North Capital Strong Return: No Fear Of Interference And Then Inflow Nearly 100 Billion Bet On Consumer Stocks To Break The Valuation Ceiling

On June 2nd, close to 2 billion of the net capital inflow from north to the end of June 2nd, which means that only two trading days in June, the net inflow of north capital has been close to 12 billion yuan, continuing the strong inflow performance since April.

But unlike the continuous large-scale inflow of capital in 2019, the influx and outflow of northward capital experienced a roller coaster wave in 2020 because of the epidemic and the unusual volatility of overseas financial markets.

First, in the early February, after the A share market resumed trading, the company bought a lot of money, and in the short term, nearly 100 billion capital was flowing fiercely. But then the epidemic continued to spread throughout the world, and the European and American markets plunged, and the northward capital turned to a safe haven mode. In a short span of a month, it completed a 100 billion scale net outflow. In the middle of March, it returned to the "plus matching" track under the influence of internal and external environmental changes.

It is worth noting that when the recent Sino US trade friction has escalated into a variable of uncertainty, the market has begun to pay attention to whether the trend of inward capital inflow will encounter second changes in a year.

Judging from the recent continuous net inflow of north capital, the market generally believes that the uncertainty of Sino US trade frictions has not interfered with the trend of net inflow of capital in North. It can be clear that the large-scale net inflow trend of the capital in north is stable, and there will be 200 billion -3000 billion yuan in the next year.

There are still hundreds of billions of inflows into space in the year.

Once again, the return of the northbound capital to the net inflow trajectory can be found that since March 24th, the north capital has begun to stop the operation of a large net sale and tentatively "reflux". By the middle of April, as the external market risk coefficient gradually reduced, north capital was formally re entered on a large scale.

From March 24th to date, more than two months, the north capital has only 8 trading days as a net outflow, and the remaining 40 close trading days are all net inflow. During this period, the net inflow of north capital accumulated over 90 billion yuan.

In the month of April, the inflow of capital in North China was close to 50 billion yuan, and the net inflow in May was around 30 billion. At present, there are more than 10 billion capital inflows in just two trading days in June.

There are clear reasons behind the massive influx and outflow of the first two northbound funds during the year, and this time the background of the northbound capital returning to the additional track is clear.

The core factor of the return of foreign investment is that the risks of overseas, especially the European and American markets, will be lifted in the near future. Xie Chao, an analyst at Everbright Securities, said: "the return of funds in the north is consistent with our prediction in the two quarter strategy. The liquidity crisis caused by the panic collapse of US stocks and the rise of the US dollar index has been resolved, and the growth rate implied by the valuation of the A share market has been lower than the long-term potential growth rate of the economy, and has entered the interval worth worth investment. The quality assets of A shares should be restored. "

On the other hand, Zhang Qiyao, a strategist at Guosheng securities, also suggested that since the outbreak of the current outbreak, the Federal Reserve's unlimited QE has opened up the global monetary easing, and Europe and Japan have followed the policy of stimulus and treatment. Especially since March, the periphery risk-free interest rate center has shifted rapidly, and the Sino US long debt spreads have broken 2% in late May, hitting a new high in the past 10 years. On the other hand, the epidemic still has a great impact in other parts of the world, and many areas still have a long time to go from normalizing to resuming work. In the context of high interest rates, A shares, as the first asset to take the lead out of the impact of the epidemic, have welcomed the global fund.

However, the uncertainty of Sino US trade friction has emerged again, and the market is also worried about whether there will be a second trend reversal in the past year, showing a net outflow.

In this regard, Zhang Qiyao said: "after half a year, the friction between China and the United States has started again, but it has not constituted the core contradiction of the market. On the other hand, the peripheral market continues to rebound, and risk appetite repair promotes foreign capital to increase A shares. Reflected in the capital market, despite the increasing tightening of Sino US relations and escalating frictions and sanctions, the global stock market rebound has not been pushed forward since May. The VIX index has maintained a downward trend since March, and peripheral risk preferences have not been significantly affected. The continuation of the external market has become another important promoter of foreign capital continuing to add A shares.

Many market participants also believe that in the long run, the international capital of A shares is still far from matching. Even if the external uncertainties increase, the logic of the initial stage of foreign capital admission will not change at all. In addition, from the second half of this year, although the internationalization process of A shares is postponed, the trend of foreign capital inflow is expected to continue. Some agencies believe that there are still 200 billion -3000 billion foreign investment increments in the second half of this year.

Ze Hao investment partner Cao Gang also told reporters: "at present, the proportion of A shares held by foreign investors is still lower than that of the United States and Japan, or even worse than that of Korea. At present, foreign capital allocation of A shares is still at an earlier stage. Even if there are many uncertainties this year, foreign investors will eventually return to the path of adding A shares, and we can confirm that the A shares of foreign funds are relatively accurate in recent years. Fixed trend, incremental foreign investment can still be expected.

Boosting consumer stocks to break valuation ceilings

The continuous reflux of foreign capital in the past few months is not simply reflected in the data, but also in the market, especially in the recent big consumption concept, which is one of the core driving forces.

Since May, large consumption segments such as food, beverage and medicine have gained the top edge. Many leading stock prices have frequently hit new heights, and the big consumption sector has again become a "bull share concentration camp".

Another proof of the concept of big money in Bejing capital betting is that, recently, the US group, Hua test, Sophia and tiger pharmaceutical four companies were all exposed to foreign ownership due to 26% of their foreign ownership, which is also rare in history. Three of the four companies belong to the large consumer sector.

According to the current data, foreign capital continues to buy large consumer concepts, such as Guizhou Moutai, Heng Rui pharmaceuticals and other companies. According to the statistics of WIND, in the past month, the top three companies in North buying net are the US group, Guizhou Moutai and GREE electric appliances. Among them, Guizhou Moutai is a new high and its stock price is close to 1500 yuan mark.

It is undeniable that the valuation of consumer stocks has been at a historically high level, so what is the logic of foreign capital still being allocated? In response, Zhang Qiyao said: "we have always regarded foreign capital as the core variable of A shares and will promote the revaluation of core assets represented by big consumption. Recent consumption has risen again, valuations have exceeded the historical limit, and some investors are worried that A shares will be expensive. But from the global valuation system, we can see that most of the A shares are not expensive compared with the world, or their profitability growth is dominant.

Zhang Qiyao believes that the current valuation of the A share consumer stocks has three characteristics from the global market: first, compared with the US stock market, the leading PE value of most of the A shares in the consumer industry is high at present, and its valuation premium comes from high growth. The growth rate of A shares is generally higher than that of the US stocks. From the perspective of PE-G, the valuation of A shares is still in a reasonable range; second, the majority of the current A shares are consumer banks. The leading PB of the industry is more reasonable. From the perspective of PB-ROE, the valuation of A share consumption is more reasonable. Third, the domestic and foreign epidemic is misplaced, and the A share consumption leader takes the lead in the profit recovery. And compared with the global layout of the US stock consumption faucet, the A share consumption leader with lower demand under the impact of the epidemic has stronger performance advantages.

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