China’s policy of opening up to qualified foreign institutional investors is continuously increasing. The latest QFII investment quota approval form disclosed by the safe shows that in the first eight months of this year, the newly approved quota of QFII has exceeded US $10 billion, more than three times that of the same period last year.
This means that the QFII army, known as the “A-share reinforcement”, can reserve more and sufficient funds and “ammunition”.
With the disclosure of the semi annual report of listed companies, QFII, as one of the important long-term investors, also surfaced the investment map in the first half of the year. Under the expectation that QFII quota management is expected to be further relaxed, the impact of foreign capital on the structure and investment philosophy of A-share investors will be deepened.
a number of QFII have newly approved large amounts of credit this year
On August 30, the examination and approval of the investment quota of qualified foreign institutional investors (QFII) announced by the safe showed that as of the end of August 2019, 292 investment institutions had obtained a total quota of US $111.376 billion.
According to the statistics of Shanghai Securities News, since this year, the newly approved quota of QFII is US $10.32 billion. The newly approved amount in the same period last year was only US $3.3 billion. This means that in the first eight months of this year, the newly approved quota of QFII was 3.13 times that of the same period last year.
By the end of August, the Macao monetary authority had the largest cumulative approved amount of US $5 billion; Abu Dhabi Investment Bureau ranked second with an amount of US $3.5 billion; The total approved amount of Bank of Korea was US $3 billion, ranking third.
In addition to the above-mentioned institutions, there are six institutions with a cumulative approved amount of more than US $2 billion, including France Industrial Bank Co.Ltd(601166) , Barclays Bank, Central Bank of Norway, Hong Kong Monetary Authority, Swiss bank and Kuwait government investment authority.
It is worth noting that the data disclosed by the safe on January 9 this year showed that as of December 29, 2018, the cumulative approved amount of Abu Dhabi Investment Authority was $2.5 billion, and the last change of amount was December 25, 2015. This means that after a lapse of nearly four years, Abu Dhabi Investment Bureau obtained a new approval amount of US $1 billion in the first half of this year.
Similarly, Merrill Lynch’s approved quota as of the end of 2016 was US $650 million, while the latest approved quota this year increased to US $1.94 billion; France Industrial Bank Co.Ltd(601166) last approved a quota of US $1.7 billion, and this year it obtained a new approved quota of US $1 billion after a lapse of three years; Barclays also won the newly approved quota of US $2.3 billion this year after a lapse of three years, becoming the institution with the most newly approved quota this year.
QFII sweeping path large exposure
After the fund “ammunition” is sufficient, QFII is not soft to sweep the goods.
According to the statistics, as of August 30, among the A-share listed companies that have released the 2019 semi annual report, QFII has 293 positions, 144 holding more than 1% and 21 holding more than 5%; A total of 55 listed companies were increased by QFII in the first half of this year.
According to the reporter’s statistics, a number of listed companies became the target of QFII’s large-scale purchase in the second quarter. According to the data, by the end of the second quarter, Citigroup Global Finance Co., Ltd. had a heavy position of Huatai Securities Co.Ltd(601688) 82515 million shares, and the market value of its position by the end of June reached 18.4 billion yuan; Merrill Lynch holds China Merchants Energy Shipping Co.Ltd(601872) 4021 million shares. Morgan Stanley and Mingji international have taken a fancy to Huaneng Lancang River Hydropower Inc(600025) and bought 10.74 million shares and 12.39 million shares respectively, both of which have become one of the top ten new shareholders.
In the second quarter of this year, sovereign investment funds were still active in a shares. Singapore Government Investment Co., Ltd. sold frequently in the second quarter, and recently held more than 13 million shares of Wanhua Chemical Group Co.Ltd(600309) and Grandblue Environment Co.Ltd(600323) respectively. In addition, the institution also increased its holdings of China State Construction Engineering Corporation Limited(601668) 5706 million shares, Bank Of Ningbo Co.Ltd(002142) 3361 million shares, Yutong Bus Co.Ltd(600066) 399 million shares, Shenzhen Worldunion Group Incorporated(002285) 378 million shares, Baoshan Iron & Steel Co.Ltd(600019) 196 million shares, Wuxi Lead Intelligent Equipment Co.Ltd(300450) 178 million shares.
At the same time, QFII also adjusted its position according to its own investment strategy and risk judgment. Statistics show that by the end of the second quarter, Huaneng Lancang River Hydropower Inc(600025) was reduced by nearly half by the Central Bank of Norway, reducing its holdings of 23.12 million shares.
Analyzing QFII’s position, it is not difficult to find that its stock selection pays more attention to fundamentals and is more inclined to the style of value investment.
In addition to a shares, the bond market is also an area where QFII buys heavily. According to the Bond Custody data of July released by the Central Clearing Corporation and Shanghai clearing house, as of the end of July, overseas institutions had increased their holdings of domestic bonds in China for eight consecutive months, and the total holdings of domestic bonds by overseas institutions amounted to 2016.307 billion yuan, exceeding the 2 trillion yuan mark. Yang Weizhen, senior vice president and chief fixed income analyst of Founder Securities Co.Ltd(601901) Research Institute, believes that in the long run, the proportion of foreign institutions in China’s domestic bond market may reach about 12%.
QFII quota management is expected to be further relaxed
QFII system is the earliest and most important institutional arrangement for the opening of China’s capital market to the outside world. It is one of the main channels for foreign investors to invest in the domestic financial market. The reform of QFII system of safe has been carried out in an orderly manner in accordance with the principle of gradual reform.
Various signs show that the relaxation of QFII quota management is expected to continue further. Whether at the 11th Shanghai Lujiazui Finance & Trade Zone Development Co.Ltd(600663) forum held in June this year or at the press conference on foreign exchange revenue and expenditure data for the first half of 2019 held in July, relevant persons of the safe mentioned that they would promote the reform of QFII and rqfii, expand the scope of investment, and study the appropriate relaxation or even cancellation of QFII quota management.
According to the current system, QFII is quota management, with a total quota of US $300 billion. A single QFII can obtain the basic investment quota not exceeding a certain proportion of its asset scale in the form of filing, and the basic investment quota shall not exceed US $5 billion; The application for investment quota exceeding the basic quota must be approved by the safe.
If QFII quota management is cancelled, it will be more convenient for foreign capital “living water” to enter China’s capital market. This also means that the capital account opening represented by QFII system is expected to be further.
(Shanghai Securities News)
