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MSCI's largest expansion takes effect during the year

Time: 2019-11-28 06:59 Source: Internet Author: admin Hits: 1321 times
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Yesterday, the A-shares closed collectively, the Shanghai Composite Index nearly fell below the 2900-point mark, and more than 2,000 stocks in the two cities fell. And the northbound fund has once again become the only bright spot. It was 2.421 billion yuan throughout the day, a net purchase for 10 consecutive trading days, and a cumulative net inflow of 58 billion yuan since November. It is worth noting that the net inflow of northbound funds was 21.43 billion yuan on November 26, and because the third expansion of MSCI took effect after the close of the year, this was also the largest single expansion of A shares. In the end of the day, there was a huge amount of funds to raise funds. The amount of pending orders in the funds was more than 50 billion yuan. The market generally believes that the expansion of MSCI and the continued inflow of foreign capital will form a long-term positive for A shares.

On November 8th, the international index MSCI announced that the inclusion ratio of A-share large-cap stocks was increased from 15% to 20%, and mid-cap stocks would also be included for the first time at 20%. This is the third time that MSCI has increased the A share weight in May and August this year, and this is the third increase in the year. The promotion of A shares will take effect after the close on November 26. After the completion of the implementation, the number of A-share targets included in the MSCI index increased to 472.

According to CICC estimates, the third MSCI expansion is expected to bring about 250 billion to 300 billion yuan of incremental funds to the A-share market, compared with the capital inflows brought by the two expansions in May and August this year. Increase by about 50% to 70%.

Huatai Securities Research Report believes that the expansion indicates that a large number of passively allocated MSCI index institutional funds and actively allocated foreign capital will flow into the A-share market, bring capital increase to A-shares, and inject long-term value investment into A-shares.

Industrial Securities estimates that the allocation of incremental funds to large-cap stocks and mid-cap stocks accounted for 57% and 43%, respectively. In terms of industry distribution, the proportion of incremental capital inflows in the financial, pharmaceutical, food and beverage, and electronics sectors ranks first.

Although the broad market has recently been repeatedly sawing around 2900 points, foreign capital is accelerating "buy, buy, buy". As of the end of the third quarter, foreign investors held a total of nearly 1.8 trillion yuan in the value of the A-share market through QFII (Qualified Foreign Institutional Investor), RQFII (Qualified Foreign Investor in RMB) and Northbound funds, accounting for 3% of the total A-share market value. Public equity funds hold comparable stock values.

Since the fourth quarter, the broader market has continued to fluctuate, but the pace of "buy, buy and buy" for northbound funds has not stopped. Last week, Northbound funds accumulated a net purchase of 5.747 billion yuan. On Monday, Northbound funds rushed to a scale of up to 5.6 billion yuan. On Tuesday, northbound funds inflowed 21.4 billion yuan, a record high. Yesterday, Beijing's capital continued to have a net inflow of 2.421 billion yuan. Northbound funds made a net purchase for 10 consecutive trading days.

So, what did Northbound funds buy? The data shows that on November 26, the largest purchase amount of Shanghai-Hong Kong Stock Connect was Guizhou Moutai, China Ping An and China Merchants Bank. Among them, the largest net purchases were China National Travel Service and China International Travel Service. The largest purchase amount of Shenzhen Stock Connect is Wuliangye, Ningde Times and Gree Electric, and the largest net purchase amount is Hehe. Regarding the sector, the “buy-buy” sectors of foreign investment at the end of the day were mainly electronics, banking, computers, and pharmaceuticals. Yesterday, Shanghai Stock Connect bought He and He the most, with purchase amounts exceeding 400 million yuan. The top three net purchases were CITIC Securities and Maotai of Guizhou. As for Shenzhen Stock Connect, the largest buyers were Helicom Precision, and the largest net purchases were Gree Electric Appliances, Wuliangye and Vanke A.

Statistics show that since November, there have been 146 companies with a net purchase amount of more than 100 million yuan from northbound funds. From the perspective of the distribution of the amount of additional positions in the industry of the relevant company, the information technology industry has the largest number, close to 9 billion yuan; the optional consumer industry is close behind, and it also exceeds 8 billion yuan. In addition, the industry, materials, finance, daily consumption and other sectors have more than 4 billion yuan. It can be seen that since November, the information technology and large consumption sectors have been the key focus of the Northbound Fund to increase their positions recently.

Some people in the industry believe that overseas funds have always favored industry leaders with stable profits and abundant cash flows. Together with the end of the year, large consumption, medical health, financial real estate, etc. may benefit first.

Some fund managers said that companies with high certainty, stable profitability and high performance tend to be favored by mature overseas investment institutions. Foreign capital prefers stocks with relatively reasonable valuation, high certainty, and a large margin of safety. The specific performance is the layout of blue chips. In the short term, foreign investors' preferences for blue chips will not change much.

At the current point, some fund managers said that from the perspective of valuation and other aspects, A shares have international appeal. At present, the valuation of the constituent stocks of the MSCI China A International Index is still at the bottom of history, and is lower than the mainstream wide-base index. There is a lot of room for upward repair of the target with performance support and low valuation. With the gradual advancement of the A-share internationalization process and the further improvement of China's capital market, the increase in the proportion of international capital in the A-share market will be a major trend in the future, and the investor structure and market investment climate will also usher in reshaping.

(Responsible editor: admin)
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