On December 17, 2021, the CSRC planned to revise several provisions on the trading interconnection mechanism between the mainland and Hong Kong stock markets, in which “Shanghai and Shenzhen Stock connect investors do not include mainland investors” attracted market attention. According to the split of custody seats, the seats participating in the trading of Shanghai Shenzhen Hong Kong stock connect include Chinese institutions, foreign securities companies and foreign banks. From the perspective of intuitive understanding, mainland investors are more likely to be hosted in Chinese funded institutions (including mainland institutions and Hong Kong funded institutions), but it does not rule out that a small number of mainland investors choose foreign securities companies as custody institutions. We calculate the impact of this round according to the custody account.
Impact of the new regulations: actively cut off the risk of global liquidity fluctuation at the cost of short-term impact
It is generally believed that mainland investors will invest through the detour of securities companies in Hong Kong. Its advantage is that they can leverage through the cheap cost of overseas capital. However, such behavior will amplify the sensitivity of the mainland market to the global capital cost. Global liquidity is approaching a phased inflection point. At present, they take the initiative to cut off risks, which is conducive to the healthy development of the capital market, But it may cause impact in the short term. Northbound funds are mainly entrusted to foreign banks, Followed by foreign securities companies and Chinese institutions (we can think that mainland investors may potentially affect the capital, but the high probability is only part of it). However, the custody capital scale of foreign banks accounts for a relatively high proportion and the transaction behavior is relatively stable, which is not within the scope of this influence. If the above rules are defined, as of December 16, 2021, the scale of Beishang custody in foreign banks, foreign securities companies and Chinese institutions is 2195.141 billion yuan and 470 million yuan respectively RMB 100 million and RMB 131.792 billion, accounting for 78.48%, 16.81% and 4.71% respectively. Since 2021 (as of December 16), the custody funds of foreign banks and foreign securities companies have purchased A-Shares of RMB 400017 billion and RMB 27684 million respectively, and the custody funds of Chinese institutions have sold A-Shares of RMB 3019 million. Since 2021, foreign banks are still the main force of incremental funds going north. The potential impact of mainland investors on the scale of funds has increased, but the proportion has decreased. No matter from the perspective of increment or stock, the overall withdrawal of northbound due to the implementation of the new regulations will not occur, which is more due to structural fluctuations. From the industry distribution of stock positions potentially affected by mainland investors (as of December 16): they are mainly food and beverage, Dianxin, electronics, medicine and other industries, of which Chinese institutions hold 17.57 billion yuan, 15.421 billion yuan, 12.181 billion yuan and 11.615 billion yuan respectively, and foreign securities companies hold 71.825 billion yuan, 55.636 billion yuan, 39.745 billion yuan and 40.021 billion yuan respectively.
Potential influence of mainland investors on capital behavior in 2021: electronics, Dianxin and computer are the main buying industries
From the perspective of transaction, the funds entrusted to foreign securities companies are the main source of capital fluctuation in northbound, which presents the characteristics of high-frequency transaction. If it is understood that the regulatory policy is mainly aimed at the purchase funds of Hong Kong brokers since 2021, the industries that need to be concerned are: from the perspective of the additional industries in 2021, the funds entrusted by Chinese institutions are mainly to increase positions in electronics, Dianxin, computers, food and beverage, commerce and retail, etc; The funds entrusted by foreign securities companies are mainly increased: banking, electronics, chemical industry, Dianxin and computer. If it is considered that the two joint positions can be used as the cross verification of the industrial preferences of mainland investors, electronics, Dianxin and computers can be regarded as the most likely sectors for mainland investors to buy since 2021. As of December 16, Chinese institutions bought 1.224 billion yuan, 1.022 billion yuan and 862 million yuan respectively, and foreign securities companies bought 8.369 billion yuan, 4.945 billion yuan and 4.286 billion yuan.
Discussion on behavior since December
Since December (as of December 16), Beishang investors entrusted with Chinese funded institutions, foreign securities companies and foreign banks have net purchased 194 million yuan, 34.866 billion yuan and 47.045 billion yuan respectively. The proportion of foreign securities companies has exceeded the past, and the marginal impact is worthy of attention. In December, both Chinese funded institutions and foreign-funded securities companies mainly net bought food and beverage, non bank, power and public utilities sectors, of which Chinese funded institutions (as of December 16) bought 2.114 billion yuan, 356 million yuan and 217 million yuan respectively; Foreign securities companies bought 6.861 billion yuan, 7.157 billion yuan and 1.990 billion yuan respectively. If it is understood that the new regulations are aimed at the behavior since December, the above sectors deserve attention. On the day of the new regulations landing this Friday (December 17), Chinese funded institutions sold 2.518 billion yuan (the trading volume is much higher than in the past), and foreign-funded securities companies sold 5.991 billion yuan. In the concentrated industries, Chinese funded institutions are mainly food and beverage, electronics, power and public utilities; foreign-funded securities companies are mainly selling Dianxin, medicine and food and beverage. If it is considered that Friday is the beginning of the impact, the above sectors deserve attention.
Risk tips:
Measurement error.
