A Shares Will Rise Northward To The Prophet On The First Day Of The Year To Reproduce Billions Of Net Inflows.

A shares go up, north to prophets.

On 2020, the first day of the new year, A shares performed well. Under the superposition of multiple positive expectations, each sector showed a general trend.

Among them, the north capital has become an important market promoter. According to the statistics of Wind, the net inflow of land shares to the north in January 2, 2020 was 10 billion 147 million yuan, and the Shanghai Stock Exchange and Shenzhen Stock Exchange entered 5 billion of the capital respectively.

It is worth noting that after the surge of capital inflows on the first trading day of the new year, the total net inflow of funds has exceeded one trillion yuan since the opening of the mainland stock market.

On the other hand, the process of internationalization of A shares will slow down in 2020, and the trend of continued inflow of foreign capital this year is very clear, but it is difficult to appear in comparison with the obvious increase in the previous two years, maintaining the scale of 2019 or the big probability event.

But in any case, foreign investment has become an important pole of domestic market investors, which is having a huge impact on market research, investment style and so on.

Foreign capital surges northward

In December 31, 2019, the northbound capital ended a net inflow of nearly a month, with a net outflow of 162 million. Such a signal made the market think that it would take time for the market to wait for the next round of North going capital sweeping in 2020. But on the first trading day of the new year, the capital in North China switched back to the rhythm of the previous surge.

From the point of time, the huge net inflow of northbound capital on the first day of the new year has laid a good foundation for the positive trend of the new year. But if we jump out of the new and old alternative point of view, north capital in recent years are actively adding A shares.

According to statistics, the net capital inflow of land shares in December last year was 72 billion 994 million yuan A shares, the highest monthly net inflow since the launch. In addition, the total net capital inflow of land stocks reached a record high of 351 billion 743 million yuan.

"That is to say, the huge inflow of funds from north to north is not a new investment logic, but rather a continuation of foreign capital's sustained and optimistic A share in recent years." In January 2nd, Cao Gang, an investment partner of zhe Hao, told reporters.

The chief investment officer of a large asset management institution in Hongkong has analyzed several reasons for the accelerated layout of foreign investment, many of which are also recognized by many foreign asset management institutions. He said: "first, the Sino US trade negotiations are warming and the appreciation of the RMB exchange rate is an important variable driving the recent admission of foreign capital. Second, the global stock market and US stocks have reached a new high, the VIX index has dropped to a low level, and the risk appetite has accelerated to accelerate the layout of emerging markets in foreign investment. All of these provide a good external environment for the layout of emerging markets in international funds, and the A share market with high valuations is undoubtedly a better option for foreign investment in emerging markets. "

The continuous large scale net inflow of funds is a fact that is taking place. It is also a very clear trend. But more importantly, the share of foreign capital in the A share market is higher and higher, which has a huge impact on the ecology of A share investors.

According to the statistics of Societe Generale Securities, as of the end of the three quarter of 2019, according to available data, the market capitalization of institutional investors in A shares has exceeded 6 trillion, accounting for 11% of the total market capitalization of all A shares, 14% of the market value of circulation, and 28% of the market value of free circulation. Now, with the inflow of qualification history in the four seasons, the total market capitalization of foreign capital in A shares will also be further higher.

"Compared with the data from the previous year, the market value of A shares held by foreign investors is close to 1 trillion and 800 billion, accounting for 3% of the total market value of the total A, and 8% of the market value of free circulation. Foreign investors have become an important influence on the pricing power of A shares, showing a three stand trend with public offerings, insurance and social security. With China's financial opening, foreign investors are further expanding their pricing power in A shares, especially as an important influence on the pricing power of core assets. Societe Generale Securities chief strategist Wang Delun think.

The trend is clear and the scale is slightly lower.

No doubt, in 2020 the first trading day of the new year, the net capital flow of billions of dollars in the north is a positive sign of foreign investment in many A shares. At the same time, reporters and a number of investment institutions and a number of brokerage analysts exchanged views that the market maintained a positive attitude towards foreign capital, especially the continuous net inflow of capital in the north for a long time.

But it is worth noting that continuous inflow is an optimistic judgement of the trend of net inflow of foreign capital. From the perspective of scale increment, many analysts do not think that the scale of foreign capital inflow will increase again in 2020, but to a certain extent it will drop slightly.

Among them, the slowdown of internationalization of A shares in 2020 is an important factor. In retrospect, the internationalization process of A shares in 2019 was orderly landing, and completed the three steps in the expansion of MSCI index respectively, and the first time the first two international indexes of FTSE Russell and S & P Dow Jones were first introduced.

After entering 2020, A has been identified as the third step in the first stage of the FTSE Russell index to be implemented. That is to say, the proportion of A shares in FTSE will continue to increase in March 2020, when the A share will reach 25%, and the proportion of the emerging market index of the FTSE Russell index and the global market index will reach 5.57% and 0.57% respectively. But compared with 2019, the process of internationalization of A shares should be slowed down, especially in the MSCI index.

"No matter from the experience of Korea or the factors restricting the increase of A share, the MSCI share will be brought into the MSCI process in the short term or slowed down after the expansion of MSCI in November 2018, and the passive incremental funds brought about by the expansion will be weakened in 2020. However, the increase of foreign capital A shares is a relatively definite trend in recent years. Incremental foreign investment can still be expected, but the scale may drop slightly. Zhang Xia, chief strategist of China Merchants Securities, said.

Among the constraints mentioned by Zhang Xia, the richness of domestic market risk management tools is an important bargaining chip. According to the current research and feedback, it is an important reason for foreign investors to hesitate to supply the risk management tools in the domestic market.

Corresponding to the overseas market, there are three stock index futures and Shanghai 50ETF options in the domestic A share derivatives, as well as the Shanghai and Shenzhen 300ETF options and stock index options just launched.

However, compared with the overseas market, the A stock derivatives currently offered by domestic exchanges are not rich enough to satisfy the needs of investors' management risk as a whole.

However, according to reporters, since 2019, regulators have made great efforts in enriching derivatives products. Some products that have been waiting for many years have been approved in recent years, and the financial derivatives will not be further expanded in 2020.

Judging from the above situation, Zhang Xia predicted: "in 2020, the A share will continue to be included in the international index process. If the hedging tools are in steady operation this year, they can provide more effective hedge tools for overseas institutional investors, and do not exclude the possibility of MSCI throwing out the expansion plan. However, in view of the fact that it will take 8 months or so to land on the ground, if MSCI puts forward suggestions for expansion in the quarterly adjustment of the first quarter of 2020, it will be possible to continue expansion next year. In addition, September 2020 is an important time to observe the expansion of the A share index by the FTSE Russell index. Taking into account the expansion of the arrangements to the final implementation still need a certain time interval, the first phase of the FTSE Russell index is completed, and the probability of further expansion in 2020 is not high.