Before the National Day, the stock market trend gradually stabilized, while liquor stocks continued to flourish, and on-market funds that are heavily stocked on liquor stocks also reaped impressive gains. However, although the market is rising, market funds, which are a trend vane for institutional capital, are beginning to experience net redemptions.

Liquor stocks soared

Heavy liquor stock funds benefit

Yesterday, liquor stocks led the two markets. The liquor index rose 3.81%, the rise of Jinhui Liquor came to a standstill. Liquor Ghost Liquor and Yingjiagong Liquor also rose more than 9%. Kweichow Moutai rose more than 3%, and the stock price reached a record high of 1,184 yuan.

Following the interpretation of the liquor market, many OTC funds (ETFs, LOF, grade B, etc.) that heavily stock liquor stocks rose significantly. According to the data, as of the close of trading on September 24, 35 OTC funds with liquor stocks as the heavy sector rose by an average of 0.92% on the same day. The China-Europe Industry Growth Blend and Southern Consumer Enterprise funds rose 3.9% and 3.66% respectively yesterday; the Penghua China Securities Liquor Index Rating B, China Merchants China Securities Liquor B, Yinhua Consumer Theme Rating B, and Penghua China Securities ETF rose more than 2%. According to the data, the average yield of the above funds reached 54.8% during the year, far exceeding the general market performance during the same period, and some leveraged Tier B increases were significantly ahead.

According to the data, as of September 23, China Merchants China Securities Liquor B's net worth growth rate reached 202.7% during the year. The yield of China Southern Consumer Enterprise, Penghua China Securities Liquor Index Class B, and China Thailand Securities Food and Beverage Industry Index Class B also had yields of over 120% during the same period. Using leverage and investor popularity, the increase was significant.

Among non-graded funds, the Huitianfu China Securities Major Consumer ETF, Harvest China Securities Major Consumer ETF, and Invesco Great Wall Dingyi Hybrid (LOF) all had yields of 60% during the year, far ahead of the general market index.

Referring to the boom in the liquor sector, a large public fund manager in Beijing analyzed that the food and beverage industry has seen the highest gains since this year. Liquor stocks are the industry with the strongest certainty of growth in this sector. The secondary market's pursuit of certainty has boosted the valuation of liquor stocks. Under the general trend of consumption upgrading, demand in the high-end liquor market is strong, and there is plenty of room for price increases. Overallocated liquor stocks have become the main source of excess income for many funds. Meanwhile, liquor stocks, which are relatively scarce and undervalued, are also increasingly becoming an important direction for foreign capital allocation. “Liquor has consumer attributes and social attributes, forming a relatively good competitive pattern in terms of regions and prices. The market's pursuit of certainty has led institutional capital to pool liquor stocks.”

Liquor Stock Benefit Fund

Encountered a net redemption

It is worth noting that as the liquor market rose higher and higher, on-market funds, which were a trend vane for institutional capital, began to experience net redemption.

According to the data, as of September 23, the total share of 35 on-market funds related to the liquor sector was 17.7 billion yuan, down 14.8% from the end of last year. Among them, LOF funds and stock ETFs such as Jingshun Great Wall Dingyi Hybrid and Harvest China Securities's main consumer ETF received a net inflow of capital, while some of the on-market funds that track MSCI-related indices with Kweichow Moutai and Wuliangye as heavy stocks received a net redemption of funds.

Also, investors are discouraged by the high premiums of on-market funds. Some industry insiders warned that liquor stocks have risen hugely since this year, and related funds may have higher premiums, so you should pay attention to investment risks.

According to the data, as of September 24, the average premium rate of the above 35 funds was 1.14%. Among them, the number of on-market funds traded at a premium reached 27; China Securities Liquor B, which has the highest premium rate, recently reached 17.08%.

A stock ETF fund manager in Beijing explained, “An on-market fund premium means that the fund's transaction price in the secondary market exceeds its own net worth. This phenomenon usually occurs when the net value of the fund rises rapidly, and investors are even willing to 'get on the car' at a higher price. However, in the long run, the transaction price of the product will return to the net value of the fund, and holders of high premiums should pay attention to the risk of a pullback.”

From a fundamental point of view, there are fund managers who suggest the risks of investing in liquor stocks.

The high-performing fund manager mentioned above in Beijing said that the liquor stock market in the future will face pressure from the following three aspects: first, in an environment of downward pressure on the domestic economy and trade frictions between China and the US, consumer goods such as liquor may be affected by the general economic environment; second, many liquor companies expect price increases, and consumer acceptance of price increases will need to be tracked in the future; third, liquor stocks have increased significantly during the year and have already accumulated quite a few profit markets, which will constrain the future market's upward space.