In 2021, northbound capital will accelerate the layout of the A-share market. As one of the important incremental funds of a shares, by the end of 2021, the market value of Beishang capital holdings was 2.7 trillion, accounting for 3.7% of circulating A-Shares (only 0.5% at the beginning of 2017). In 2021, the net inflow of northbound capital into A-Shares was 432.2 billion yuan, significantly exceeding the scale of 351.7 billion yuan in 2019 and 208.9 billion yuan in 2020.
Observe the changes in the market value proportion of northbound capital holdings in various industries (northbound market value / total market value of the industry) since the beginning of the year. The industries in which the market value proportion of northbound capital holdings has increased significantly are mainly concentrated in the new energy and upstream resources sectors with high prosperity, including electric gas equipment, computers, agriculture, forestry, animal husbandry and fishery, chemical industry, nonferrous metals, etc, Industries with a significant decline in the market value of northbound capital holdings are concentrated in the consumption and real estate industry chain, including household appliances, building materials, medicine and biology, food and beverage, real estate, etc.
In 2021, the industries with significant additional funds from northbound are electrical equipment, chemical industry, medicine and biology, with net inflow of 132.7 billion yuan, 62.3 billion yuan and 49.5 billion yuan respectively. The top three industries with net outflow of funds from northbound are food and beverage, national defense and military industry and real estate, with net outflow of 5.2 billion yuan, 3.1 billion yuan and 2.1 billion yuan respectively. In December 2021, Beishang capital significantly increased the allocation of non bank finance, chemical industry, banking, food and beverage and electrical equipment, with a net inflow of RMB 17.2 billion, 10.6 billion, 9.8 billion, 8.9 billion and 7.9 billion respectively. The sectors significantly reduced their holdings were medicine, biology and non-ferrous metals, with a net outflow of RMB 1.9 billion and 1.2 billion respectively. In the long run, funds going north continue to flow to industries with high prosperity, including electrical equipment, electronics, mechanical equipment, etc. in addition, there have been significant additions to the financial sector (non bank and bank) and the consumer sector (food and beverage, household appliances, etc.) recently.
Investment strategy: northbound capital, as an important incremental capital of a shares, affects the market investment style and pricing system to a certain extent. With reference to the latest trend of funds going north and in combination with the current situation, the high growth plate and dilemma reversal plate deserve attention: first, continue to focus on the manufacturing industry and the high boom track. Including military industry, new energy (new energy vehicles, photovoltaic, new energy, energy systems, etc.), semiconductors, the Internet of things, etc. these sectors have long-term logic and will maintain high growth for a long time in the future. When the market starts a new performance expectation in the first quarter of next year, it is expected that the relevant sectors will usher in a new round of upward period. The second is the dilemma reversal track. Including business tourism, pig cycle, shipbuilding, innovative medicine and other sectors. These sectors are currently at the bottom of the cycle. At the most difficult time, the stock price also reflects these difficulties to a considerable extent. Once the cycle goes up, the stock price is full of elasticity. In addition, we can also pay attention to some industrial security fields, such as information security, seed industry security, etc; The industrial cycle began to move upward, such as consumer electronics.
Risk tip: the Fed’s interest rate hike is less than expected, and the performance of relevant sectors is less than expected.
