Wall Street Institutions Will Increase The Proportion Of A Shares To Form A Pressure On The Stock Market.

In the past two days, I visited a number of Wall Street institutions in New York, including investment banks, hedge funds, public funds and so on. On the whole, although the A stock market was flopping last year, some institutions were deterred and some investments in A shares were reduced, but now A shares have fallen out of value, and the attraction of funds for medium and long lines has increased. Many Wall Street agencies have indicated that the proportion of A shares will be increased through various channels.

Compared with the US stock index, which is at a historically high level, they believe that A shares will have higher potential returns in the coming year.

At the same time, a number of overseas investment agencies said, after a year of Chinese management efforts, June,

It is more likely to join the MSCI index. Once successfully joined, it is expected to bring hundreds of billions of dollars of new investment to A shares every year.

In April this year, MSCI Ming Sheng again raised concerns about whether A shares should be included in its international index to consult international investors.

As a MSCI index of over $10 trillion asset tracking, investors will make corresponding adjustments to their portfolios along with the change of index stocks, which will become an important step for China to attract foreign capital to support financial markets and enhance the international status of A shares.

Wall Street investment institutions mainly invest in A shares through QFII.

According to statistics, QFII has increased its holdings of A shares for two consecutive quarters, reflecting the recognition of the value of A shares by overseas investment institutions.

Official data show that QFII has opened a new A share account for 49 consecutive months.

In March of this year, the State Administration of foreign exchange launched a new QFII quota of 2 billion 621 million US dollars. At this point, 274 QFII have been approved and the total amount of investment has been issued for 80 billion 951 million US dollars.

From January to March, the number of new accounts opened by QFII was 7, 18 and 10, respectively. In the fourth quarter of 2015, the number of new accounts opened was 33.

QFII has opened a A share account continuously, and the investment quota has increased substantially, reflecting the recognition of the current valuation of A shares by outbound funds.

Especially in the first quarter of the market trend of recovery, QFII increased sharply, showing that the two quarter of 2016 and after market expectations are very optimistic.

From the perspective of industry preference, the banking sector is not considered. Machinery and equipment, food and drink are the two top 17 industries in the QFII market.

The mutual recognition of the fund between Mainland China and Hongkong started in July 2015 and opened up new investment channels for overseas investors. In February 2016, the State Administration of foreign exchange issued new regulations on investment quota, exchange management and investment in QFII.

To some extent, relax.

Among them, in terms of investment quota, relax the upper limit of investment quota of a single QFII institution, no longer set a unified investment quota for single institution, and no longer set the time limit for remittance of QFII investment principal in exchange management.

Two, after the past ten months of decline, A shares already have medium and long-term investment value. Now it is advantageous to enter the MSCI index and enter the A share cost control.

Three, the Shenzhen Hong Kong pass policy, which is speeding up now, is expected to dispel MSCI concerns and promote A shares into the emerging market index.

Four, after the A share is included in the MSCI index, the initial allocation ratio is only 5%, and the proportion will be gradually increased in the future, just like the RMB accession in November 30th last year.

Like SDR, A shares do not need to be fully qualified to join the emerging market index.

In the long run, overseas capital will become an important factor affecting the liquidity of domestic capital market, and gradually change the investment concept of A share market.

Compared with the US stocks whose index is at a historically high level, Wall Street investment institutions believe that A shares will have higher potential returns in the coming year.

They believe that the Chinese economy is beginning to pick up and will not go down sharply. The risk of corporate bond default, which the market is worried about, will be released after the Chinese government implements debt to equity swap and launches CDS (credit default swap contract).

In terms of monetary policy, the Fed's interest rate hike is slowing, the Central Bank of China will continue to be relaxed and market liquidity will remain ample.

Most of them are optimistic about the trend of A shares in the coming year.

In the next few months, they will continue to increase their holdings of A shares.

In terms of investment methods, some investment institutions that focus on A share are very different from those in the mainland.

For example, they pay more attention to the research and analysis of stocks, and pay less attention to short-term index fluctuations.

Because of the limited number of researchers, they will not pay much attention to many industries and stocks. They will closely follow and investigate deeply for valuable stocks.

When these stocks fall out of value, they will intervene when the stock price rises and sell when the valuation bubble occurs.

This is similar to the method of value investment advocated by Buffett.

If they buy promising stocks at a cheaper price and then continue to fall, they will make up for the cost rather than panic.

Therefore, the basis of their band is stock price, not mechanical setting time.

In judging the big trend of A shares, overseas institutions generally indicated that they did not have the advantage. I also invited me to introduce the way to judge the trend of A shares and hope to grasp the general direction in the future.