Since March, there has been a significant net outflow of foreign capital from a shares. As of March 14, the cumulative net purchase amount of northbound funds in the current month reached -48.501 billion yuan. On the morning of March 15, the net purchase amount of northbound funds was -8.836 billion yuan.
In the 10 trading days from March 1 to 14, the northbound funds had a net outflow in 8 trading days, of which the net purchases on March 9 and 14 were -10.935 billion yuan and -14.409 billion yuan respectively. In the short-term outflow of foreign capital, A-Shares fell sharply in the short term. From March 2 to 14, the Shanghai Composite Index and the gem index fell by 7.60% and 10.93% respectively. Among them, the gem refers to entering a technical bear market, with a cumulative callback of more than 27% compared with last year’s high point.
In this round of adjustment, some heavy foreign stocks fell significantly Midea Group Co.Ltd(000333) since October 25 last year, it has been continuously sold by Shenzhen Stock connect, and its shareholding ratio has decreased from 18.94% on October 22 last year to 16.10% on March 14 this year Kweichow Moutai Co.Ltd(600519) and China Tourism Group Duty Free Corporation Limited(601888) were net sold by Shanghai Stock connect for 7 trading days from March 1 to 14. On March 14, they were net sold by 1.556 billion yuan and 801 million yuan respectively, equivalent to 18.49% and 19.40% of their full day trading volume.
There are multiple factors in the short-term outflow of foreign capital and the adjustment of a shares. It is worth mentioning that the US Securities Regulatory Commission (SEC) announced on March 10 that five Chinese companies will be included in the temporary identified list according to the foreign company Accountability Act. This triggered the continuous sharp decline of China concept stocks listed in the United States, and then the sharp decline of technology stocks listed in Hong Kong. At the close of March 14, the NASDAQ China Jinlong index, which represents the performance of major Chinese stocks in the United States, fell 11.73%, down more than 10% for three consecutive trading days. Some market analysts believe that China concept shares, Hong Kong shares and a share capital are “brothers”, and the decline is easy to trigger a chain reaction.
According to the analysis of Morgan Stanley Huaxin Fund Research and management department, the external conflict pushed up the oil price, the market’s concern about inflation intensified, the overseas market adjusted sharply, the A-share sentiment was impacted, and the Hong Kong stock was impacted by the additional impact of China concept stock supervision. The continuous decline triggered negative feedback at the capital level, which accelerated the market decline China Industrial Securities Co.Ltd(601377) research report said that the rhythm of net inflow of northbound funds has slowed down significantly since 2022, and the biggest marginal change in this round of outflow lies in the reduction of A-Shares by foreign capital “long money”. Recently, both the foreign capital allocation disk and trading disk have turned into net outflow, and the allocation disk representing the “long money” of foreign capital rarely has a continuous net outflow.
The short-term substantial outflow of foreign capital from A-Shares has a certain impact on the sentiment of A-share investors. From the trend of individual stocks, most of them are in the form of breaking and falling. For investors, although it is impossible to judge when the adjustment bottoms out, it is not appropriate to panic excessively. The fundamental factor determining the medium and long-term trend of the stock market is fundamentals. At present, there are many uncertain factors, and the epidemic situation in China has been obviously repeated. However, this year’s government work report makes it clear that China’s GDP is expected to grow by about 5.5%. This shows that China’s economic development has strong stamina and toughness, which is expected to form a strong support for the stock market. In the medium and long term, A-Shares are basically oriented well, and foreign capital is still expected to continue to flow into A-Shares China Industrial Securities Co.Ltd(601377) analysis points out that first, the real interest rate difference between China and the United States is still at a high level, supporting the capital inflow to the north; Second, there is less pressure on the depreciation of RMB exchange rate and improve the cost performance of RMB assets; Third, the US economy faces the risk of stagflation or even recession. With the increase of steady growth, China’s fundamentals are expected to improve. China’s relatively stable fundamentals and investment environment will also attract sustained inflow of foreign capital. The inflow of foreign capital into A-Shares is still a long-term trend.
Investors should also see that the increasing number of positive factors in the market helps to enhance the resilience of a shares. On the one hand, a group of listed companies rarely took the initiative to disclose the operating conditions of the first two months, most of which achieved sustained performance growth and sent positive signals to minority shareholders. On the other hand, the number of companies that announced increased holdings and repurchases increased. For example, Midea Group Co.Ltd(000333) announced that it planned to buy back 2.5 billion yuan to 5 billion yuan, and Jiangsu Hengrui Medicine Co.Ltd(600276) planned to buy back 600 million yuan to 1.2 billion yuan. According to relevant media statistics, 27 listed companies were increased by important shareholders from March 7 to 11, with a total increase of 613 million yuan.
