GF strategy: the guiding significance of the overall size of foreign countries

GF strategy: the guiding significance of the overall size of foreign countries

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  [Guangfa Strategy]Foreign re-perspective and foreign influences from the perspective of epidemic situation-liquidity “source of living water” series of reports (4) Source: Dai Kang (Jin Qilin analyst) Strategy World Report Summary-● 1Q A-share impact:How to look at the impact of foreign investment in this outbreak?

The current market analysis often compares A shares in 2003 directly, and does not fully consider the impact of foreign countries under the opening of the capital market. We believe that foreign exchange factors need to be considered when analyzing the impact of the epidemic, and lead to three major aspects: First, when comparing Hong Kong stocks with 2003,Appropriate; Second, it is expected that the net over the week after the foreign holiday will exceed 23 billion U.S. dollars, and when the net inflow is resumed, focus on supplementary confirmed / suspected case changes; third, it is expected that the A-shares after the holiday will be affected by the cycle and offline consumption.Leading technology growth routine.

  In-depth foreign re-examination-● 2Q A-share impact: How have foreign countries affected A-shares in recent years?

No matter in general or in structure, the deep-seated laws of the operation of the A-share market itself are routinely important. In recent years, the core leading factors of A-shares that have replaced each other, many more means are boosting effects.

In terms of style, the interpretation is led by dragons.

In terms of the industry, outsourcing subsidies have pushed up the estimated hub of some industries.

  ● 3A question of A-share impact: some changes in foreign preferences for A-shares?

In terms of industry, large foreign exchange stocks hold large consumption and financial positions, with marginal directional technology and cyclical spreads; in terms of estimates, the characteristics of low positions have gradually disappeared; in terms of concentration, the concentration of heavy stocks has declined.

  ● 4Ask the impact of A shares: Does foreign country have a leading guiding significance for A shares?

The guiding significance of overall budget leadership.

At the industry level, although wealth and inflows are relatively slightly more important in guiding high-impact industries than in low-impact industries, they are not statistically significant.

  ● 5Q. What’s the difference between the domestic wealth and foreign and domestic investment in increasing or reducing positions?

The increase and decrease of foreign capital in recent years have not been completely synchronized.

In 19 years in foreign countries, public funds increased their positions while insurance lightened their positions, reflecting that the insurance of absolute returns is conservative, while the relative returns of public funds are more aggressive, and foreign exchange is more important in the long run.

  ● 6 Ask domestic and foreign investment comparison: What is the difference between foreign and domestic investment in industry preferences?

Domestic public funds are similar to the replacement of Beishang Fund to the industry. Public funds are slightly more preferred than Beishang Fund for electronic, pharmaceutical and other growth industries.

The ratio of domestic insurance to the capital of the north, and the industry’s priorities are converging. Domestic insurance especially prefers undervalued industries such as banking, real estate, public utilities, and construction.

  ● 7Ask domestic and foreign capital comparison: What is the structure of foreign investors and how is the performance of returns?

With reference to Hong Kong, the overseas investors of Hong Kong stocks are the United States (23% of the transactions), British (17%), and Europe (excluding the United Kingdom, 10%). The foreign exchange is better in terms of income.Broad market and common stock base.

  ● 8 Q: What are the factors that influence foreign flows?

The main factors are: the degree of capital market openness in developing countries, the RMB exchange rate, global monetary policy and liquidity, and global risk appetite.

  ● 9Funds: How much passive capital flows does the international index bring?

18 years of passive capital flow of about 6.9 billion US dollars, accounting for only about 2% of the entire northward capital.

The carry-on factor has increased significantly in 19 years, and the international index has brought a significant increase in passive funds to about 52.

9 billion, accounting for 15%.

  ● 10 Q: Capital flow: How big is the size of foreign inflows into A shares in the future?

It is expected that the proportion of A-share foreign holdings will increase from 3% to about 10% in the next 10 years, with an average annual net inflow of 300-400 billion US dollars.

  Risk reminder: foreign exchange may be deficient in measurement, the epidemic is uncertain, and exchange rate changes affect foreign exchange.

  The introduction is expected to accelerate the inflow of foreign capital into A shares, and foreign influence in A shares is also increasing.

From 16 to 19 years, funds from the mainland stock exchange to the north flowed into A shares of US $ 60.7 billion, US $ 19.7 billion, US $ 294.2 billion, and US $ 351.

7 billion, showing a trend of accelerated A-share inflows for four consecutive years.

The size of foreign stock holdings has also continued to increase, until December 31, 19, the size of foreign holdings reached 2.

1 trillion yuan, combined with domestic insurance

4 trillion), public funds (2.

(4 trillion) to form a tripartite standing.

  In the process of increasing foreign investment influence, a large number of stock investors have mistakenly considered foreign exchange as the core factor of the past few years. We believe that no matter how much or structurally, the recent few years may become the core factor of the stock line.More foreign budgets are boosting rather than interventional.

In the past few years, the nature of foreign investment has been constantly improving, and sometimes the market performance is consistent with the direction of foreign countries, but we need to recognize that correlation is not equal to causality, and the depth of the market itself is more important.

In some stages, foreign countries have only complied with the market operation rules, rather than intervening in the market operation.

We believe that foreign countries can be used as more important reference factors, but they should not be understood as the core determinants, let alone the use of foreign performance as a judgment logic.  This article rethinks foreign investment in three dimensions: the impact of foreign investment on A-shares, the comparison between domestic and foreign investment, and capital flows. The original source is traced to clarify the impact of foreign investment and its reference significance in investment.
Among them, in the impact of foreign capital on A shares, we deeply analyzed whether foreign capital is really the dominant factor in A shares in terms of total volume and structure, whether foreign capital has a leading guiding significance for A shares, and what changes have occurred in foreign capital preferences recently; internalIn the comparison of foreign investment, we also found that as an institutional investor, foreign capital and domestic insurance and public funds increase and reduce positions are not completely consistent, and industry preferences are also different. This has a certain relationship with relative income / absolute income 南京夜网 and the length of the assessment period,Furthermore, it analyzes the difference in the performance of domestic and foreign investment returns. In terms of capital flows, we summarized and analyzed the four-factor framework that affects foreign capital flows, and re-sorted the scale of passive capital flows in the past few years.Looking forward.
  The recent epidemic of new coronaviruses has become the focus of attention in the market. We have also focused on the impact of foreign investment from the perspective of the epidemic.
Some investors directly reviewed and compared the A-shares in 2003, which may not fully consider the impact of foreign capital on the improvement of the openness of the capital market. We believe that the factor of foreign capital needs to be fully considered when analyzing the impact of the epidemic.
This article focuses on analyzing and solving the following three problems: ① Which one is more appropriate to choose Hong Kong stocks / A shares when compared with the 2003 resumption; ② What is the scale of short-term foreign capital outflows and when to resume inflows after the market opening;What to pay attention to in terms of short-term industry configuration.
  The main body of the report: A. Impact of A shares: How to view the impact of foreign investment in the outbreak?
  A new coronavirus epidemic occurred at the end of 19, and investors in A shares compared with the SARS period in 2003 to try to deduce the impact of the epidemic on A shares.
  The direct review and comparison of A shares in 2003 may not fully consider the impact of foreign capital on the improvement of the openness of the capital market. We believe that the factor of foreign capital needs to be fully considered when analyzing the impact of the epidemic.
Here we focus on the following three questions: First, which one is more appropriate to choose Hong Kong stocks / A stocks when compared with the 2003 review?
Second, what is the scale of short-term foreign capital outflows after the opening of the market and when will the inflows resume?
Third, considering the flow of foreign capital, what should be paid attention to in terms of short-term industry allocation?
  1.

1 Which one is more appropriate to choose Hong Kong stocks / A stocks when comparing with the 2003 review?
  At the transaction level, it is necessary to pay attention to the difference in the degree of openness of the capital market. In 2003, A shares were relatively closed, and A shares are currently more open.
Based on: ① There are often large differences between closed and open markets in economic theory, and the results of the mechanism may be completely opposite; ② The A-share trend during the epidemic in 2003 was completely opposite to that of Hong Kong stocks, at which time the Hong Kong stock market was more international.
We believe that it may be more appropriate to choose an internationalized Hong Kong stock market for comparative analysis.
The mechanism of closed markets and open markets in classical economic theory may be completely opposite. Take the Mundell Fleming model as an example. The currency policy of a country under a fixed exchange rate system in a closed market is effective in the short term, while the currency of that country in an open market is effective.The policy is not effective in the short term.
From the SARS performance during the SARS period in 2003, the performance of the A shares and the performance of the Hong Kong shares were completely opposite.
With the national response as the dividing line (China listed SARS as a legal infectious disease on April 13, 2003), we divided November 2002 to March 03 into the pre-SARS epidemic period and April to May 2003 intoLate SARS outbreak.
In the early stage of the epidemic (2002 / 11-2003 / 03), the HSI fell by 9%, and in the late stage of the epidemic (2003 / 04-2003 / 05), it rose by 10%. After that, Hong Kong stocks entered a four-year bull market.
At that time, the Shanghai Composite Index rose 29% in the early stages of the epidemic, but fell 11% in the later stages of the epidemic.

The performance of A shares and the Hong Kong stock market is completely opposite. From a logical point of view, the Hong Kong stock market was relatively more forward-looking at the time, and the degree of SARS fermentation in the early stage of the epidemic was uncertain. Therefore, the Hong Kong stock market mainly reflected a decline.SARS will be effectively controlled, so the Hong Kong stock market stopped falling and rebounded, and subsequently began to interpret the logic of economic fundamentals rebound, entering a four-year bull market.
  1.2 What is the scale of short-term foreign capital outflows after this market opening and when will they resume?
  In the short term, there is a clear risk-off of foreign investment in the market after the holiday. We estimate that the net outflow of foreign investment in the week after the holiday will be around 23 billion yuan.
At the time of resuming net inflows, we can focus on the changes in newly diagnosed cases and new suspected cases. It is expected that the added value will decline, especially when there is a continuous decline, foreign capital can resume net inflows.
  The probability of a net outflow of A-share capital during the period of 18 years when major assets have been in a safe-haven mode is close to 90%. Combined with the changes in the prices of major asset types during the Spring Festival holiday, the net outflow of foreign capital within one week after the opening of the Spring Festival is2.3 million yuan.

How to predict the scale of outflow of foreign capital?
Since the interconnection mechanism has only been in operation since the end of 14 years, it is difficult to predict the scale of foreign investment flows by comparing the flows of foreign investment during different epidemic periods.
Considering that changes in certain factors often have an impact on the prices of large categories of assets, capital flows are accompanied in this process, and capital flows are often proportional to the magnitude of asset price changes.
If we believe that asset prices can fully reflect changes in factors, then we do not have to choose the epidemic period, but only need to observe the flow of foreign capital under the same general asset changes.
Based on this relationship between asset prices and capital flows, a regression equation for capital flows can be constructed to make predictions.
During the Chinese New Year market break, overseas countries showed obvious risk-avoidance behavior, that is, bonds and gold rose, stocks and industries fell.
References to the weekly frequency of 18 years have seen 9 periods of rising bonds and gold, and falling stocks and industries. Of these, 8 times of foreign capital experienced net outflows during the week.
In the selection of the dependent variable, in view of the rapid increase in the scale of foreign capital stock, we did not simply use the absolute scale (the scale of foreign capital flow in the current week) but rather the relative proportion (the flow of foreign capital in the week / the cumulative net purchase size) as the dependent variableIn the selection of independent variables, in order to minimize the correlation interference between the various variables, the change in bond yields selected the US 10Y Treasury bond yields, the stock market fluctuations selected the Hang Seng Index, industrial commodities selected LME copper and COMEX gold.The goodness of fit of the regression equation can reach 0.
90 (the value is between 0 and 1, the higher the better), the corresponding measured foreign capital flow ratio for the week is -2.

2%, corresponding to a net outflow of about 23 billion yuan a week.
  At the time of resuming net inflows, we can focus on the daily changes in newly diagnosed and suspected cases. It is expected that when the value of newly diagnosed and suspected cases declines daily, foreign capital is expected to resume net inflows.
With reference to the experience during the SARS period in 2003, the pre-epidemic EPFR funds mainly showed outflows in emerging markets, while the post-epidemic EPFR funds gradually shifted from outflows to inflows in emerging markets.
The outbreak started in December 19, and as of January 30, 20, the daily new confirmed & suspected cases have not entered a clear downward trend.We believe that we can pay close attention to the daily changes in newly diagnosed and suspected cases. When these two indicators show a downward trend, we can consider that the epidemic is in its later stages and foreign investment is expected to resume net inflows.
  1.3 What do you need to pay attention to in terms of industry allocation considering the flow of foreign capital?
  It is expected that A-shares will be relatively affected by the epidemic after the holiday period (cycle affecting labor-intensive real estate infrastructure chain) and offline consumption (such as leisure services, cinema lines, traditional retail, and delivery), which will have relatively small impact on technological growth.Some, it is recommended to focus on technological growth (consumer electronics, new energy vehicles, games).
During the Spring Festival holiday (20/01 / 24-01 / 31), there is a four-day trading time for Hong Kong stocks.
In addition, foreign capital currently enters A shares from Hong Kong mainly through the interconnection mechanism. Therefore, the industry performance of the Hong Kong stock market can be roughly referenced to speculate the behavior of foreign capital at the industry level.
During the Spring Festival holiday, industries with relatively better performance of Hong Kong stocks include medical equipment and services (-1.
6%), food and supplies retail (-2.

2%), software and services (-2.
8%), media (-3.

1%), Utilities (-3.

6%), etc., and industries that have fallen more than 6% have technical hardware and equipment (-9.
5%), semiconductors and equipment (-7.
7%), durable consumer goods (-7.
0%), cars and parts (-6.
9%), consumer services (-6.
4%), energy (-6.
4%), food and beverage (-6.
1%), real estate (-6%).
Taking into account the influence of foreign investment in the home appliances, food and beverage, leisure services, building materials, transportation and other industries of A-shares is relatively large (measured by the proportion of free-flow capital holdings in free circulation market value), it is expected that the affected by the epidemic will be relatively largeIt is a cycle (affecting the start of labor-intensive real estate infrastructure chain) and offline consumption (such as leisure services, cinema lines, traditional retail, delivery, etc.).
We judge that the event shock usually does not change the previous sector logic. The liquidity shock caused by the large decline in the opening of the market will make the GEM adjustment larger. However, if the rebound is stabilized, it should also lead to the growth of technology.
It is recommended to pay attention to the growth of technology (consumer electronics, new energy vehicles, games). Second, the impact of A shares: How has foreign investment affected A shares in recent years?
  Many A-share investors mistakenly believe that foreign capital is the core factor of the past few years. We believe that foreign capital is not the core dominant factor of A-shares in recent years, both in terms of total volume and structure.Rather than leading role.
In the past few years, the importance of foreign investment has indeed continued to increase, and sometimes the market performance and the direction of foreign investment are exactly the same, but we need to realize that correlation is not equal to causality, and the deep-seated laws of the market itself are more important.
In some stages, foreign capital just conforms to the laws of market operation, rather than dominates the market operation.
We believe that foreign investment can be used as a relatively important reference factor, but it should not be understood as the core leading factor, let alone the use of foreign investment performance as a judgment logic.
  2.1 Aggregate: Foreign capital cannot dominate the trend of A-shares. Foreign capital is not the core dominant factor of A-shares at the aggregate level.
Since the establishment of the interconnection mechanism in 2014, there has been a net inflow of funds of RMB 60.7 billion, RMB 199.7 billion, RMB 294.2 billion, and RMB 351.7 billion from 1619 to 1919, showing a trend of accelerated inflow of A shares for four consecutive years.
In particular, the scale of the net inflow of funds to the north has jumped to the level of about 200 billion yuan since 17 years, a significant increase in scale compared to previous years.
Some investors believe that foreign capital has dominated the trend of A-shares in the past few years, but this is not the case.
18 years is the best example. The net inflow of funds from Beijing to the north in 2018 was 294.2 billion yuan, an increase of nearly 50% compared to 17 years.
However, during the same period, A-shares fell significantly, and the Shanghai Composite Index fell by about 25% in 18 years.

  2.2 Style: Changes in the supply and demand pattern of A shares have promoted the dominant style of the broader market, and accelerated foreign capital inflows have played a supporting role. Since 16 years, with the ecological changes in the supply and demand pattern of A shares, the style of the broader market has continued to outperform. Hengqiang, the dragon leader.
The A-share ecology has undergone profound changes since 16 years. From the perspective of the stock supply side, China has entered the era of the stock economy, with 16-17 years of physical supply-side reforms and 19 years of financial supply-side reforms continuing to advance. China ‘s economic concentration in the industry has continued to increase.Leading companies present the Matthew Effect Hengqiang.
From the perspective of stock demand, long-term investors such as foreign investment and insurance have continued to enter the market, and demand for large-cap blue-chip stocks with better fundamentals has continued to increase.
Under the ecological evolution of the A-share supply and demand pattern, the broader market style continued to outperform.
  The 16 years of accelerated foreign capital inflows into A-shares has contributed to the broader market style.
Since 2016, the inflow of Beishang funds has continued to accelerate. From 16 to 19 years, the inflow of Beishang funds into A shares was 60.7 billion yuan, 1997 billion yuan, 294.2 billion yuan, and 351.7 billion yuan. During this period, the large-cap index continued to outperform the small-cap index.If there has been no foreign accelerated inflow of A-shares since 16 years, considering the ecological changes in the supply and demand layout of A-shares in recent years, the style of the A-share market will still be relatively dominant, but it has been accelerating and accelerating since 16 years.Dedicated to the extreme.

  2.Three-year estimated hub: external funding has pushed some industries to increase their estimated hubs over the past 16 years. Industries with higher influence have increased relative to foreign exchange influence. The estimated hubs have become more prominent, replacing the estimated hubs of some industries.Boosting effect.

Considering that the PE estimate may be passively increased due to the decrease in net profit, the PB estimate is used to compare the changes in the estimated center of various industries.

In addition, in order to eliminate the impact of the overall market changes, relative A-share non-financial PBs are used instead of absolute PBs.

From the perspective of the share of Beishang Capital holdings in the free market capitalization, the top five industries with the most influence of Beishang Capital are home appliances, food and beverages, leisure services, building materials, and transportation. Their 16-year relative A-share non-financial estimatesThe value center has increased to a certain extent, among which the food and beverage are the most typical. From the beginning of 16 to the end of 19, its relative PB rose by about 111%, and the relative PB of home appliances and building materials industry rose by 37%, 37%. Delivery and leisure services did not change.Obviously, the relative PB dropped slightly by 3% and 5%.

In the five industries with the smallest capital influence in the north, the defense military, textiles, nonferrous metals, chemicals, and mining, from the beginning of 16 to the end of 19, their relative PB centers have almost no change from the market, and even some of them have declined.

Among them, textile and defense, defense and mining, mining fell by 31%, 27%, 4%, nonferrous metals, chemical industry rose slightly by 10%, 9%.

  2.4Investor structure: Foreign countries have become the second largest institutional investors in A shares, which has promoted the development of institutional influence. At present, foreign capital in A shares has become the second largest institutional investor in A shares.

Since the opening of the Shanghai-Hong Kong Stock Connect at the end of 2014, foreign investment in A shares has grown rapidly.

In the internal structure of institutional investors, foreign capital has continued to increase in the proportion of major A-share institutional investors. According to the data of the top ten shareholders disclosed in the A-share financial report, foreign capital has become the second largest institutional investor in A-shares in 2017, second only toDomestic public offering funds.

  The proportion of A-share individual investor holdings is declining, and it is expected that the continuous inflow of A-shares will continue to promote the growth and influence of A-share institutional investors.

Since 2007, the proportion of A-share individual investor holdings has been declining, but it still exceeds that of professional institutional investors.

In recent years, A-share institutional investors, including foreign investors, long-term investors such as bank wealth management subsidiaries and pensions, have continued to enter the market. It is expected that the proportion of institutional investors will continue to increase in the future.

Foreign countries are investors with an accelerating growth rate among institutional investors. The continued inflow of foreign A-shares will continue to boost the influence of A-share institutional investors.

  Third, the impact of A shares: Some changes in foreign preferences?

  3.

1Industry configuration preferences: Marginally spreads from consumption, finance to technology, and foreign positions. Large consumption and finance take the lead in foreign positions, but on the margins, there is a recent cost of diffusion into the technology and cycle sectors.

As of the end of 19 years, the top five industries in A shares held by China Land Connect North were funds in food and beverages, home appliances, pharmaceuticals, biotechnology, banking, and non-bank finance. From the perspective of stock, they can still obviously replace large consumption and finance.

From a marginal point of view, starting from the second half of 19, the share of technology stocks represented by TMT among the positions of Kitakami Capital began to increase, and the share of technology stocks increased from 8 at the end of June 19.

71% rose to 11 at the end of 19 years.

25%.
Beginning at the end of the third quarter of 19th, the proportion of cyclical stock holdings in Kitakami Capital’s positions began to increase, from 8 at the end of August 19th.

02% rose to 9 at the end of 19 years.

59%.

  3.2Estimated preferences: The characteristics of low-estimation positions gradually disappear.

As of the end of March 17th, the market value of PE (TTM) held by Kitakami Capital holdings below 30 accounted for about 77%, while the proportion of the entire market at that time was 48%, indicating that the Kitakami Capital holding positions had a preferential underestimation characteristic.
As of the end of 19, the market value of PE (TTM) held by Kitakami Funds below 30 accounted for about 60%, while the proportion of the whole market was 64%, indicating that the valuation of Kitakami Funds held positions has been underestimated compared with the entire market.disappear.

  3.3 Concentration degree: the concentration of heavy storage stocks has declined.

The top 20 heavy stocks of the Northbound Fund in 19 were basically the same as in 17 years. The so-called heavy stocks were Guizhou Maotai, Ping An of China, Midea Group, Gree Electric, Hengrui Medicine, Wuliangye, China Merchants Bank, Conch Cement, Ping An Bank, Yangtze PowerWait.

Judging from the position held in March of 2017, the concentration of Kitakami capital heavy storage stocks has declined.

Among them, the top ten heavy positions accounted for 48 from the end of 17 years.

23% were admitted to 36 at the end of 19 years.

58%, the proportion of the top 20 heavy positions in the same period was 63.

26% canceled 48.

47%.

From the perspective of various industries, the proportion of leading positions in the industry also declined slightly.In the liquor industry, Guizhou Maotai’s share of the stock market held by its industry declined from 52% at the end of 17 to 49% at the end of 19; in the electronics industry, Hikvision’s share of the stock market held by its industry declined from 68% at the end of 1722% at the end of 19 years; in the pharmaceutical industry, Hengrui Pharmaceutical’s share of the industry’s stock market value dropped from 49% at the end of 17 to 33% at the end of 19 years; in utilities, Yangtze River Power accounted for the industry’s share market value79% fell to 63% at the end of 19 years.

  Fourth, the impact of A shares: Do foreign countries have a leading guiding significance for A shares?

  4.

1 In terms of major forces: Foreign countries have no obvious leading role in A-shares. The inflow of capital to the north has no significant leading significance for the A-share market as a whole.

Whether in the weekly or monthly dimension, the correlation between net foreign inflows and future market trends is almost zero.

The regression coefficient method can be used to calculate the fitting coefficient of the scale of the net inflow of capital in the north and the future rise and fall of the market to determine whether the capital inflow of the north has a leading significance for the overall stock market.The lower the correlation.

The closer the value of the fitting degree R2 is to 1, the higher the degree of fitting, indicating that two correlations have occurred.

Since the launch of the China Stock Exchange in 2014, in the weekly dimension, the A-share market’s return rate in the next week and the weekly inflow of capital from the north have been linearly fitted, and the corresponding linear equation has a degree of fit less than 0.

001, the correlation is very low.

In order to eliminate the influence of time and frequency, we also analyzed the correlation between rich capital flow and market performance in the monthly dimension.

The expected return of the A-share market in the next month is a linear fit with the monthly inflow of capital from the north, and the corresponding linear equation fit is about 0.

02, the correlation is still low.

  4.

2Industry level: Although the leading guidance significance of affluent inflows to high-impact industries is relatively slightly higher than that of low-impact industries, it is not statistically significant in terms of leading guidance in communication at the industry level.The correlation coefficient between the next week’s return rate of the influential industry and the net inflow of funds from the north of the week is basically zero.

1-0.

3 intervals, while the correlation coefficients of foreign low-impact industries are almost zero.

01 or less.

The leading significance of foreign inflows to high-impact industries is relatively slightly higher than that of low-impact industries, but from a statistical perspective, the leading significance of foreign investment at the industry level is not obvious.

For any industry, the proportion of the capital held by Beijing Capital to the free market capitalization of the industry is used as an indicator of foreign exchange influence.

The top five industries with the most foreign influence are home appliances, food and beverages, leisure services, building materials, and transportation. The correlation coefficients are relatively high. The correlation coefficients of the transportation, building materials, and food and beverage industries are 0.

26, 0.

24, 0.

16.

This shows that for the above industries, Beishang Capital expanded its scale that week, and the industry’s return rate in the next week will tend to be better, with a certain positive correlation; while the five industries with the least influence of Beishang Capital’s national defense military, spinning clothing, Nonferrous metals, chemical industry, mining, the correlation coefficient between the weekly scale of capital shift north and the return rate of the industry in the next week is 0.

Around 01 is even negative, indicating that there is almost no correlation between the two.

But statistically, the correlation coefficient is less than zero.

3 indicates that the correlation is extremely weak and can be considered irrelevant.

  From the perspective of monthly frequency, the leading significance of foreign inflows in the industry outlook is slightly weaker than the weekly dimension. Statistically speaking, the leading significance of foreign investment at the industry level is not obvious.

From the perspective of the share of Beishang Capital holdings in the free circulation market value, the correlation coefficients of the top five industries with the largest influence of Beishang Capital on home appliances, food and beverages, leisure services, building materials, and transportation are as high as 0.
31, while the lowest building material is -0.

2, while the five industries with the smallest capital influence in the north are the defense military, textiles, nonferrous metals, chemical, mining, and the correlation between the monthly performance of foreign countries is obviously different, with the highest defense military being 0.

14, the lowest spinning clothing is -0.

16.
  V. Comparison of domestic and foreign investment: What is the difference between foreign and domestic investment in adding or reducing positions?

  In recent years in foreign countries, the three major institutions of domestic public offerings and insurance have not synchronized their positions, and their behaviors have differed.

Taking the last three years as an example, only the three major institutions increased their positions in the same direction in 18 years, and the three major institutional investors increased and reduced their positions in 17 and 19 years.

In 17 years, the market was structurally differentiated. Foreign positions were increased, but insurance and public funds were all lightened. In the market’s bear market in 18 years, foreign exchange, insurance and public funds were increased in positions, reflecting the characteristics of institutional investors’ bear market dips.In foreign countries, public funds have increased their average positions, while insurance has reduced their positions. This may reflect that the insurance based on absolute income investors is relatively conservative, and that public funds based on relative income investors are growing and merging in the market.Promoted by the increase in the scale of fund purchases, it is relatively more aggressive.

The continuous inflow of foreign capital into A-shares in recent years is based on the fact that A-shares have fundamental advantages and overlap in opening up and opening up. The long-term investment concept has continued to increase the allocation of A-shares.

  6. Comparison of domestic and foreign investment: What is the difference between foreign and domestic investment in industry preferences?

  The proportion of domestic public offering funds to Beijing Capital is close to that of the holding industry. Relatively speaking, domestic public offering funds have slightly more substitutions than Beijing Capital for growth industries such as electronics, medicine and biology.From the perspective of industry, the top five industries held by Northbound Capital are food and beverage, household appliances, pharmaceuticals, banks, non-banks, and the top five industries held by domestic public funds are food and beverage, pharmaceuticals, bio, electronics, and non-banks.For home appliances, four industries in the top five heavy storage industries are the same.

In addition, the two largest heavy storage industries have invested in food and beverages, and the proportion of industry allocation is 17%.

The difference between the two is that domestic public offering funds have a slightly more preference for growth styles compared to northbound funds.

Domestic public offering funds hold the second position in pharmaceutical and biological industries, with an industry allocation ratio of 15%, which is nearly 5 shares higher than Kitakami Capital; domestic public offering funds hold the third position in the electronics industry, with an industry allocation ratio of 11%, Which is 5 mergers higher than Kitakami Capital.

  The ratio of domestic insurance to the capital of the north, and the industry’s priorities are converging. Domestic insurance especially prefers undervalued industries such as banking, real estate, public utilities, and construction.

The complete details of the positions of domestic insurance companies have never been announced. According to the data of the top ten shareholders of listed companies, the size of domestic insurance companies’ holdings in the consecutive 19Q3 was 645 billion US dollars, which accounted for about half of the direct positions of insurance companies.

By comparison, the top five industries held by Kitakami Capital are food and beverage, household appliances, medical and biological, banking, and non-banking, while the top five industries held by domestic insurance institutions are banks, real estate, utilities, medical and biological, and building decoration. The differences between the twoCompetitiveness.

In the allocation of the domestic insurance industry, banks account for up to 55%, which is 45 subdivisions higher than the capital of the north. In addition, the allocation ratio of domestic insurance to real estate, public utilities, and construction is 16%, 5 respectively.

5%, 3.

3%, which is 13, 3, or 2 digits higher than the northbound funds.

Can be polished, domestic insurance institutions are more conservative in the industry configuration, and are more likely to pursue absolute underestimation of the industry.

  VII. Internal foreign comparison: What is the structure of foreign investors and how are their returns performing?

  With reference to the Hong Kong stock market, the main overseas investors in the Hong Kong stock market are the United States, the United Kingdom, and Europe (excluding the United Kingdom).

As the detailed shareholding and transaction structure of A-share foreign countries is not disclosed, the main reference is the foreign-investment transaction structure of the Hong Kong stock market.

Considering that overseas investors invest in A shares mainly through the Hong Kong Stock Connect, the structure of foreign investors in the Hong Kong stock market is of certain reference.

Except in Mainland China, the main overseas investors in the Hong Kong stock market are the United States, the United Kingdom, and Europe (excluding the United Kingdom).

Taking 18 years as an example, excluding the mainland of China, the top three trading value of foreign investors in the Hong Kong stock market are the United States, the United Kingdom, and Europe (excluding the United Kingdom), with the proportion of trading value being 23 respectively.

1%, 17.

2%, 10.

1%.
The top three transactions in 2016 (except for the Chinese mainland) are also the United Kingdom, the United States, and Europe (excluding the United Kingdom).

In addition, Mainland China is also one of the major investors in the Hong Kong market, ranking first, with a transaction ratio of 28 in 18 years.

3%.

  Based on the situation in the past three years, foreign investment is better than the overall level of domestic investment.

Comparing the yields of major A-share institutional investors in the past three years, the funds calculate the median rate of return for ordinary stock funds, partial-share mixed funds, and flexible allocation funds, and the income is approximately 70% of the capital of the North.Expect to represent the expected rate of return.

Overall, foreign investment returns are higher than the domestic average.

In 19 years, the capital return rate of Beishang increased by about 50%. It outperformed the 13 mergers of the Shanghai and Shenzhen 300 Indexes, outperformed ordinary stock funds, partial stock hybrid funds, and flexible allocation funds., 13 units, 24 units.

The market has generally decreased in 18 years, and the expected return rate of income growth is about -22%, outperforming the Shanghai and Shenzhen 300 Index by about 3 subdivisions, and outperforming ordinary stock funds by about 1 median rate of return, but only slightly higherThe median rate of return for partial stock hybrid funds and flexible allocation funds.

The estimated 17-year return is 36%, outperforming the CSI 300 Index by 14 points, outperforming ordinary stock funds, partial stock hybrid funds, and flexible allocation funds. The median rate of return is 25, 23Subdivisions, 29 digits.

  8. Flow of funds: What are the factors influencing foreign flows?

  From the perspective of A-share experience, the main factors affecting foreign flows are: the degree of capital market openness, the RMB exchange rate, global monetary policy and liquidity, and global risk appetite.

  8.

1 Degree of capital market openness The degree of capital market openness is an important policy factor affecting foreign inflows.

The degree of capital market openness includes the tightening of national government’s policies on capital flow control and the degree of recognition of major domestic index companies on domestic stock markets.

At present, there are still some capital controls, but the restrictions on capital controls continue to decrease, and the process of opening the capital market to the outside world continues to advance, which will help foreign capital continue to flow into A shares.

The major international index companies represented by Ming Sheng have continuously increased their recognition of previous A shares.

In 2017, Ming Sheng announced that it will divide A shares into A shares. In 2018, A shares will be replaced by a 5% replacement factor. In 2019, the A share replacement factor will be further increased to 20%.

Although there is no plan to increase the replacement factor for motorcycles in 2020, with reference to the experience of Taiwan and South Korea, it is expected that A shares will eventually be completely replaced by 100% in the next 10 years.

This process will be accompanied by continued accelerated foreign inflows into A shares.

  8.2 RMB exchange rate The exchange rate is an important macro variable affecting foreign exchange flows.

The exchange rate is stable or the exchange rate has a potential appreciation trend and often alternates; if the exchange rate fluctuates or the exchange rate has a potential depreciation trend, it is often replaced by the dominant one.

Compared with Brazil, Russia, India, South Africa and other major emerging market countries, the RMB exchange rate is relatively more stable.

Considering the above economic fundamentals and monetary policy, the RMB exchange rate has no basis for long-term depreciation.

Therefore, the stability of the RMB exchange rate and the long-term fundamentals are supportive of promoting foreign exchange inflows.

  8.

3 Global monetary policy and liquidity Global monetary policy orientation and changes in liquidity are one of the periodic factors that affect foreign flows.

When global monetary policy shifts to loose and global liquidity is abundant, funds will often flow into global capital markets, and domestic capital markets will also have foreign exchange transactions. When global monetary policy is tightening and global liquidity is contracting, funds will often be removed from global capital marketsInterest rates, domestic capital markets will also have funds to replace.

  8.

4 Global risk appetite Global risk appetite is one of the periodic factors affecting foreign flows.

When global risk appetite rises, global funds often flow from hedged assets to risky assets, and domestic capital markets also have foreign exchange transactions; when global risk reduction is reduced, global funds tend to flow from risky assets to hedged assets, and domestic capital marketsThere will also be foreign capital substitution.

Factors affecting risk appetite include economic, political, and geopolitical factors.

For example, in May 2019, trade frictions appeared repeatedly in foreign countries, and foreign countries repeatedly repeated A shares.

  Nine, capital flow: How much passive capital flow does the international index bring?

  The passive fund flow brought about by the international index in 18 years is about 6.9 billion US dollars, accounting for only about 2% of the scale of funds going northward for the whole year.

There are divergent opinions on the size of passive funds in the market. We use complementary factors to calculate the size of pure passive funds on the day of foreign exchange conversion, and calculate the proportion of passive funds in all northbound funds.

In 2018, A shares were officially entered into Morocco. After May 31, 2018, the A-share participation factor was increased from 0 to 2.

At 5%, the net inflow of funds from Kitakami on the same day was about 5.7 billion in A shares; on August 31, 2018, the A share entry factor was 2.

From 5% to 5%, the net inflow of funds from Kitakami on the day was about 3.8 billion yuan.

The average daily net inflow of statutory active funds in 2018 is about 1.3 billion U.S. dollars. Assuming that the active fund inflow on the implementation day of the divisor factor is the same as the average daily indicator, the scale of passive fund inflows in 2018 will be about 6.9 billion U.S. dollars per year.The scale is only about 2%.

  In 19 years, with the significant increase in the exclusion factor of the international index, the international index brought a significant increase in passive funds to about 52.9 billion, accounting for 15%.

In 19 years, the increase of A-shares in major international indexes has significantly accelerated.

On May 28, August 27, and November 26, the after-hours A-share entry factors were increased to 10%, 15%, and 20%, respectively. On the day of the northward investment, 5.6 billion, 11.3 billion, and 21.4 billion were invested respectively.
On June 21, 19 and September 20, after-hours, the A-share richness factor was increased to 5% and 15%, respectively. On the day of the northbound capital inflows were 7.3 billion and 14.9 billion US dollars respectively.

The average daily net inflow of statutory active funds in 19 years was about 1.5 billion US dollars. Assuming that the active fund inflows on the day of implementation of the divisor factor are at the same rate as the average daily rate, the scale of passive fund raising in 19 years is about 52.9 billion US dollars.Reached 15%.

  10. Flow of funds: How big is the size of foreign inflows into A shares in the future?

  It is estimated that the proportion of foreign holdings of A shares in the next 10 years is expected to increase from the current 3% to about 10%, with an average annual net inflow of A shares of US $ 300-400 billion.

As of the end of the third quarter of 2019, the value of A-share foreign holdings in the market accounted for only 3% in one year, far lower than the level of 25% -30% of Taiwanese foreign capital and 16% of Korean foreign stocks.

Within 10 years after the entry into Taiwan, the share of foreign holdings increased from 9% in 1997 to 23% in 2006, an average annual increase of 1.
.

4 ;; within 10 years after entering the Korean stock market, foreign shareholding increased from 4% in 1992 to 15% in 2001, an average annual increase of 1.

One single; referring to the experience of Taiwan and South Korea, it is expected that the proportion of A-share holdings each year is expected to increase from 3% to 10% within 10 years, and the average annual net inflow of A-shares is 300-400 billion.

  With reference to overseas experience, after the capital market is open and internationally recognized, foreign countries will gradually continue to carry out heavy volume transportation after the reorganization, and even the replacement factor of the international index will continue to increase. During this period, the inflow will continue to maintain a certain scale.

Taking the South Korean stock market as an example, before the entry into Morocco, the net inflow of funds decreased and stabilized, and the average annual net inflow of foreign exchange in the previous decade (1982-1991) was only 5.

500 million US dollars; Korea ‘s stock market officially entered Japan in January 1992. Unless the following ten years (1992-2001), foreign exchange inflows have shown an upward trend year by year. The average annual net inflow of foreign exchange has reached 10.9 billion US dollars.Nearly 20 times the average annual net inflow before admission.

During the period from February 1992 to August 1996, the MoFine suspension was promoted, but during the period, the exchange continued to maintain a certain scale of continuous inflow. The five-year average net inflow was US $ 12.4 billion, which was significantly more than the average of the previous ten years.5.

500 million US dollars.

  Risk Tips 1. There may be defects or deviations in the excess scale measured by the regression equation method; 2. Uncertainty of the epidemic situation may have a continuous impact on the global market; 3. The increase of the RMB exchange rate may cause a certain impact on the circulation.