20200120-China_Knowledge-Foreign_Investments_in_China_s_A-shares_Weekly_12页_1mb

Foreign Investments in China's A-shares Weekly Summary

Core Content

This report provides an overview of foreign investment activity in China's A-shares market, including market performance, investment trends, and key industry insights. It highlights the movements of foreign funds through the Stock Connect and QFII (Qualified Foreign Institutional Investor) programs, as well as the implications of these investments on the domestic market.

Main Market Performance

• Stock Indices:

  • SZSE: 10,954, up 0.7%
  • SSE: 3,075, down 0.5%
  • HSI: 29,056, up 1.5%
  • NASDAQ: 9,389, up 2.3%
  • Nikkei225: 24,041, up 0.8%
  • DJIA: 29,348, up 1.8%
  • FTSE100: 7,675, up 1.1%

• Stock Connect (Northbound):

  • Average Daily Trading Volume: RMB 55.9 bln, down 6.7% from previous week
  • Foreign Investment in A-shares: RMB 10.43 bln, with a 2.28% change in value
  • Foreign Investment vs. All A-shares: 0.18%
  • QFII Holdings vs. All A-shares (Q3): -1.4%

• QFII Investment Trends:

  • Number of Companies Invested in Q3: 310
  • Top 20 Companies by Stock Connect Investment: Includes major firms like GREE APPLIANCES, PING AN BANK, MIDEA GP, CMB, and others.
  • Top 20 Companies by QFII Investment: Includes BANK OF BJ, MIDEA GP, HENGRUI MEDICINE, AIER EYE, and others.

Key Industry Insights

• Foreign Investment by Industry:

  • Top Industries: Health Care (up 56.42%), Home Appliance (up 21.23%), Electronics (up 22.93%), Electrical Equipment (up 10.72%), and Construction Materials (up 17.11%).
  • Least Popular Industry: Mining (only 0.27% of foreign investment).

• QFII Holdings by Industry (Q3 2019):

  • Banking: RMB 262.20 hundred mln, down 8.54% qoq
  • Health Care: RMB 204.62 hundred mln, up 56.42% qoq
  • Home Appliance: RMB 182.82 hundred mln, up 21.23% qoq
  • Electronics: RMB 76.78 hundred mln, up 22.93% qoq
  • Food & Beverage: RMB 47.63 hundred mln, down 2.09% qoq
  • Transportation: RMB 42.05 hundred mln, down 1.41% qoq
  • Computer: RMB 36.44 hundred mln, up 10.72% qoq
  • Construction Materials: RMB 34.80 hundred mln, up 17.11% qoq

Investment Ratings

• A+ Rating: 225 companies, with foreign investment proportion above the industry and A-shares average, and significant net growth over the past quarter.
• A Rating: 327 companies, with foreign investment proportion above the A-shares average or their industry's average, and positive net growth over the past 4 quarters.
• B Rating: 395 companies, with foreign investment proportion below the A-shares average and their industry's average, and minimal net growth.
• C Rating: Companies with little or no foreign investment.
• D Rating: Companies with zero foreign investment and poor investor relations performance.

News Highlights

• GDP Growth: China's GDP in 2019 reached RMB 99,086.5 bln, up 6.1% YoY, with GDP per capita exceeding USD 10,000 for the first time.
• Midea Group: Foreign investment in Midea Group reached 27.95% of total share capital, surpassing the 28% cap set by CSRC.
• Allianz (China) Insurance Holding Co Ltd: Opened in Shanghai, marking a milestone in China's financial sector liberalization.
• JPMorgan Chase: Seeking 100% ownership of a fund management company, with restrictions on foreign share ratios set to be lifted in April 2020.

Investment Flow

• Northbound Connect: Net inflow of RMB 19.6 bln
• Southbound Connect: Net inflow of RMB 9.1 bln
• Bond Connect: Average daily trading volume in Dec 2019 was RMB 12.9 bln, down 27.9% from previous month.

Top 10 A-shares by Market Value Change (Jan 17)

• Increase: PING AN OF CHINA (+2.4 bln), WULIANGYE (+2.0 bln), MIDEA GP (+1.8 bln), HENGRUI MEDICINE (+1.6 bln), SHUNXIN AGRI (+0.8 bln), GLODON (+0.8 bln), PING AN BANK (+0.8 bln), etc.
• Decrease: CMB (-1.4 bln), SH AIRPORT (-1.1 bln), CONCH CEMENT (-0.8 bln), NARI (-0.7 bln), GREE APPLIANCES (-0.6 bln), etc.

Top 20 QFII by Market Value of Holdings (Q3 2019)

• ING Bank N.V.: RMB 13.3 hundred mln, down 9.3%
• Government of Singapore Investment Corp: RMB 12.2 hundred mln, down 8.1%
• BNP Paribas: RMB 11.2 hundred mln, up 3.3%
• Canada Pension Plan Investment Board: RMB 7.6 hundred mln, down 0.6%
• Hillhouse Capital GR: RMB 6.2 hundred mln, up 45.4%
• Norges Bank: RMB 6.0 hundred mln, up 20.2%
• Oppenheimerfunds Inc: RMB 5.9 hundred mln, up 22.2%
• UBS: RMB 5.4 hundred mln, up 30.9%
• Merrill Lynch International: RMB 5.4 hundred mln, up 272.6%
• HSBC (Hong Kong): RMB 5.3 hundred mln, up 16.2%
• ABU Dhabi Investment Authority: RMB 4.5 hundred mln, up 178.2%
• Monetary Authority of Macao: RMB 3.5 hundred mln, up 44.8%
• Caisse de dépôt et placement du Qué: RMB 1.4 hundred mln, up 172.6%
• International Finance Corporation: RMB 1.1 hundred mln, down 5.7%
• E Fund Management (Hong Kong) Co.: RMB 1.0 hundred mln, down 42.0%

Key Regulatory Framework

• Foreign Investment Limits:
  • Single Foreign Investor: No more than 10% of a single listed company's shares.
  • All Foreign Investors: No more than 30% of a single listed company's shares.
  • Critical Thresholds:
    • 26%: Buy-in alarm triggered
    • 28%: Buy-in suspended
    • 30%: No more foreign buy-in allowed

Conclusion

The report illustrates a dynamic foreign investment landscape in China's A-shares market, with significant inflows and outflows across different sectors. The electronics, home appliance, and health care industries are the most favored by foreign investors, while mining remains the least popular. The regulatory environment is evolving, with increased openness in the financial sector and new opportunities for foreign investment. Investors are advised to carefully assess the market trends and investment risks, and to consult professional advisors for informed decision-making.