In 2023, the net inflow of northbound funds into A-shares will rise first and then decline. Northbound funds flowed rapidly in January, and increased steadily and slightly from February to July, reaching the highest point of cumulative net outflow in early August, but since then it has turned into a state of continuous net outflow.
The annual net ** was 43.7 billion yuan
On an annual basis, the cumulative net ** of northbound funds in 2023 will be 43.7 billion yuan, which is the 10th consecutive year of net ** since the opening of northbound. However, in absolute terms, it is the second lowest point in history, only higher than the 18.5 billion yuan in 2015 (when the Shenzhen Stock Connect was not yet opened).
January was the net ** peak
From a monthly point of view, in January this year, the northbound capital was net 141.3 billion yuan, which was the most net month in the yearIn August, northbound funds sold a net of 89.7 billion yuan, the largest net selling month of the year.
Higher yields on U.S. Treasury bonds put pressure on the northbound
There is a certain correlation between the net inflow of northbound funds and the change in the interest rate differential between China and the United States. Looking back at this year's **, the impact of U.S. Treasury yields (10-year, the same below) on the direction of northbound funds may be divided into four stages.
The first stage was in January, when Treasury yields rose from 38% fell back to 3Around 4%, northbound funds have been net for 17 consecutive days in the same period, and the overall state is a rapid net inflow.
The second stage is from February to July, and the US Treasury yield is at 33% to 41% between the wide range**, the northbound funds in and out of the same period, but still maintained the overall net ** state.
The third stage is from August to mid-December. U.S. Treasury yields broke through 4After 1%, the highest rush rose to about 5%, and then fell back to around 4%, during which the northbound funds had a rapid net outflow from August to October, and the outflow rate declined from November to mid-December.
The fourth stage is late December. Treasury yields returned to 3Around 8%, northbound funds turned into overall net inflows. Especially on December 25, the northbound funds were net **135 on the same day5.8 billion yuan, a single-day net purchase hit a new high since July 28.
Top 20 northbound holdings by market capitalization
*In terms of December 29, the largest holding stock of northbound funds is still Kweichow Moutai, with a market value of 148.8 billion yuan, about double the value of the second largest holding stock, Midea Group (72.5 billion yuan). The market value of CATL's holdings ranked third, with the latest value of 69.1 billion yuan.
Northbound shareholding ratio is TOP20
Compared with the top 20 in terms of market capitalization, the gap between the top 20 in the proportion of northbound funds is relatively small. As of December 29, Hongfa Co., Ltd., Fuyao Glass, and Inovance Technology ranked among the top three in the proportion of northbound capital holdings, respectively. 33%, and the three are in between.
Foreign investment is expected to return**
The trading days for 2023 have all ended, and the situation of northbound funds is a foregone conclusion. Turning to next year, will northbound funds return?Most research institutions believe that with the end of the U.S. interest rate hike cycle and the continuous improvement of the domestic policy environment, northbound funds may return to A-shares.
SPDBI believes that if the interest rate cut cycle begins, it indicates that economic growth may slow down, and the performance of global stock indexes has weakened, but emerging markets have performed relatively well. At present, the foreign investment in China is still low, if the Sino-US economic cycle reverses and the RMB enters the appreciation channel, it is expected to attract foreign capital back to China.
IB** said that considering that the end of the year and the beginning of the year are also the traditional time window for foreign institutions to readjust their investment portfolios and concentrate on increasing their positions in A-shares, the return of foreign capital is expected to become an important driver of the market, focusing on value growth leaders.
Cinda** pointed out that the easing of Sino-US relations, the appreciation of the renminbi, and the expectation of macroeconomic stimulus policies are all expected to attract foreign capital to flow back into A-shares.
Article**: Oriental Wealth Research Center).