enthusiastic about Shanghai and Hong Kong.

Securities companies hope that Shanghai and Hong Kong will bring about a source of water for A shares in the short term and uplift the valuation center of A shares, which will help to change the investment pattern of A shares and boost the internationalization of the capital market in the long run.

Overseas investment bankers believe that the interconnected market between Shanghai and Hong Kong has created a second largest market with a global market value, which is attractive to overseas investors.

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In the market, it is worth noting that the plate with scarce value and blue chips with cheap valuation.

Overseas capital A shares hold a significant increase in stock market value.

Societe Generale Securities pointed out that since the "Shanghai and Hong Kong Tong" news released in April, with the preparatory work to advance, overseas funds ahead of the layout preparation.

Looking at the largest A50RQFII fund in the south, especially in the two quarter and the three quarter, with the anticipation of the "new normal" of China's economic stabilization, there has been a large net purchase in the past few months.

Due to the delay in the firing time of "Shanghai and Hong Kong Tong", capital inflow has been decreasing since October.

With the "Shanghai and Hong Kong Tong" set sail, the rush of overseas funds is expected to be reproduced.

In addition, at present, there are nearly 950 billion offshore renminbi stocks in Hongkong. The opening of Shanghai and Hong Kong will provide some impetus to the return of offshore RMB funds, especially those of blue chips with high dividend yield and high dividend yield.

At the same time, low-cost offshore funds through the way of Shanghai and Hong Kong to enter the mainland, but also help to improve the financing costs of the mainland's real economy, reduce risk free interest rates, and gradually increase the level of interest rates between the two places. It is also good to raise the valuation of A shares.

Shenyang Wanguo Securities also expressed the expectation for overseas incremental funds to intervene in A shares.

Shenyang Wanguo Securities pointed out that the reform and opening up of the capital market is a general trend and a step towards internationalization of the RMB.

With the Shanghai and Hong Kong pass and subsequent possible mutual recognition of China Hong Kong mutual fund and the A share being incorporated into the MSCI index and other events, the neutral assumption is estimated that the incremental capital to A shares will eventually reach 8000-12000 billion yuan.

Chen Li, chief strategist of UBS Securities, said that after the Shanghai and Hong Kong Exchanges, overseas capital is expected to continue to pour into the A share market.

Next June, a number of important index companies, such as MSCI, will again discuss whether A shares should be included in the international index.

Once A shares enter these indices, large international public funds will have to focus on A shares.

At the same time, with the acceleration of RMB internationalization process, if RMB convertibility before the end of 2020, then the weight of A shares in the international index will gradually increase from "small and micro" to "significant".

Chen Li predicts that in a year, the market capitalization of international investors in the A share market will rise from the current 350 billion yuan to more than 900 billion yuan, accounting for more than 8% of the total market value of circulation.

Chen Li also reminded that the positive impact of Shanghai and Hong Kong on A shares may be relatively limited in the early days of opening up.

On the one hand, some of the mainland investment institutions that have bought shares in Shanghai and Hong Kong through shares may gain a profit.

In November, some investors seeking absolute return may consider locking in revenue.

On the other hand, because of some technical problems, such as liquidation and delivery, some large global public funds are difficult to deal with A shares immediately.

Liu Jinjin, chief strategist at Goldman Sachs, believes that the Shanghai and Hong Kong Tong plan actually integrates A shares and Hong Kong stock market, creating a large market with the largest market value in the world and the third place in the world with average daily trading volume.

At present, more than 70% of Chinese residents' assets are real estate, and only 6% of them are stocks. Shanghai and Hong Kong will bring diversified investment opportunities to investors.

Liu Mingdi, director of stock investment at Nomura, believes that China's capital market has been in a relatively split state. After the launch of Shanghai and Hong Kong, overseas investors and mainland investors will regard the segmented market as a whole market.

In the two city stock index for many years in the low position, Shanghai and Hong Kong will promote the two cities to usher in a structural bull market, increasing the power of collective market share index.

Liu Mingdi predicts that MSCI will be China.

It may rush to around 70 at the end of the year, and it is now around 63.

From the perspective of valuation and economy, overseas investors will be willing to buy high-quality stocks in A as long as there is no special economic downside risk.

Internationalization of capital market will speed up

In addition to attracting overseas funds to intervene in the A shares in the short term, most brokerages believe that this will be an important step in the internationalization of China's capital market, especially on the long-term impact of Shanghai and Hong Kong.

Northeast Securities pointed out that Shanghai and Hong Kong have important significance in promoting the development of both capital markets and RMB internationalization, helping to integrate the assets of China and abroad and enhance the coordination of Shanghai and Hong Kong stock markets.

For the mainland, the capital market is relatively independent from the international capital market. Although it can avoid the impact of international hot money to some extent, it also restricts the mature development of the mainland capital market. At the same time, the pricing of A shares is far away from the international financial market, which may result in the valuation of "barrier lake" and the risk can not be effectively released. For the Hong Kong stock market, the ability of Hong Kong stocks to resist international capital shocks will be enhanced and the stability of the stock market will be increased with the A shares.

China Everbright Securities said that Hong Kong and Shanghai Tong is not only a catalyst for short-term market, but also a long-term dividend policy to attract capital to invest in China and reassess the A share market. It will also affect or even change the investment structure of China's mainland stock market.

Shanghai Stock Exchange as a mode of cooperation between the two exchanges is the best pitional institutional arrangement before China's capital account has not been fully opened to the outside world, which has just begun for China's A share market.

First of all, Shanghai and Hong Kong have found a legal way to invest and preserve value for offshore RMB market.

By July 2014, RMB deposits in Hongkong alone had reached 936 billion 700 million yuan, an increase of 34.7% over the same period last year.

RMB deposits in Taiwan and Singapore have exceeded 250 billion yuan.

A shares will become an important investment target for overseas RMB in the future.

Second, the A share market is at the bottom of the valuation regardless of the international market and the history of the mainland.

The valuation depressions provide a higher margin of safety with increasing dividends.

33 overseas exchanges have signed a memorandum of capital cooperation with the Shanghai Stock Exchange.

Finally, through the Shanghai and Hong Kong links, the A share will be included in the global benchmark index (such as MSCI), which will further speed up.

Scarce varieties are still attracting attention

Goldman Sachs analysts believe that in the A share market, there are some scarce value plates worthy of attention, such as the Hongkong market does not have the liquor plate.

QFII heavy margin is also worth noting, because these stocks have passed the bottom-up analysis of relevant institutions, confirming that they are in line with the valuation framework of international investors.

In addition, we can also pay attention to the high degree of correlation with GDP growth, the discount of AH shares, and the stock with higher yield and stable dividend growth.

Nomura Liu Mingdi also said that overseas investors are interested in some relatively low and relatively scarce stocks.

In particular, the long line funds demand for A share blue chips is quite high. First, the valuation is cheap. At present, the blue chips of A shares are only half the shares of the S & P 500 index. Second, compared with China's huge economic volume and trade volume, the allocation ratio of overseas funds to China's stock is obviously low.

Liu Mingdi pointed out that China is changing the pattern of economic growth, and it is particularly concerned about the sectors and stocks that are expected to benefit from this "new normal", including consumer related goods and services, leisure tourism, environmental protection, alternative energy and technology.

Chen Li believes that overseas

Concerned about bottom-up stock selection.

Large overseas funds want to buy 1-2 stocks in Shanghai and Hong Kong for 5-10 years, focusing on consumption, medicine and TMT industries.

The investment themes of UBS, including Shanghai and Hong Kong, include reform, market share upgrading, consumption upgrading and policy support.