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Guo Shiliang: The net outflow of funds from the north is over 10 billion. What are the concerns of foreign capital?

May 15, 2019 08:29
source: WeChat public number Guo Shiliang

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Summary
From the valuation of the stock market, although the average valuation of China's A shares is still slightly higher than the Hong Kong stock market, considering the liquidity advantage of the A-share market, the A-share market can still give a moderate premium rate. However, for foreign capital, the primary consideration may be the need for hedging and exchange rate fluctuations. In other words, in the context of a slight increase in exchange rate fluctuations, the net outflow pressure of foreign capital still exists. However, when the exchange rate environment is gradually stabilized and the low valuation advantage of the A-share market is further highlighted, it is likely to gradually reverse the pattern of a large net outflow of funds from the north, and even gradually return to the trend of continuous net inflow of funds from the north.

Under the circumstances that the proportion of foreign capital in the market share of A shares continues to rise, foreign capital has gradually gained a certain voice and influence. For the market, the continuous net flow of foreign capital often represents the market attitude of smart funds or prophetic funds, and has a certain reference role in the running trend of the stock market.

Stepping into May, as a Northward-funded fund that has received much attention from the market, its net outflow has intensified. Among them, just recently, the Northward funds once again had a single-day net outflow of more than 10 billion yuan, and the single-day net outflow scale became the peak level of the net outflow in a single day.

It should be noted that on the one hand, it is the northbound funds this year.Net inflowThe scale has exceeded 100 billion yuan, and the net outflow of the most recent month has not completely changed the state of large net inflows during the year. The attitude of foreign capital to the A-share market is not too pessimistic; on the other hand, it is the northward fund. Not exactly equivalent to foreign capital. Under actual circumstances, there are some domestic funds that rely on the low channel of the Hong Kong stock market.interest rateAdvantages, disguised with the help of Lu shares into the A-share market, and part of the northward funds, in fact, still can not be separated from the domestic funds, and some funds even belong to highly leveraged domestic speculative funds.

For the single-day large net outflow of northward funds, it is still inseparable from the comprehensive consideration of many factors. One aspect is the fluctuation of the exchange rate, which triggers a change in the attitude of the net flow of some northward funds. In the case of northward funds, stock price fluctuations are a factor to be considered, but exchange rate fluctuations also need to be taken into account; During the holiday period, the volatility of the A-share market increased slightly. Considering the risk-avoidance factor, some North-way funds chose the net outflow in the first trading day of the resumption of trading of the stock exchange, which is still the expected action of the market. In addition, considering the valuation difference between the two markets and the factor of discount and premium rate, some Northbound funds will use this to achieve arbitrage demand.

However, in the final analysis, for Northbound funds, it is more likely to be affected by investment sentiment. As an emotional A-share market, capital investment sentiment often affects the volatility level of the stock market itself. In reality, it is better to say that the A-share market is a policy market or a market dominated by funds.

Since the beginning of this year, the overall volatility of the A-share market has not been low. Among them, from the analysis of market performance in the first four months, the Shanghai stock market climbed from 2,440.91 points to 3,284.45 points, and since April, the Shanghai stock market has adjusted from 3,284.45 points to 2,383.38 points. In a short period of time, the cumulative market adjustment has reached 13.68%. However, after this round of rapid adjustment, the average valuation of the A-share market has once again returned to the low valuation area. Among them, as of May 14, the Shanghai stock market average price-earnings ratio of 13.30 times, the deep market average price-earnings ratio of 23.05 times. As for the Shenzhen City, the average price-earnings ratio of the main board is 16.42 times, and the average price-to-earnings ratio of the small and medium-sized board and the ChiNext market are 25.47 times and 39.12 times respectively.

From the valuation of the stock market, although the average valuation of China's A shares is still slightly higher than the Hong Kong stock market, considering the liquidity advantage of the A-share market, the A-share market can still give a moderate premium rate. However, for foreign capital, the primary consideration may be the need for hedging and exchange rate fluctuations. In other words, in the context of a slight increase in exchange rate fluctuations, the net outflow pressure of foreign capital still exists. However, when the exchange rate environment is gradually stabilized and the low valuation advantage of the A-share market is further highlighted, it is likely to gradually reverse the pattern of a large net outflow of funds from the north, and even gradually return to the trend of continuous net inflow of funds from the north.

(Article source: WeChat public number Guo Shiliang)

                (Editor: DF078)

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