CICC: North South capital differentiation is increasing

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　　 Abstract

　　 abstract

　　 The changes in the face value of global funds this week should be noted as follows: 1) The EPFR fund data we tracked showed that as of this Wednesday (June 12), overseas funds had continued to flow out of A shares and Hong Kong shares, and the outflow scale was slower than that of last week; 2) In terms of connectivity, the capital flowing out from the north is large, but the capital flowing in from the south is accelerating; 3) All Global market, stocks, bonds and money markets all maintain inflow; four ）US stocks turned into outflows, and Japan and developed Europe continued to outflows.

　　 Domestic funds On the other hand, overseas funds continued to flow out of the Chinese market, but the scale narrowed. As of this Wednesday (June 6 to June 12), the outflow of active funds from A-share and Hong Kong stock markets totaled $180 million, slower than the outflow of $280 million last week, while the outflow of passive funds was $280 million, slower than the outflow of $360 million last week. After the rapid repair in the early stage, the A-share and Hong Kong stock markets have retreated since late May, the Shanghai Stock Exchange Index fell back to around 3000 points, and the Hong Kong Hang Seng Index once fell below the 18000 point threshold, consistent with the recent weakening of capital. The performance of the market since the end of April also confirms our judgment that the current round of capital inflow is dominated by the rebalancing of transactional and regional partial allocation funds (The Power and Space of this Round of Rebound).

　　 Global capital On the gold surface, Active foreign capital flowed out of Japanese stocks, American stocks turned into inflows, and Indian inflows accelerated. As of this Wednesday （ six month six day -6 month twelve Day) This week, the active inflow of foreign capital into the Indian market accelerated, and the overall inflow into the Indian stock market five point four US $100 million（ vs． Inflow last week two point six US $100 million); In terms of Japanese stocks, active foreign capital continued to flow out this week one point four US $100 million, narrower than last week（ vs． Outflow last week four US $100 million). At the same time, the active foreign capital was transferred to outflow of US stocks, and the outflow scale was six thousand seven hundred and fifty-three Ten thousand dollars.

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Increased north-south capital differentiation

　　 Chinese market

　　 Overseas funds ： The overall outflow of foreign capital from EPFR continued, but the range narrowed

As of this Wednesday (June 6 June 12), A-share active foreign capital outflow was $81.89 million (vs. last week's outflow of $10.26 million), while passive capital outflow slowed to $54.23 million (vs. last week's net outflow of $220 million); At the same time, the overall outflow of overseas funds from Hong Kong stocks and ADRs was $320 million (vs. last week's net outflow of $320 million), including an outflow of active funds of $93.24 million (vs. last week's outflow of $180 million), and the outflow of passive funds accelerated to $230 million.

　　 Interconnection funds: Large outflow in the north direction, but accelerated inflow in the south direction

　　 The northward outflow was significant, and the stock market value of food and beverage declined the most. This week (June 10 to June 14), the northward capital outflows were four consecutive trading days, with an overall outflow scale of 21.87 billion yuan and an average daily outflow of 5.47 billion yuan (compared with an inflow of 1.06 billion yuan on the previous Sunday). In terms of industries, technology hardware has become the only key sector where the stock market value has risen, while food, beverage, banking and other sectors have seen the largest decline in stock market value. In terms of individual stocks, this week Solar power supply 、 Ningde era as well as Mindray Medical Equivalents increased their holdings more, but decreased their holdings Guizhou Moutai 、 Bank of Communications And Wuliangye Equal subject.

　　 The southward inflow continued, and the growth rate of energy and raw materials plate ranked first. This week (June 10 to June 14), a total inflow of HK $26.96 billion from the south, with an average inflow of HK $6.74 billion per day (compared with the inflow of HK $5.45 billion on the previous Sunday). At the industry level, the market value of shares held by energy/raw materials and medicine and other sectors rose, while the market value of shares held by mainland banks and insurance and other sectors declined the most. In terms of individual stocks, southbound funds China Mobile 、 Bank of China The increase in holdings with high dividend standard such as CNOOC was more, but the decrease in holdings was faster, the Hong Kong Stock Exchange and COSCO Haineng Equal subject.

　　 global market

　　 Across markets and assets: US stocks turned into outflows, developed Europe and Japan continued to outflows, and emerging markets turned into inflows 。 From the perspective of active foreign capital, the turnover of US equity was USD 67.53 million (vs. USD 180 million inflow last week), that of developed Europe was USD 390 million (vs. USD 1.51 billion outflow last week), that of Japanese stock market continued to be USD 140 million (vs. USD 400 million outflow last week), and that of emerging markets turned into USD 360 million (vs. USD 270 million outflow last week). In terms of assets, global stocks, bonds and currencies continue to flow in.

　　 Configuration scale As of April 30, the allocation ratio of active funds to China was about 0.2% lower than the benchmark. Since 2022, global active funds have shifted from over allocation to under allocation for China and India. South Korea still maintains over allocation, while Japan's under allocation has declined. Since January 2022, China's allocation proportion has declined more (- 0.2%), while the UK (+1.3%), France (+0.6%) and Japan (+0.3%) have achieved the largest increase in allocation. In terms of regional type, funds from Europe are the main outflow force; At the sector level, overseas funds are over allocated to China's healthcare, consumption, semiconductors and hardware, capital goods, and under allocated to the Internet, finance, and real estate.

　　 Source

　　 Article Source

This article is excerpted from: The Increasing North South Capital Differentiation, which has been released on June 15, 2024 》

Analyst Liu Gang CFA SAC Practicing Certificate No.: S0080512030003 SFC CE Ref: AVH867

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