In the past 2021, while individual investors actively entered the market, institutional investors were also very active. Overall, the investor structure of the A-share market has changed greatly, and the proportion of market value held by professional institutional investors has increased steadily year by year. According to the data of China Securities Depository and Clearing Co., Ltd., by the end of November 2021, the number of non natural person investors (mainly institutional investors) who have opened A-share accounts was 442500, an increase of 46600 compared with the end of 2020, and the growth rate was accelerated compared with the same period of the previous two years, which also reflects the institutionalization trend from the side. Looking forward to 2022, institutional people pointed out that with the continuous inflow of medium and long-term funds such as public offering, insurance, financial management and foreign capital, the institutionalization process of A-Shares will continue to advance steadily.
increasingly optimized investor structure
the “long money” of A-Shares keeps flowing
According to China International Capital Corporation Limited(601995) , individual investors accounted for 95.4% of the market in 2003 based on the free circulation market value. By the end of 2020, the proportion of individual investors will fall below 50% for the first time. In 2021, which has just ended, this trend is more significant.
As the “main force” of institutionalization, the scale of public funds will continue to expand in 2021. According to the data of China Securities Investment Fund Industry Association, as of the end of November 2021, the total asset management scale of China’s public funds was 25.32 trillion yuan. Private equity funds have also become an important part of incremental funds. According to China Industrial Securities Co.Ltd(601377) , the net inflow of private equity funds in 2021 is about 2 trillion. If 75% of the positions are estimated, by the third quarter of 2021, the proportion of private equity market value in the market value of the whole a has increased significantly from 3.54% at the end of 2020 to 4.84%. China Industrial Securities Co.Ltd(601377) it is estimated that in 2022, the issuance of public funds is expected to exceed 2 trillion, and private funds are expected to continue to maintain a net inflow of 2 trillion.
With the acceleration of the construction of the old-age security system, the long-term capital of A-Shares is also expected to be further expanded. China Industrial Securities Co.Ltd(601377) it is estimated that for the A-share market, the basic endowment insurance fund is expected to bring more than 10 billion yuan of capital increment in 2022, the social security fund will bring more than 100 billion yuan of capital increment, and the enterprise annuity will bring more than 100 billion yuan of capital increment. Industrial Bank Co.Ltd(601166) Political Commissar Lu, chief economist, said that a healthy capital market is inseparable from long-term investors crossing the cycle to stabilize the short-term irrational fluctuations in the capital market. The long-term pension investment and large total amount of funds are the natural stabilizers for the stability of the capital market.
In addition, while bringing incremental funds, northbound funds have also changed the investor structure of the market to a certain extent and strengthened the concept of value investment and long-term investment. According to the statistics of data treasure, the total turnover of northbound funds in 2021 exceeded 25 trillion yuan, with a net purchase of 432.1 billion yuan, both reaching a record high, and the net purchase is twice that of 2020.
Guotai Junan Securities Co.Ltd(601211) said that compared with the equity markets of overseas developed countries, the A-share market is in the middle of institutionalization, and institutional funds will still be the “decisive force” of A-shares in the future. Anxin Securities pointed out that looking forward to 2022, the end of the transition period of real estate regulation and new asset management regulations will have a far-reaching impact on Residents’ asset allocation; The flow dividend of Internet “base purchase” is gradually ebbing, and the “base purchase” behavior of residents will be more quantitative, rational and habitual in the future; With the continuous inflow of medium and long-term funds such as public offering, insurance, financial management and foreign capital, the process of A-share institutionalization will also advance steadily.
value investment orientation highlights
funds focus on high-quality assets
The “long-term flow” of funds from public funds, insurance funds, pensions and other institutions will be an important driving force for the long-term and healthy development of China’s capital market. Insiders pointed out that whether it is to find enterprises with real value or eliminate investment targets with hidden risks, it needs strong investment and research ability, which is the natural advantage of institutional investors.
In terms of the market characteristics in the process of A-share institutionalization, public funds, insurance funds and foreign capital reflect a higher voice. According to the statistics of Guotai Junan Securities Co.Ltd(601211) , from 2006 to 2007, the shareholding scale of the fund continued to rise, and its preferred non bank finance, banking and other industries achieved better excess returns relative to the market; From 2009 to 2010, after the formal introduction of the insurance fund management bill, the insurance fund accelerated the allocation of a shares. During the market entry period, the performance of small and medium-sized stocks was better than that of large cap stocks. According to the style, the consumption and growth performance were stronger than that of cycle and finance; From 2017 to 2020, foreign capital led the institutionalization, and the public fund “took over” in 2020. Its preferred industries such as blue chip white horse and food and beverage “rode the dust” in this period of time. Chen Li, chief economist of Chuancai securities and director of the Research Institute, said that the increase of institutional investors is conducive to reducing the irrational volatility of the A-share market. As far as the A-share market is concerned, institutional investors are more in pursuit of relatively determined returns and the perspective of being responsible to the custodian. They need to strictly screen listed companies and pay more attention to companies that meet the value investment concept.
Where will new institutional funds be invested in the market? From the perspective of market performance, A-share institutional funds are gathering high-quality assets with high growth certainty and scientific and innovative attributes. Based on the data of the third quarterly report of 2021, from the distribution of CITIC’s primary industries, the industries with heavy positions of public funds are medicine, food and beverage, power equipment, new energy, electronics, basic chemical industry, etc. 84 listed companies with the largest holding scale of 10 billion public funds include Kweichow Moutai Co.Ltd(600519) , Wuliangye Yibin Co.Ltd(000858) , Hangzhou Hikvision Digital Technology Co.Ltd(002415) , Contemporary Amperex Technology Co.Limited(300750) , Wuxi Apptec Co.Ltd(603259) ; The industries with the largest positions are food and beverage, medicine and electronics, with a holding scale of more than 110 billion yuan. According to data treasure statistics, by the end of 2021, the market value of A-Shares in pharmaceutical, biological and electronic industries had exceeded 8 trillion. The market value of the six major industries of electrical equipment, chemical industry, electronics, public utilities, mechanical equipment and non-ferrous metals also increased by more than trillion.
However, Wei Yixi, ESG researcher of e fund, also pointed out that institutional investors account for about 22% of the total market value of a shares, but their participation in corporate governance is still in the early stage, and the average attendance rate at the general meeting of shareholders is only 25% to 26%. Many institutional investors did not participate in the voting and transferred the decision-making power of major issues to major shareholders. Referring to the experience of overseas mature markets, the institutionalized proportion of A-share market is expected to be further improved in the future. “Compared with individual investors, institutional investors are more professional, more long-term value oriented and have a larger shareholding scale, so they can have a stronger influence on listed companies.” He said.
(economic information daily)
