20181213-中国银河国际证券-Northbound_Stock_Connect__Major_net_outflows_in_building_materials_stocks_10页_721kb

Hong Kong Strategy Summary

Core Content

This document provides an analysis of the Northbound Stock Connect trading activity in November and December 2018, focusing on the net inflow and outflow of funds into specific Chinese A-shares. It highlights the shift in investor sentiment towards certain stocks and the selling pressure on others, influenced by market dynamics and index inclusion.

Main Points

• Northbound Trading Trends:

  • Northbound trading recorded net inflows of RMB47bn in November 2018, reversing from net outflows of RMB10.5bn in October.
  • The first week of December continued to see RMB12.6bn in net inflows.
  • YTD net inflows reached RMB290bn, significantly higher than RMB200bn in 2017, due to the inclusion of A-shares in the MSCI Emerging Markets Index.

• Major Fund Inflows:

  • Stocks with significant weighting in the MSCI Emerging Markets Index attracted substantial inflows, including:
    • Moutai (600519.CH): Stake increased by 6.1%, with RMB3.27bn involved.
    • China Merchants Bank (600036.CH): Stake increased by 15.9%, with RMB2.48bn involved.
    • Ping An Insurance (601318.CH): Stake increased by 4.6%, with RMB1.96bn involved.
    • China Southern Airlines (600029.CH): Noted as a major inflow despite not being a heavy index stock, with RMB2bn involved.
    • Aier Eye Hospital (300015.CH): Attracted RMB738m, with stake rising to 5.52%.

• Major Fund Outflows:

  • Northbound investors sold off building materials stocks, including:
    • Anhui Conch Cement (600585.CH): Stake decreased by 7.2%, with RMB925.4m involved.
    • Baoshan Iron & Steel (600019.CH): Stake decreased by 10.4%, with RMB460.6m involved.
    • Maanshan Iron & Steel (600808.CH): Stake decreased by 18.0%, with RMB307.1m involved.
    • Sansteel (002110.CH): Noted as being sold, with RMB94.3m involved.
    • Jiangsu Hengrui Medicine (600276.CH): Stake decreased by 1.4%, with RMB379.2m involved.

• Other Notable Trends:

  • China Southern Airlines saw a 148.4% increase in stake held by northbound investors, with a 2.26% change in stake and a RMB2bn inflow.
  • Aier Eye Hospital showed a 36.8% increase in stake, with a RMB738m inflow.
  • Hangzhou Hikvision (002415.CH), though a major MSCI stock, saw reduced interest from northbound investors.
  • Non-MSCI stocks like Aier Eye Hospital and China Southern Airlines also attracted inflows due to their performance and sector-specific factors.

Key Information

• Market Performance:

  • The CSI300 was up less than 1% in November, but northbound inflows were still strong at RMB47bn.
  • Weak oil prices and a stabilizing RMB are cited as key factors attracting northbound investors.

• Sector Dynamics:

  • Building materials stocks faced selling pressure, possibly due to seasonal factors and market expectations.
  • Healthcare and financial sectors showed positive inflows, with companies like Moutai, China Merchants Bank, and Ping An Insurance leading the trend.

• Investor Behavior:

  • Northbound investors were more inclined to invest in stocks with high index weightings.
  • Some non-index stocks also attracted attention due to sector-specific performance and dividend yields.

Conclusion

The document outlines the shift in northbound investor activity in late 2018, highlighting a reversal from outflows to inflows in November, with a focus on high-weight stocks in the MSCI Emerging Markets Index. It also notes the selling pressure on building materials stocks and the positive inflows into non-index stocks such as Aier Eye Hospital and China Southern Airlines, driven by market conditions, sector performance, and dividend yields.