Net increase of 10.1 billion USD!
Brothers and sisters, the A-shares have reached 3600 points!!!
Investors joke: "According to this trend, soon there might be no couriers left, only the flag bearers of each Sector!"
As of the close, the Shanghai Composite Index rose by 0.65%, closing at 3605.73 points, the Shenzhen Component Index rose by 1.21%, the GEM Index rose by 1.5%, with a total trading volume of 1873.9 billion yuan in the All Market, a decrease of 24.5 billion yuan compared to the previous day, and over 4300 stocks rising.
Under the stock-bond seesaw effect, it was another day of battering in the bond market, with the 10-year national bond active notes experiencing 7 consecutive downturns, and yields climbing from 1.632% to 1.73%.
1
Are foreign investors starting to increase their positions in the Chinese stock market?
Yesterday, when the A-shares touched 3600 points, they immediately dropped. The stock king Tencent surged nearly 5%, and a giant bullish line supported the Hong Kong stocks, with the Hang Seng TECH Index rising 2.48%.
The problem is that southbound funds net sold HK stocks amounting to 1.32 billion HKD yesterday, with Tencent being the most affected, net selling 1.129 billion HKD, which was the largest net sell of the day.
(The content of this article consists of objective data information and does not constitute any investment advice.)
Who is crazily buying Tencent?
The southbound funds' increase in shareholding of Tencent stopped on April 22, and since then, there has been a continuous decrease.
According to Wind data, from April 24 to July 23, the southbound funds had a cumulative net sell amounting to as much as 52.6 billion HKD.
With such a large volume, the most likely buyers are still foreign investors.
According to Tencent's top ten net buying/selling brokers in the last 60 days, the Hong Kong Stock Connect net selling ranked prominently, while the brokers with the highest net buying are Industrial And Commercial Bank Of China, HSBC, Citibank, and Société Générale.
Therefore, the market widely discussed yesterday that Tencent's sudden surge is likely due to foreign active funds buying.
Regarding whether foreign capital has increased its holdings in Chinese assets, the data from the Forex administration is more authoritative.
2
In the first half of the year, foreign investment net increased by 10.1 billion dollars!
On July 22, the State Administration of Foreign Exchange revealed data showing that in the first half of this year, foreign capital net increased its holdings of domestic Stocks and Funds by 10.1 billion USD, especially in May and June, where the net increase rose to 18.8 billion USD, reversing the overall net reduction trend of the past two years.
In June, the securities investment foreign exchange settlement and sales once again showed a surplus, with a surplus of 25.3 billion USD, which is the highest level since October 2024. A settlement surplus indicates that more foreign exchange has been exchanged for RMB, reflecting a Bullish outlook on the future of RMB assets.
Specifically, the settlement of foreign exchange under the capital and financial account recorded a surplus of 2.4 billion USD again after May, with the surplus of securities investment reaching 7.7 billion USD, tying with the historical third-highest record in May.
Today, Wu Jinyou from the Shanghai headquarters of the People's Bank of China stated at a press conference that since May, foreign capital has increased its purchases of domestic Stocks.
"Foreign investment in domestic Stocks has warmed, reversing from a net Outflow in the same period last year to a net Inflow this year, and since May, foreign capital has increased its purchases of domestic Stocks. With deeper market opening and the emergence of valuation advantages, the attractiveness of the domestic Capital Markets to foreign capital is expected to continue to strengthen."
These changes are also apparent in the holdings dynamics of northern-bound funds.
The previous article "Just now, almost broke through! Sweeping the whole network" mentioned the changes in holdings of northern-bound funds in the second quarter:
As of June 30, the Market Cap of northern-bound funds reached 2.29 trillion yuan, an increase of about 50 billion yuan from the first quarter, marking a consecutive second quarter of increased holdings.
In terms of shareholding quantity, foreign investors hold 12.3065 million shares, an increase of 0.4122 million shares compared to the end of the first quarter, also representing a net increase in A-shares in the second quarter.
Among them, the top five stocks with net purchases in the second quarter were Contemporary Amperex Technology, Hengrui Pharmaceuticals, Dongpeng Beverage, Zijin Mining Group, and WUXI APPTEC, while the top five stocks with reductions in shareholding were Kweichow Moutai, Midea Group Co., Ltd, Wuliangye Yibin, Boe Technology Group, and Luxshare Precision Industry.
"Currently, the market value of bonds and stocks held by foreign investors accounts for about 3%-4%. Supported by multiple positive factors, it is expected that foreign capital will continue to gradually increase its allocation to RMB assets," said Jia Ning, director of the International Balance of Payments Department of the State Administration of Foreign Exchange.
3
The resonance of margin trading and stock ETFs!
As A-shares are eager to challenge the 3600 high point, the most aggressive leveraged funds in the market - margin trading funds have also been charging upwards recently.
As of July 23, the financing balance of the two markets increased by 2.647 billion yuan, reaching 1.92 trillion yuan, setting a new high since March this year.
Since June 23, in the past 23 trading days, the net financing inflow was positive for 22 days, with only one day showing a net outflow.
Notably, since mid-April, the stock ETFs that were continuously experiencing net outflows have had three consecutive days of net inflows, resonating with the margin financing.
According to Wind data, in the first three trading days of this week, the total net inflow of stock ETFs reached 5.468 billion yuan, with ETFs tracking the construction materials index, Hong Kong Internet Index, CSI Infrastructure Index, CSI Chemicals Sub-industry Index, Hong Kong Securities Index, and CSI Steel Index leading with net inflows of 2.813 billion yuan, 2.805 billion yuan, 1.501 billion yuan, 1.491 billion yuan, 1.373 billion yuan, and 1.301 billion yuan respectively.
It is evident that under the stimulation of the largest hydropower project in human history, with related stocks being hard to come by, funds are choosing to steer through ETFs to save the situation, frantically trading in directions related to 'anti-involution.'
If we closely observe the performance of the sectors in the A-shares over the four trading days this week, it seems that funds are working hard to eliminate "all low-priced sectors."
On Monday, the building materials and infrastructure sectors exploded; on Tuesday, the low-priced upstream resource sectors surged across the board, with the coal sector experiencing a surge in limit rises, followed by increases in the steel and liquor sectors; on Wednesday, the hydropower concept showed a divergence, and bank stocks rose again; on Thursday, the duty-free and tourism sectors exploded.
Now the A-shares have stood above 3600 points for the first time this year, in a rapidly rotating market, funds are urgently seeking truly investable undervalued sectors, as this is an important source of future excess returns.
A review by Industrial Securities of seven historical rounds where brokerage firms led the index to new highs found that in the 20 trading days after the market breakthrough led by brokerages, growth industries represented by military industry, pharmaceuticals, TMT, and personal care, along with industries such as chemicals, machinery, and new energy, which have more α opportunities, have a high probability of leading the rise.
