Text: Yan Xiang, Zhu Chengcheng
Key conclusions:
Overall, we believe there was an improvement in equity market liquidity margins in April. Specifically, although the trading heat of the two cities and the stock position of the fund declined slightly, the balance of the two financial institutions in the secondary market fell slightly. However, on the other hand, we see that the scale of IPO fundraising in the primary market has continued to decline month-on-month, the reduction of holdings by major shareholders in industrial capital has decreased significantly month-on-month, the issuance scale of partial stock funds in the secondary market has increased slightly, and more importantly, the northbound capital is still flowing in, and the net inflow on April 26 exceeded 20 billion yuan, the largest single-day net inflow since the opening of the cross-border connect.
Judging from the specific positions of northbound funds, the proportion of the market value of household appliances, electrical equipment, food and beverage, automobiles, and non-ferrous metals in the total market value of the industry's A-shares in April was still in the forefront. In terms of the allocation of primary industries, foreign investment in April still preferred to allocate food and beverage, electrical equipment and banking industries. From the perspective of changes in the proportion of holdings, foreign investors increased their positions in non-ferrous metals, banking, chemical and other industries in April, and reduced their positions in food and beverage, computers, leisure services and other industries.
We believe that it is no accident that northbound funds have exceeded expectations this year, on the contrary, both the short-term and long-term inflow trends of northbound funds are in line with objective laws. In the short term, since 2018, the cumulative 20-day net inflow and outflow of northbound funds has basically fluctuated around a stable central level, and the mean reversion characteristics are significant, which means that northbound funds will generally gradually turn into net inflows after rapid outflows in the short term. In the long run, since the opening of the Cross-border Stock Connect, there has been a net inflow of northbound funds over the years, and in recent years, with the great improvement of the convenience of global investors in the allocation of the A-share market, the inclusion factor of the A-share market in major international indices has also been increasing, and the increase in the degree of "internationalization" of A-shares will help attract long-term and sustained inflows of foreign capital.
Risk Warning: First, geopolitical risks exceed expectations, second, macroeconomic risks are less than expected, and third, overseas markets fluctuate sharply.
The main body of the report
1 Primary market: IPO fundraising decreased month-on-month
In April 2024, the total amount of funds raised in the primary market stock market was 18 billion yuan (including IPOs, additional issuances and allotments), a decrease of 42.5% from the previous month. From a structural point of view, the IPO scale raised a total of 2.7 billion yuan in April, down 54.1% month-on-month, accounting for 15.0% of the total funds raised in the month, the total amount of additional funds raised was 15.3 billion yuan, down 39.7% month-on-month, accounting for 85.0% of the total funds raised in the month, and the total amount of funds raised through allotment in the month was 0.0 billion yuan. Overall, the total amount of funds raised in the primary market decreased in April compared to the previous month.
2 Industrial capital: the reduction of major shareholders' holdings decreased slightly
Significant shareholder reductions: In April 2024, the amount of net reductions by significant shareholders decreased slightly from the previous month. In April 2024, important shareholders increased their holdings by 8.6 billion yuan in the secondary market, reduced their holdings by 8.8 billion yuan, and reduced their holdings by 100 million yuan, a net decrease of 3.8 billion yuan from the previous month. In terms of sectors, the main board increased its holdings by 1.3 billion yuan, the Growth Enterprise Market (GEM) by 1.1 billion yuan, and the Science and Technology Innovation Board (STAR Market) by 300 million yuan.
3 Secondary market: Stock-biased fund issuance increased slightly
All A-share trading: The market turnover fell in April. The turnover of all A-shares in April was 11.4 trillion yuan, down 21.3% month-on-month, and the average daily turnover was 632.2 billion yuan, down 8.16% month-on-month. Judging from the changing trend, the average daily trading popularity of A-shares this year began to fluctuate and fall after reaching a high point in March last year, and the single-day trading scale of the two cities in September last year was only 599.1 billion yuan.
The scale of new funds: the issuance scale of equity-biased funds increased slightly in April. In April, the scale of new funds (equity + hybrid) was 10.5 billion, up 2.6 billion from the previous month. Judging from the change trend, the scale of new issuance of stock-biased funds began to fluctuate and decline after reaching a stage high of 46.4 billion in February last year. In terms of decomposition, in April this year, 2.68 billion hybrid funds were issued, and 7.81 billion equity funds were issued, and the current scale of new funds (equity + hybrid) is at a historical low in the past two years.
Fund equity positioning: Fund equity positions decreased slightly in April. As of April 26, the proportion of open-end fund equity investment was 64.86%, compared with 65.65% at the end of March. From the trend point of view, with the market correction in April last year, the fund's stock position fluctuated from a high level, and began to fluctuate and rebound after reaching a stage low in early June last year. At present, the fund's equity position is above the historical pivot level in the past two years.
Margin and securities lending balances: The balance of the two financing facilities decreased slightly in April. As of April 26, the balance of margin financing and securities lending was 1,521 billion yuan, a decrease of 17 billion yuan from the end of the previous month. To a certain extent, the balance of the two financial institutions can reflect the market sentiment, and from the perspective of the changing trend, the balance of the two financial institutions began to fluctuate and rebound after reaching a low point in early February.
4 Northbound funds: Northbound single-day inflows hit a record high
In April, northbound funds continued to flow in. In April, the net inflow of northbound funds was 3.74 billion yuan, a decrease of 18.2 billion yuan compared with the previous month. In April, the net inflow of Shanghai-Hong Kong Stock Connect was 3.96 billion yuan, and the net outflow of Shenzhen-Hong Kong Stock Connect was 220 million yuan. From the perspective of the change trend, in January last year, the northbound capital inflow was 141.3 billion yuan, reaching a stage high, and then the northbound capital inflow slowed down, and began to continue to flow out in August last year, but in February this year, the northbound capital inflowed sharply, and the monthly inflow scale has exceeded the overall inflow scale of last year.
From the perspective of the proportion of the market value of the shares held by the Continental Stock Connect (primary industry) to the market value of the A-share industry, the proportion of the market value of the Continental Stock Connect to the total market value of the A-share industry in the household appliances, electrical equipment, food and beverage, automobiles and non-ferrous metals industries in April is still in the forefront. As of April 26, the top 5 industries in terms of the proportion of the market value of the primary industry to the market value of the A share market of the industry were household appliances, electrical equipment, food and beverage, automobiles, and non-ferrous metals, accounting for 11.6%, 7.1%, 5.4%, 3.9% and 3.7% respectively.
In terms of the allocation of primary industries, foreign investment in April still preferred to allocate food and beverage, electrical equipment and banking industries. Compared with the previous month, the food and beverage and electrical equipment industries continued to be the key areas of foreign investment. The top five industries with the highest market capitalization are food and beverage (13.2%), electrical equipment (11.9%), banking (8.2%), household appliances (8.1%), and medicine and biology (7.7%). The industry allocation of foreign capital is relatively concentrated, with the top five heavy industries accounting for 49.1% of the total, a slight decrease compared with March. The proportion of shares held by the commercial trade and textile and garment industries is 0.3%, and the shareholding ratio of the comprehensive industry is only 0.2%, which is relatively low in all industries.
From the perspective of changes in the proportion of holdings, foreign investors increased their positions in non-ferrous metals, banking, chemical and other industries in April, and reduced their positions in food and beverage, computers, leisure services and other industries. Specifically, in April, foreign investors increased their positions in non-ferrous metals, banking, chemicals, automobiles, non-bank financial and other industries, increasing by 0.48, 0.23, 0.22, 0.21 and 0.12 percentage points respectively, and reduced their positions in food and beverage, computers, leisure services, media, electrical equipment and other industries, by 0.33, 0.29, 0.21, 0.18 and 0.17 percentage points respectively.
In terms of industry concentration, compared with the previous month, CR3 and CR6 of the industries held by the Mainland-Hong Kong Stock Connect in April decreased slightly, and CR10 increased slightly. Specifically, as of April 26, the CR3, CR6 and CR10 positions in the land stock connect were 33.3%, 55.6% and 75.3% respectively, a change of -0.4, -0.4 and +0.7 percentage points respectively from the previous month.
In terms of individual stocks, the market value of the top 20 heavy stocks in the Stock Connect increased most of them in April, among which the market value of Kweichow Moutai still ranked first. From the perspective of market performance, the top 20 heavy stocks of the Stock Connect performed better in April, with only 4 monthly returns negative, among which Fuyao Glass, Zijin Mining, Haier Smart Home, Wanhua Chemical, China Merchants Bank and other stocks were among the top gainers.
In terms of the concentration of individual stocks, the concentration of the top five and top 20 holdings of the Mainland-Hong Kong Stock Connect increased slightly in April, and the concentration of the top 10 decreased slightly. Specifically, in April, CR5, CR10, CR20 and CR50 were 21.2%, 29.4%, 39.8% and 55.0% respectively, up 0.0 percentage points, down 0.1 percentage points, up 0.0 percentage points and down 0.1 percentage points respectively from the previous month.
We believe that it is no accident that northbound funds have exceeded expectations this year, on the contrary, both the short-term and long-term inflow trends of northbound funds are in line with objective laws. In the short term, since 2018, the cumulative 20-day net inflow and outflow of northbound funds has basically fluctuated around a stable central level, and the mean reversion characteristics are significant, which means that northbound funds will generally gradually turn into net inflows after rapid outflows in the short term. In the long run, since the opening of the Cross-border Stock Connect, there has been a net inflow of northbound funds over the years, and in recent years, with the great improvement of the convenience of global investors in the allocation of the A-share market, the inclusion factor of the A-share market in major international indices has also been increasing, and the increase in the degree of "internationalization" of A-shares will help attract long-term and sustained inflows of foreign capital. 5 Risk Warning
First, geopolitical risks exceed expectations, second, macroeconomic risks are lower than expected, and third, overseas markets fluctuate sharply. This article is from the report "Stock Market Liquidity Monthly Report: Northbound Single-day Net Inflows Hit a Record High" released by Huafu Securities Research Institute on April 29, 2024. Analyst: Yan Xiang, S0210523050003 Zhu Chengcheng, S0210523060003 new book recommendation |"Pursuing the Road of Value: 1990~2023 China's Stock Market Review" This book systematically reviews the market trend of A-shares in 1990~2023 since the establishment of China's stock market, and pays more attention to the use of quantitative empirical evidence to explain market changes. The author tries to construct a "four-in-one" analytical framework for review, that is, macroeconomy, corporate earnings, interest rate level, and asset price comparison. The market review of each year is divided into three parts: the first part is a review of major events, which describes the key events affecting the capital market, the second part is the economic situation, which analyzes the macroeconomic situation and the changes in the earnings and valuation of listed companies, and the third part is the market characteristics, which analyzes and explains the structural characteristics of the stock market in the current year. The last two chapters of the book provide an overview of the investment framework, methodology and key issues of the A-share market. In order to do a better job in review research, the new edition of "Pursuing the Road to Value" A lot of revisions have been made, including: first, the review of the A market in the last three years from 2021 to 2023 has been continued; second, the annual strategic topics have been reconstructed, and the methodological part with universal significance has been summarized in the last two chapters of the book for framework summary, so that readers can better understand the basic logic of the operation of A-shares; third, a large number of columns have been added to think and discuss many special issues; fourth, inductive tables and data summaries have been added to highlight the attributes of the reference book of this book; and fifth, the content of the original chapters has been supplemented and revised to a considerable extent。 Overall, no less than 40% of the new version has been updated and revised. At a time when the mainland is speeding up the construction of a financial power, the era of a comprehensive registration system has begun, and the capital market has attracted widespread attention from the whole society, we sincerely hope that the new edition of "The Road to Value" can help readers better understand the historical details of the past A-shares, so as to rationally and scientifically judge the short-term, medium- and long-term trends of the future market.
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