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Original title: The continuous net inflow of foreign capital in the A-share market has steadily improved internationalization
Cheng Dan, reporter for Securities Times
The opening of the capital market is accelerating and foreign capital has continued to maintain a net inflow in recent years.
According to the data, from the beginning of 2019 to the end of November of this year, foreign investment in the A-share market represented 6.53%, an increase of 3.04 percentage points compared to 2018. During this period, the Foreign investors continued to buy net A shares, of which the net purchases of A shares from Shanghai and Shenzhen Stock Connect amounted to 503.4 billion yuan. At the end of November this year, the market value of A shares held by foreign investors was nearly 3 trillion yuan, accounting for 4.63% of the market value of A shares, an increase of 1 , 84 trillion yuan and 1.48 percentage points, respectively, since the end of 2018.
Foreign capital has steadily increased the allocation of A shares, which has injected more international elements into the Chinese capital market and further optimized the investment structure of the A-share market. In the complicated international situation of the past two years , this positive change is commendable, demonstrating the attractiveness of the A-share market.
Industrial valuesChief Economist Wang Han said that the continued net inflow of foreign capital has shown the excellent results of China’s capital market reform and opening up, reflecting the full confidence of foreign investors in the macroeconomic and market development prospects. capital of China. Favored by institutions, more and more international capital arrives in waves.
Behind this is the continued bidirectional opening of China’s capital market in recent years and the increasing degree of internationalization of China’s capital market. Since 2019, the inclusion of A shares in the major international indices has accelerated significantly and the inclusion factors have continued to increase. The Shanghai-London Stock Connect and China-Japan ETF exchanges have launched one after the other. In particular, the 9 new measures for the expansion and opening of the capital market announced by the China Securities Regulatory Commission in June 2019 have been implemented one after another, and the attraction of foreign capital has increased further. Many of them have been implemented, including the “single stake and single control” of foreign-funded institutions, shareholder rating requirements, fund custody ratings, the full introduction of “full circulation” of shares H and the addition of specific futures varieties.
Since the beginning of this year, the pace of China’s capital market opening has not only not slowed down due to the sudden new corona pneumonia epidemic, but has accelerated. Foreign participation restrictions of securities funds and futures institutions were fully liberalized earlier, many foreign-owned securities companies have successfully landed, QFII and RQFII have completely canceled quota restrictions, further optimized the interconnection mechanisms of domestic and foreign markets, and the scope of international futures products has continued to expand. This series of important opening-up measures shows China’s firm determination to expand capital market openness. By opening up, the construction of China’s capital market system has been further improved, the investment and financing environment has been improved, and the internationalization of the capital market has been accelerated.
The continued allocation of A shares by foreign capital has not only brought additional capital into the A share market, but has also affected the investment philosophy of the A share market. From an industry perspective, foreign investors prefer shares such as pharmaceutical and biological products, household appliances, electronic products, electrical equipment and finance. These stocks generally have relatively stable dividend yields or higher growth expectations. Foreign investment business behaviors show a high correlation with the trend of these industry sectors, forming a positive feedback effect to some extent, and has also produced an obvious demonstration effect on the business behaviors of other investors in the A-share market. .
“Foreign investment has a long term, mostly adhering to the concept of long-term value investment, which can effectively reduce market volatility. At the same time, foreign institutional investors pay more attention to the fundamentals of individual stocks , and high-quality stocks are easily favored, which helps promote survival of the fittest in the market. ” , China’s economy is transforming into high-quality development, and there are many opportunities in the development process. Foreign capital will continue to flow in, subtly changing the investment style of the domestic market.
The major foreign-funded institutions recently released their 2021 China Capital Market Outlook reports. Many foreign-funded institutions have given “high allocation” and “over-allotment” ratings to A shares in their annual reports of prospects, and confident in China’s economic fundamentals next year. Rui Dalio, founder of the Bridgewater Fund, said that global investment in China remains quite insufficient. Xing Ziqiang, chief economist at Morgan Stanley China, said China’s economy is expected to maintain relatively strong growth in 2021. Among them, personal consumption will become the main growth point of the economy, and the simultaneous recovery of global demand will also boost China’s manufacturing industry.
It should be noted that the pace of internationalization of the capital market is still accelerating and a series of measures will continue to be implemented to expand bidirectional openness. The reporter learned from relevant people close to the regulatory authorities that in the next step, the regulatory authorities will constantly promote the institutional opening of the capital market in accordance with the established arrangements.
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