On the first trading day of the "May Day" holiday, A-shares ushered in a "good start". The turnover of the three markets in Shanghai, Shenzhen and Beijing was 1,107.4 billion yuan, with more than 4,500 stocks rising, and the net inflow of northbound funds was 9.316 billion yuan.
After-hours data shows that northbound funds bought a net of 3.061 billion yuan of Kweichow Moutai on the same day, and the amount of net purchases of Kweichow Moutai in a single day hit a record high. Kweichow Moutai closed up more than 3%, with a turnover of 10 billion yuan and a total market value of 2.2 trillion yuan. The closing price of Kweichow Moutai was 1760.2 yuan, a new high in the year, and the cumulative increase during the year was nearly 2%.
Core assets led by Kweichow Moutai continued to rebound, and the Shanghai Composite Index continued to refresh a new high this year, with a cumulative increase of more than 5%. Echoing the A-share exchange, the Hong Kong stock market continued to be strong, and the Hang Seng Index reaped the "Ten Consecutive Yangs".
Northbound funds bought Moutai
On May 6, Kweichow Moutai, the "king of A-shares", rose 3.24%, and the turnover increased to 10 billion yuan, the first time in nearly 7 months.
Judging from the news of Kweichow Moutai, on the evening of April 29, Kweichow Moutai issued an announcement on personnel changes, recommending Zhang Deqin as a director and chairman of Kweichow Moutai according to relevant documents of the Guizhou Provincial People's Government. As the new "head" of Kweichow Moutai, Zhang Deqin, who is currently the chairman of Xijiu Co., Ltd., is from Moutai and is considered a senior wine expert. Kweichow Moutai's "change of leadership" is believed to help ensure the company's high-quality development. At present, Zhang Deqin has officially assumed his new position and took over from Moutai.
In addition, Kweichow Moutai also announced a quarterly report for continuous growth. Kweichow Moutai's 2024 first quarter report shows that the company achieved a total operating income of 46.485 billion yuan, a year-on-year increase of 18.04%, and a net profit of 24.065 billion yuan, a year-on-year increase of 15.73%.
However, industry insiders generally believe that Kweichow Moutai's recent fundamentals and personnel changes are not enough to raise the company's stock price. Kweichow Moutai's recent stock price rebound is more driven by sentiment and capital.
In terms of northbound capital flow, northbound funds bought a net of 9.316 billion yuan of A shares on the same day, of which Kweichow Moutai received a net purchase of 3.061 billion yuan. The amount of northbound funds buying Kweichow Moutai in a single day hit a record high.
Kweichow Moutai was also the most favored company for the main funds on the day, with a net inflow of more than 900 million yuan in a single day.
Kweichow Moutai rose sharply in a single day, and its performance turned red again during the year, with a cumulative increase of 1.98%. This means that the top 20 companies in the A-share market by market capitalization have all achieved an increase in performance during the year.
On May 6, the main funds continued to flow into A-share large-cap stocks. In addition to Kweichow Moutai, WuXi AppTec, Ping An of China, and Wuliangye had a net inflow of more than 200 million yuan, and Luxshare Precision, BYD, and Industrial Fortune Union had a net inflow of more than 100 million yuan.
The trend of switching the investment style of A-shares to the broader market has been strengthened again. Specifically, the Wind Overcap Index has risen 14.81% this year, much better than the Mid-Cap Index and the Small-Cap Index, which are up 2.45% and down 4.19% respectively this year.
Core assets have become the focus of foreign capital inflows
There is a lot of overlap between the core assets of A-shares and large-cap stocks. Recently, the core assets of A-shares led by Kweichow Moutai and Hong Kong stocks have continued to rebound, which is believed to be driven by the return of foreign capital.
Industrial Securities said that in the near future, northbound funds have mainly increased their positions in banks, non-ferrous metals, power equipment and food and beverages. At the individual stock level, the increase in positions is also concentrated in leading white horses such as CATL, China Merchants Bank, Mindray Medical, and Luxshare Precision.
Core assets are an important direction for foreign investors to focus on A-shares. Since the beginning of this year, with the correction of overseas capital markets, a large number of foreign investors have re-bought A-shares. Wind data shows that since the beginning of this year, the total net inflow of northbound funds into A-shares has been 83.56 billion yuan.
Taking Kweichow Moutai as an example, since the beginning of this year, the Hong Kong Securities Clearing Company has added more than 3 million shares, indicating that some funds continue to enter the market. The flagship fund of a well-known foreign capital group, the Euro Pacific Growth Fund, was once the fund product with the largest number of shares in Kweichow Moutai in the world, and it increased its holdings of Kweichow Moutai by 386,900 shares in the first quarter.
Wind data shows that CATL, Wuliangye, China Merchants Bank, Kweichow Moutai, Midea Group, Industrial Bank, and Ping An of China have all received net purchases of more than 4 billion yuan from northbound funds this year.
"The entry of foreign capital will resonate with various domestic institutions, and the 'rallying call' of core assets has been sounded. According to the analysis of Industrial Securities, the leading style will become an important source of excess returns this year. With the reshaping of the united front of core assets, the judgment of "the return of the main line of core assets" has become clearer and clearer.
While foreign institutions are buying Chinese assets with real money, they are also actively bullish on Chinese assets. After the release of economic data for the first quarter, Goldman Sachs, Morgan Stanley, Deutsche Bank and many other international financial institutions have raised their growth forecasts for China's economy this year. Goldman Sachs said that it will continue to overweight A-shares, and judged that the valuation of A-shares has the potential to rise by 20%-40% under the optimistic scenario of policy promotion. UBS, a well-known foreign bank, upgraded the MSCI China Index to "overweight".
After more than two months of repeated shocks, before the May Day holiday, the Shanghai Composite Index successfully broke through the 3,100-point integer mark, forming an upward trend, and the second wave of upward offensive market intensified. Yang Delong, chief economist of Qianhai Open Source, believes that from the perspective of global capital allocation, the European, American and Japanese stock markets are at the top of history, and the valuation is high. A-shares and Hong Kong stocks are global valuation depressions, so it is reasonable for some capital to take profits from the European, American and Japanese markets and flow into A-shares and Hong Kong stocks.
The number of positive factors influencing fundamentals is increasing
The recovery of sentiment and capital is only temporary to drive the market, and the main driving force for the continuous rebound of the capital market is still relying on the support of fundamentals.
In the past three years, A-shares and Hong Kong stocks have continued to fall, and many high-quality assets are only three or four or four or five percent of the high price.
"There is still room for upside in the market in the long term. Yuan Hang, deputy general manager of Penghua Fund Equity Investment Department, believes that the market valuation is currently in a historically low position, compared with other major types of assets, stocks have cost performance, and the positive effect of low valuation will continue to be released in a longer period of time. The fundamentals of listed companies will be affected by the combination of policy, competitiveness, innovation and overseas markets, and overall, there will be more positive factors affecting the fundamentals in 2024.
In addition, a number of policies will enter the implementation period in the future, and the follow-up government will also do everything possible to ensure that the annual economic goals are achieved. Compared with overseas stock markets, Yuan said that the valuation of Chinese equity assets is more attractive. The decline in U.S. Treasury yields and the narrowing of risk-free interest rate differentials between China and the United States will also have an impact on the RMB exchange rate and the flow of funds in the stock market.
From the perspective of various factors, Guotai Fund expects that the short-term market shock will basically end with the support of internal and external positive factors, and the market will regain strength. Short-term bullish on growth stocks, including AI and core asset leaders. AI is optimistic about overseas industries and domestic policy catalysts, and at the same time, the recent transaction congestion has been at a low level. The core asset leader is the logic of long Chinese asset Beta at a low level. In addition, long-term attention to the export of selected stocks.
Huaan Securities said that the overall tone of the Politburo meeting of the Central Committee exceeded expectations, and the overall tone β of the overseas FOMC meeting was dovish. Looking forward to the market outlook allocation ideas, under the advent of systemic opportunities in the market, various industries are expected to usher in a general rise pattern, but from the perspective of excess, it is recommended to optimize the highly elastic growth sector and hard fundamental varieties supported by economic performance.
Soochow Securities said that the global manufacturing replenishment will be one of the most important trading logic in the next 1-2 quarters, and mainland overseas/export chain enterprises are expected to benefit from the recovery of overseas manufacturing demand, entering a cycle of profitability and valuation double-click upward;
(Source: China Business News)