Foreign investors are buying ETFs wildly! Taking advantage of index products to deploy A-shares, Da Mo, Barclays, UBS, etc. are all taking action
Finance Associated Press, November 29 (Reporter Wu Yuqi) Since the beginning of this year, the scale of ETFs has been further expanded, data shows that as of November 29, there are 872 ETF products in the whole market, with a total share of 1.98 trillion, an increase of 17.68% from the end of 2022, and a total increase of 22.98% from the end of 2022.
Judging from the situation of holders, the scale of ETFs has risen with the help of foreign capital, and the reporter of the Financial Associated Press found that in addition to the long-term holding of ETF foreign institutions, the recent new ETF heavy position holders are listed, and foreign capital is more frequent, such as Barclays Bank and UBS.
In addition, a number of foreign-funded institutions have recently publicly stated that they are optimistic about the prospects of China's economic development and are competing to sing long A-shares.
Foreign investors actively allocate Chinese assets through ETFs
In the second half of the year, foreign institutions have been active in the domestic market, and new ETF products have attracted investment from a number of foreign giants in recent months, including Barclays Bank and UBS.
For example, in the E Fund SSE Science and Technology Innovation Board 100 ETF listed on November 17, the largest holder is the wholly foreign-owned Allianz Life Insurance Co., Ltd., with 5.442 million shares and a holding ratio of 1.21%.
Another example is the ChinaAMC CSI Hong Kong Stock Connect Mainland Financial ETF listed on October 11, UBS Group invested 20 million yuan in subscription funds when the product was established, accounting for 9.57% of the total share, making it the second largest fund holder. British banking giant Barclays subscribed for a 4.79% stake, tied with ChinaAMC as the third-largest holder.
The timeline was adjusted to September, and as of September 8, Barclays Bank held 10 million shares of Bosera SSE Science and Technology Innovation Board 100 ETF, ranking the tenth largest holder. The fund was officially listed and traded on September 15 and is one of the first ETFs in China to track the STAR Market 100 Index, with the latest scale of about 3.191 billion yuan as of October 30.
In addition to the new ETF, the reporter also noticed that foreign institutions also favor high-performance ETFs. Wind data shows that as of the close of trading on November 28, a total of 18 ETFs have risen by more than 20%, of which 11 products have foreign institutions among the top ten holders, including Barclays, UBS, Morgan Stanley International, etc.
Specifically, as of the end of the interim reporting period, the third largest holder of Huaan Nasdaq 100 ETF was Barclays Bank, holding 135 million shares and a shareholding ratio of 3.18%.
There are three foreign institutions among the top 10 holders of GF Nasdaq-100 ETF. Among them, the second largest holder is Barclays Bank, holding 1.128 billion shares, holding 5.56%, the third largest holder is Merrill Lynch International, holding 618 million shares, holding 3.04%, and the fourth largest holder is HSBC, holding 341 million shares, holding 1.68%.
The Cathay Nasdaq 100 ETF is held by two foreign investors, the first largest holder is Barclays Bank with a 4.85% stake, and the third largest holder is UBS with a stake of 1.73%. The largest holder of ChinaAMC Nasdaq 100 ETF is Barclays Bank, holding 113 million shares and a shareholding ratio of 7.84%;
In addition, there are many foreign-funded institutions that have held ETFs for a long time, such as Singapore Government Investment, Nikko Asset Management Co., Ltd., Mitsubishi UFJ International Asset Management Co., Ltd., etc., which have entered the top 10 holders of ChinaAMC SSE Science and Technology Innovation Board 50 ETF, Huaan SSE 180 ETF and E Fund CSI 300 ETF for many consecutive periods, and Singapore Government Investment also appeared in the top 10 holders of Huatai Pineapple CSI 300 ETF for the first time in the second quarter.
Foreign giants continue to buy Chinese stocks
In addition to accelerating the allocation of ETFs, international asset management giants are also targeting the domestic A-share market.
A few days ago, a fund manager of Invesco, a world-renowned asset management giant, said that he had reduced his position in Japanese stocks and instead bought Chinese stocks with relatively cheap valuations.
According to Bloomberg, Britain's Invesco Pacific Fund, which outperformed 91% of its peers last year, is betting that the yen's collapse is coming to an end and has pocketed the earnings of long Japanese exporters in favor of relatively cheap Chinese stocks.
Since the fourth quarter, in the context of a large number of listed companies intensively issuing repurchase announcements, some QFII and other latest position dynamics have also emerged.
As shown in the recent announcement of Sanhua Intelligent Control, as of November 6, the company received an increase in holdings from the Kuwait Government Investment Authority in the fourth quarter, and now holds a total of 17.5465 million shares.
The Abu Dhabi Investment Authority, the largest sovereign wealth fund in the Middle East, increased its holdings of 484,800 shares of Haid Group, and as of October 31, the institution held a total of 15,974,500 shares. The reporter noticed that the Abu Dhabi Investment Authority had previously continuously increased its position in Haida Group.
In addition, the Kuwait Government Investment Authority also increased its holdings of Topband by 599,300 shares in the fourth quarter, increasing the number of shares held to 17,038,300 shares.
Morgan Stanley added another 370,300 shares of Anjing Foods, with a cumulative total of 2,736,100 shares, accounting for 0.93% of the total share capital.
As of the end of the third quarter, QFII entered the list of the top 10 circulating shareholders of more than 800 listed companies. Statistics found that well-known foreign-funded institutions such as Da Mo, Xiao Mo, and Goldman Sachs, as well as Lu Stock Connect funds, increased their holdings or built new positions in many companies in the third quarter, with a total market value of 141.831 billion yuan. In terms of position changes, compared with the end of the second quarter, QFIIs further increased their positions in 121 companies, and 545 companies were newly established by institutions.
Looking ahead, Industrial Securities Research Report believes that the external environment is gradually improving: on the one hand, the yield of U.S. bonds has fallen rapidly, and the previous trend of indiscriminate outflow of overseas funds out of emerging markets has been gradually reversed; on the other hand, the recent expectations of foreign investors for China's economy have also continued to recover, and have been first reflected in the market performance of A50 index futures.
Foreign institutions have recently bullied the Chinese market
Since November, foreign financial institutions such as Goldman Sachs, Barclays, and JPMorgan Asset Management have spoken out one after another, optimistic about China's economic prospects and bullish on the value of China's asset allocation.
Goldman Sachs Research said in its 2024 China Equity Market Strategy report released in mid-November that the MSCI China Index and CSI 300 Index are expected to rise 12% and 16%, respectively, in 2024, if driven by a 10% increase in earnings per share and a modest rise in valuations. At the same time, it maintained its overweight stance on A-shares.
At the 2023 Barclays Asia Forum, Jaideep Khanna, Head of Asia Pacific at Barclays, also believes that China, Japan, India and ASEAN countries will continue to maintain strong economic growth, mainly driven by domestic demand. The Asia-Pacific region continues to demonstrate impressive resilience as a dominant force in the global economy.
Marty Dropkin, Head of Equity Investments Asia Pacific at Fidelity International, pointed out that focusing on Asian markets, more than half of the index constituents in the MSCI Asia Pacific ex-Japan Index have expected P/E ratios below 15 times, reflecting an attractive risk-reward level of overall market valuations. Much of this optimism is driven by the improved outlook for Chinese corporate earnings, which are likely to continue to accelerate as the country's resilience grows, given the government's economic stabilization measures that have boosted the recovery in corporate earnings.
Recently, J.P. Morgan Asset Management released the "2024 Long-Term Capital Market Assumptions", and Zhu Chaoping, chief market strategist of J.P. Morgan Asset Management Asia Pacific, pointed out: "Although emerging market economies still have a growth advantage over developed market economies, the gap between the two is gradually narrowing. Our long-term economic growth forecasts have barely changed over the past two years, but we have slightly increased our growth forecasts for mature markets this year, given that the rapid development of AI has boosted productivity. At the same time, we believe it is still possible for China to achieve higher long-term growth than in mature economies. ”
Sheng Nan, global multi-asset strategist at J.P. Morgan Asset Management, said: "From a valuation perspective, Chinese equities remain attractive given our forecast for the gradual appreciation of the RMB. Therefore, actively rebalancing and diversifying asset allocation in emerging markets will be key to capturing investment opportunities and managing risks. ”
(Finance Associated Press reporter Wu Yuqi)