The latest institutional position exposure: the social security fund has increased its position in "veteran" stocks, and the blue chips have become public offerings and northbound consensus
Finance Associated Press, November 1 (edited by Tang Yetian) Recently, the third quarterly report of A-shares was disclosed, and the situation of institutional capital holdings in the third quarter also surfaced.
According to the third quarterly report of public funds disclosed last week, as of 2023Q3, the total market value of A-shares held by public funds (including foreign-funded public offerings) is about 5.4 trillion, accounting for about 5.9% of the total market value of A-shares; The total market value of A-shares held by foreign investors was 2.76 trillion yuan, accounting for 3% of the total market value, and the scale and proportion of shareholdings decreased slightly; The market value of the social security fund to Q3 is about 321 billion.
Recently, long-term funds such as social security funds have also actively entered the market. Looking back at the third quarter, the trend of institutions increasing their positions in the financial sector is significant, but there are still differences in the roadmap of Q3 positions of various institutional funds.
Social Security Fund: Still prefers medicine and machinery, power equipment
As a representative of long-term funds, the social security fund is endowed with the significance of playing a more active role.
On October 27, the National Social Security Foundation held a symposium for domestic investment managers in 2023, at which participants discussed and expressed that they would give full play to the role of institutional investors and long-term funds, and also said that A-shares had entered a window period for long-term allocation of value.
In the third quarter of this year, the social security fund appeared in the top ten outstanding shares of 638 companies, and the industries with the highest market value are still pharmaceutical, machinery and power equipment. The largest amount of holdings is still held by the Agricultural Bank of China. A total of 45 listed companies have been held by the social security fund of more than 1 billion yuan, an increase from the number in the mid-reporting quarter.
Figure: Social Security Fund 2023Q3 and Q2 Heavy Stocks Data source: Wind
From the perspective of changes in shareholding ratios, Bojun Technology, Neoway Technology, Rongtai Shares, Kefu Medical, and Jiudian Pharmaceutical have the highest proportion of increased holdings by the Social Security Fund, Longda Shares, Tacoli, New Yaqiang, etc., and the stocks held by the Social Security Fund for the longest time (more than 8 years) Hualu Hengsheng will be increased in the third quarter of 2023. In the Q3 new list of social security funds, the market value of Haier Smart Home, SDIC Power, and Orient Securities has exceeded 1 billion. Among the stocks reduced in the third quarter, San'an Optoelectronics and ZTE had the highest market value.
2023Q3 Social Security Fund newly held the top stocks in terms of market capitalization
Source: Wind
Another type of long-term funds: the top three industries held by pension funds are power equipment, medicine and biology, and electronics. In the third quarter, pension funds added 48 shares, with a total of 177 shares.
In the pension fund Q3 new holdings, the third quarter net profit growth of nearly sixty percent of Yili shares increased the total market value of the highest value, followed by Ziguang Guowei and Air China, at the same time, the pension fund in the third quarter also excluded 60 individual stock positions, Deye shares, Dongshan Precision and Fosun Pharmaceutical, Oriental Cable reduced the market value of the top.
Figure: Pension fund Q3 new holdings of the top stocks in the outstanding stock market value Data source: Wind
Northbound funds will increase their positions in Q3
The path of foreign investment in A-shares includes multiple channels such as northbound funds (Mainland-Hong Kong Stock Connect), QFII and RQFII, as well as foreign private placement. Overall, foreign investors prefer stocks with large market capitalization, higher valuations and earnings returns.
At present, foreign holdings of A-shares are still dominated by Mainland-Hong Kong Stock Connect, and by the end of September, 93.8% of the outstanding A-shares held by Southbound Stock Connect accounted for foreign investment. Since August, U.S. Treasury interest rates and the U.S. dollar index have risen rapidly, and global funds have flowed out of emerging markets. In the third quarter, the net outflow of northbound funds was about 76.4 billion, but it still focused on increasing some individual stocks.
As of the end of September 2023, nearly 74% of the holdings of Cross-border Stock Connect are in the CSI 300 constituent stocks; Structurally, the top five holding industries are power equipment, food and beverage, banking, medicine and biology, and household appliances, accounting for 47% in total.
In the third quarter, the top industries in terms of net purchases by northbound funds were automobiles, communications, household appliances and textiles and apparel.
In the third quarter, the northbound capital increase in the automobile sector, a large number of purchases of BYD, Fuyao Glass and other targets, the domestic and export sales of automobiles in the third quarter performed well, and the industry boom rose.
Chart: Northbound funds' net purchase amount and increase and decrease ratio in 2023Q3 Data source: Wind
In terms of market value changes, in the third quarter, WuXi AppTec was the stock with the most significant increase in the amount of holdings after the capital increase of the Cross-border Stock Connect, which was also the largest stock in terms of market value held by public funds in the third quarter. The pharmaceutical sector rebounded in the third quarter, and the impact of the early stage was basically cleared, among which the valuation of CRO leaders was outstanding. Kweichow Moutai's total revenue in the third quarter reached 34.33 billion yuan, an increase of 13.1% year-on-year, and the net profit attributable to the parent company reached 16.9 billion yuan, an increase of 15.7% year-on-year. Together with Hengrui Pharmaceutical and CATL, it is the same northbound heavy position target affected by the intensification of international capital liquidity.
Chart: 2023Q3 Stocks with the highest change in the net value of Mainland-Hong Kong Stock Connect Data source: Wind
In the third quarter, the northbound capital holdings of A-shares were once close to 2 trillion yuan. Chen Guo, chief strategy analyst of China Securities Construction Investment, said that under the current volume, the slope of northbound capital inflow in the future may decrease, and two-way volatility may increase. The market should look at the behavior of northbound funds rationally. In the future, the "proportion of northbound capital inflows" may be a more noteworthy indicator than "net inflows".
The third quarterly report shows that the following targets in Q3 are among the top in terms of capital increase through the Mainland-Hong Kong Stock Connect.
Figure: 2023Q3 stocks with the highest proportion of holdings in the Stock Connect
In Q3, the public fund reduced its allocation to growth and increased its allocation to the blue chips of the main board
The disclosure of the third quarter report of the public fund in 2023 came to an end as early as October 25.
Observing the allocation of active equity funds, the capital allocation style in the third quarter was tilted towards the blue chips of the main board, while the growth style suffered more allocations. The overall allocation of the new energy industry chain has been reduced, and the proportion of food and beverage, medicine, finance and cycle has been improved. Within the popular TMT sector, only the electronics industry has increased, and the congestion of the communication industry has improved but is still high.
(Finance Associated Press Tang Yetian)