Source: Financial News Agency Author: Zhou Xiaoya

“The dollar falls, everything lives” is reflected in reality. As interest rates on US bonds declined, the US dollar index weakened, and stock markets in many regions strengthened accordingly on November 15. As of November 15, the H-share ETF, French CAC40ETF, Nikkei ETF, and German ETF had the highest gains.

In fact, since the fourth quarter of this year, cross-border ETFs have become a major force driving the growth of non-commodity ETF fund shares. According to Wind data, as of November 14, since the fourth quarter of this year, the share of non-commodity ETF funds has increased by 22.325 billion shares, and the share increase of more than 70% (17.11 billion shares) has been contributed by cross-border ETFs.

As the share of cross-border ETFs continues to grow, the share of cross-border ETFs increased to 102,675 billion shares during the year, an increase of more than 40% over the end of last year. The latest total share was 346.368 billion; the latest total share was 346.368 billion; the latest scale was 232,742 billion yuan, an increase of 60.474 billion yuan over the end of last year. During this period, the shares of many cross-border ETF funds reached record highs one after another.

When “Hong Kong stocks are dawning” quietly sounded in the investment community, cross-border ETFs represented by Hong Kong stock themed funds became the main direction of capital inflows since October. How do you view future investment opportunities in various overseas markets?

The shares of many cross-border ETF funds reached record highs

On November 15, many cross-border ETFs such as the Harvest Hang Seng Chinese Enterprise ETF, Dacheng Hang Seng Technology ETF, and Guangfa Hang Seng Technology ETF led the non-commodity ETF market. At the same time, various broad-based ETFs that track overseas markets, such as Huaan France CAC40ETF, Huaxia Nomura Nikkei 225 ETF, and Huaan Germany 30 (DAX) ETF, also registered the highest gains. In fact, the net worth of most cross-border ETFs has risen since November, and this month's net worth returns have been as high as 10%.

However, the capital layout was even earlier. Entering the fourth quarter, the popularity of market capital for cross-border ETFs remained unabated, and fund shares continued to grow positively. As of November 14, the net subscription share of the five cross-border ETFs since October has exceeded 1 billion shares.

Among them, the Huaxia Hang Seng Internet Technology ETF received the strongest net subscription (6.472 billion shares), and also became the cross-border ETF with the largest increase in fund share during the year. As of November 14, the total share of the ETF reached 78.737 billion shares, an increase of 25.454 billion shares during the year. The latest size was 30.251 billion yuan, an increase of 22.84% over the end of last year.

Next is the Huaxia Hang Seng Technology ETF. Since the fourth quarter, the ETF has received a net purchase of 5.147 billion shares. As of November 14, the total fund share reached a record high of 45.699 billion shares.

It is worth noting that with the rise in the Hang Seng Technology Index, the ETF's earnings for the year up to now have changed from negative to positive. According to Wind data, the net unit value of the Huaxia Hang Seng Technology ETF on November 15 was 0.5598, with a net value return of 2.06% during the year. As of November 14, the size of the ETF was 24.495 billion yuan, making it the largest cross-border ETF with the largest increase in scale during the year.

Since the fourth quarter, the GF China Securities Hong Kong Innovative Drug ETF, which ranked third, has received a net purchase of 2,467 billion shares since the fourth quarter. The latest total share and scale both reached new highs of 7.61 billion shares and 6.676 billion yuan, respectively. Looking at it in the long run, the size of the ETF increased by 6.491 billion yuan during the year, an increase of 3510.84%. It is temporarily ranked as the cross-border ETF with the biggest increase in scale during the year.

In addition, Huatai Berry's Southern Dongying Hang Seng Technology ETF and Dacheng Nasdaq 100 ETF received net purchases of 1,695 billion shares and 1,329 billion shares respectively outside of the fourth quarter. The fund shares both reached new highs, reaching 27.112 billion shares and 2,623 billion shares.

However, since the fourth quarter, the net subscription share of three products, including the E-Fangda Hang Seng H-share ETF, E-Fonda Hang Seng Technology ETF, and the Huaxia Hang Seng Hong Kong-listed biotech ETF, has exceeded 500 million shares. As of November 14, E-Fangda's Hang Seng Technology ETF fund share has exceeded 10 billion shares to 10.027 billion shares. Similarly, the ETF's net worth return during the year also improved; the Huaxia Hang Seng Hong Kong listed biotech ETF reached new highs in both size (2,634 billion yuan) and share (4.312 billion shares).

Correspondence to this is that many Nasdaq 100 ETFs have received a lot of net redemptions since the fourth quarter, and the maximum net redemption of a single product has exceeded 1.2 billion shares.

Dollar falls, everything lives?

“Since the November Fed meeting, global stock markets have rebounded rapidly, repairing the decline in the second half of October. Under the triple advantage, the market confirmed the peak of interest rates on US bonds.” Huabao fund manager Feng Chencheng analyzed that on the economic side, both the October PMI and non-agricultural sector were lower than expected; from the perspective of US debt supply, the Ministry of Finance's new plan for November to lower the scale of future debt issuance; looking at the Federal Reserve meeting, Powell said that it is now close to the end of this round of interest rate hikes, and the impact of interest rate hikes on the credit side is gradually showing. The overall attitude is biased. Interest rates on US bonds once fell from 4.9% to 4.5%.

In his view, in line with rising interest rates, the Fed quickly changed its position, and the market judged that the Fed's actual goals were more aggressive than those expressed by the outside world, similar to the beginning of 2019. As the market collectively expects interest rates on US bonds to peak, the main risks on the denominator end have been released.

“Even if the Fed makes hawkish statements in the future, and 30-year US debt falls short of expectations, the recovery in US bond interest rates is limited. Currently, it has stabilized only at the 4.6% center, and the ability to revive the economy in the future is limited.” he said.

Tianhong Fund's latest opinion also mentioned that changes in the total supply and structure of US Treasury bonds have relieved the supply and demand pressure on the market to a certain extent, which is expected to lead to a narrowing of the term premium for long-term interest rates, which will help drive long-term interest rates downward.

In their view, as US bond yields decline, assets that are more sensitive to interest rates will be more flexible, including Hang Seng Technology, Nasdaq, and the Vietnamese stock market, all of which deserve attention. “The top of the 10-year US bond yield of 5% may have been established. Although it is not yet possible to judge a sharp and smooth decline in US bond yields, the downward trend has been established and is expected to support the performance of the global equity market in the fourth quarter.”

Feng Chencheng believes that considering the Fed's actual goals are more radical than its stated position, market sentiment is more optimistic, and it is possible to place bets ahead of time, equity assets may usher in an upward long-term trend. “Looking backwards, interest rates on the denominator side of the Hong Kong stock Internet sector continue to improve, and the molecular side of the economy is gradually being verified. The timing of allocation may have been highlighted.”

China-Europe fund manager Luo Jiaming believes that in anticipation of the Fed's interest rate cut, it is expected that as foreign capital flows from developed markets into emerging markets in the future, China's capital market, represented by Hong Kong stocks and A shares, will once again become an important investment choice.

Looking ahead to the future market, he is optimistic about the Hong Kong stock market's three main investment lines. The first is upstream assets; the second is industry leaders who go overseas to generate income; and third, they are optimistic about assets in the science and technology innovation sector, mainly the Internet, electronic semiconductors, and bioinnovative drugs.

Bosch Fund said that with the stabilization of the domestic economy, profit expectations for Hong Kong stocks have gradually improved, the suppression of US debt has recently eased, sentiment has rebounded from a low level, capital going south has also picked up slightly, and risk appetite for Hong Kong stocks has improved.

edit/lambor