Home » Under the interest rate cut, foreign capital inflows into A-share Mainland Stock Connect trading calendar optimization will help expand inclusion_Real Estate Market_China_Capacity

Under the interest rate cut, foreign capital inflows into A-share Mainland Stock Connect trading calendar optimization will help expand inclusion_Real Estate Market_China_Capacity

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Original title: Under the interest rate cut, foreign capital inflows into A-share Mainland Stock Connect trading calendar optimization will help expand inclusion

[ 8月22日,北向资金净流入43.25亿元,8月至今累计净流入近170亿元。 ]

With the reduction of the Medium-Term Lending Facility (MLF) last week, the Loan Quote Rate (LPR) was also lowered as expected, and the 5-year LPR, which is more related to housing loans, was significantly reduced by 15BP (basis points).

On August 22, the net inflow of northbound funds was 4.325 billion yuan, and the cumulative net inflow since August is nearly 17 billion yuan. Yao Hongyao, head of equities at Aberdeen China, told reporters: “China’s recent supportive policies are a positive sign, and we remain optimistic about the outlook, especially as stimulus measures start to play out throughout the system in the second half of the year. Some A shares The company began to announce its first-half results in August, and investors’ focus has gradually returned to corporate fundamentals. During the earnings period, we remain optimistic about the profitability of companies with relatively high quality.”

Extended easing cycle helps boost sentiment

On the 22nd, the 1-year LPR was reduced by 5BP to 3.65%, and the 5-year LPR was reduced by 15BP to 4.3%.

“A 5bps cut in the 1-year LPR is not expected to have a major impact, but a 15bp cut in the 5-year LPR reflects a relatively sluggish housing market and sends a strong signal that policymakers are willing to take stronger action to Stabilize the market.” Zhao Yaoting, global market strategist at Invesco Asia Pacific (excluding Japan), told reporters.

Due to the repeated epidemics that have caused China’s economic downturn, the extension of the easing cycle has recently marginally improved market sentiment, but international investors are more concerned about the follow-up progress of real estate-related measures.

Zhao Yaoting said that the reduction of LPR is expected to ease short-term pressure, but only by relaxing liquidity, the effective improvement in promoting the real estate market may be relatively limited. “So far, the fall in mortgage rates has not been very effective in driving a recovery in property sales due to a lack of confidence in large developers. Policymakers may do more to boost confidence in the housing market.”

Earlier it was reported that the regulator plans to provide liquidity support to these real estate companies by appointing state-owned enterprises to guarantee and underwrite the newly issued RMB bonds of demonstrative real estate companies. A number of foreign institutions mentioned to reporters that this measure is more substantial than the credit mitigation tool in May.

In the future, expectations for further easing remain. Ding Shuang, chief economist for Northeast Asia and China at Standard Chartered, told reporters a few days ago that economic activity in July weakened marginally. In August, due to the repeated epidemics, some leading indicators showed that economic activity was still relatively sluggish, while real estate continued to drag on the economy. “We now think there could be an additional 10BP cut in the MLF rate in October.”

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In the short term, range fluctuations are still the consensus of foreign investment, but Yao Hongyao also told reporters: “Although it will still be challenging for some time to come, we see that the impact of the epidemic on growth is dissipating, and regulatory pressure may also change over time. China’s counter-cyclical monetary and fiscal policy easing has also provided important support for the economy. Taking all this into account, we expect stock market conditions to improve in the second half of the year. For those who have been involved for the long-term, it will Proving to be a market full of opportunities.”

The new energy industry chain is still the focus

Under policy easing, growth sectors tend to dominate. Regardless of the changes in the market value of northbound capital holdings in the past 5 days and the past 20 days, new energy-related concepts are still the focus.

According to the data of Oriental Fortune Choice, in the past five trading days, the industry sectors with the largest market capitalization of northbound funds are: electrical equipment, power equipment, electricity, Internet finance, food, electronic components, power transmission and transformation equipment, real estate development, etc.

Although the short-term power cuts, including in Sichuan and other regions, may cause the price of silicon materials to rise again and squeeze the profits of the middle and lower reaches, it is difficult to change the hot trend of photovoltaic investment in the medium and long term, especially in the context of frequent global high temperature and extreme weather.

Specifically, Leshan, Sichuan is an important production base for upstream polysilicon in photovoltaics. Tongwei (600438.SH) and GCL Technology (03800.HK) both have important production capacity in the local area. According to the statistics of the Silicon Industry Branch, the local annual output of polysilicon in 2021 is 67,000 tons, and the annual output in 2022 is expected to reach 120,000 tons, accounting for 14.6% of the total output. A number of photovoltaic companies told reporters that the current power outage has been extended. In addition, once the production line is shut down, it will take a climbing cycle to return to normal levels. However, people in the industry generally believe that the overall impact is limited. This power cut has the characteristics of seasonal, temporary and regional, and many enterprises will carry out capacity expansion in the medium and long term. In this week’s announcement, both new and old companies have capacity expansion, and the new capacity in the cell segment is mainly TOPCon. In addition, the launch of new silicon material capacity is also expected to alleviate the temporary upstream price shock.

Miao Zimei, director of Fidelity International’s Asian equity investment, told reporters earlier: “In the context of the global green energy transition, we focus on opportunities in China’s solar energy industry.” She said that the Chinese government’s goal is to put renewable energy in China by 2030. The share in power generation will increase from 12% in 2021 to 26%. This will drive long-term structural growth in China’s solar and wind capacity, with annual solar capacity estimated to increase from 55GW in 2021 to 120GW in 2026. Wind power capacity will increase from 48GW in 2021 to 68GW in 2026.

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In addition to photovoltaics, international institutions have generally expressed their optimism about the development prospects of China’s offshore wind power recently.

Du Yi, manager of Swiss Pictet themed stock investment fund, told reporters: “Onshore wind power is relatively mature, while offshore wind power has great potential for future development. For example, Shanghai and other eastern regions are likely to build many power plants in the future, and there is no problem of consumption. Europe Now the so-called independent energy development supply chain is also driven by offshore wind power, the North Sea has abundant wind power resources, and many components of wind turbines also come from China.”

A number of industry insiders told reporters that the reason why wind power was not as popular as photovoltaics earlier was mostly because the market was worried about whether the rush installation promoted by the previous policy would see a resurgence, and wind power projects had a longer cycle than photovoltaics, and most of them were New Year’s projects. There will be a time dislocation between the bidding and the achievement of performance. In addition, the cost of raw materials accounts for 80-90% of the cost of wind power. Once the low-priced order is confirmed, it is difficult to realize the performance. However, this year, the upstream cost began to decline, and the trend of large-scale wind turbines is obvious, which will eventually reduce the cost of electricity. At the same time, even in the low tide of this year, the amount of wind power bidding is still very large, and the agency expects that the compound growth rate in the next few years will still be more than 30%.

One by one clearing the obstacles to expanding inclusion

It is worth mentioning that the expansion of the inclusion of A-shares in international indices such as MSCI in the medium and long term is also a driving force for attracting continuous capital inflows.

As early as August 12, the China Securities Regulatory Commission and the Hong Kong Securities Regulatory Commission issued the “Joint Announcement” to start the optimization of the trading calendar of Shanghai-Shenzhen-Hong Kong Stock Connect.

On August 22, Morgan Stanley mentioned that considering the implementation of at least 6 months, the short-term impact is limited, but it is positive in the long run.

Previously, MSCI spokespersons have mentioned on several occasions that investors believe that there are four major challenges to be solved before further inclusion – risk hedging and access to derivative instruments, the short settlement cycle of China’s A shares, Arrangements for trading holidays and the formation of an effective comprehensive trading mechanism in Land Connect.

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In the past two years, China has been addressing the above challenges one by one. For example, the optimization of trading holiday arrangements in August is an example. Several foreign investment managers mentioned to reporters before that there are many different holidays in mainland China and Hong Kong, which has caused inconvenience to investors. For example, the outbreak of the new crown epidemic in 2020 led to the postponement of the opening of the A-share market, and the closure of the Chinese New Year holiday. The A-share market has been suspended for nearly 13 days in total, and overseas markets have experienced severe fluctuations, which makes it impossible for international investors to buy and sell A-shares, but at the same time may face The redemption demand of customers can easily cause liquidity problems.

In terms of obtaining derivatives, the Hong Kong Stock Exchange launched a futures contract based on the MSCI China A50 Connectivity Index in October last year. Henry Fernandez, chairman and chief administrative officer of MSCI, said in an exclusive interview with China Business News at the time that the launch of derivatives on the Hong Kong Stock Exchange will help investors strengthen their risk management capabilities, enhance the liquidity of A-shares, and have a positive impact on Hong Kong. and international investors are of strategic significance. In addition to the issue of trading holidays, Morgan Stanley China stock strategist Wang Ying told reporters that whether A-shares can be further expanded into international indexes mainly depends on whether the mismatch between onshore and offshore settlement cycles can be resolved. This is undoubtedly a “hard bone” in the eyes of industry insiders.

“This will be the biggest hurdle for expanded inclusion, as it will affect the entire existing A-share market infrastructure and related regulations,” she said. So even if the other three issues are adequately addressed, as long as MSCI insists on the need for A-shares If the four major problems are completely solved, it is still unlikely that A-shares will increase the inclusion factor in the short term.”

Fernandez also said before that there is no plan to further expand the inclusion of A shares, and the issue of shorter settlement cycles is still difficult, involving different trading systems at home and abroad. “China’s settlement cycle is shorter than that of developed markets, so that international investors must transfer funds to China in advance before deciding whether to invest in the Chinese stock market.” However, the current inclusion factor of 20% is not small, and foreign institutions generally expect that, Increasing the inclusion factor is a long-term trend as issues are addressed one by one. Return to Sohu, see more

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Disclaimer: The opinions of this article only represent the author himself, Sohu is an information publishing platform, and Sohu only provides information storage space services.

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