Foreign Institutions Join Forces: Bullish on Long-Term A-Share Opportunities!

Recently, amidst the ongoing low-volatility fluctuations of major A-share indices, the international capital market has ignited a "China fever."

Shanghai-Pudong Development Bank (SPD) Fund, UK asset management giant M&G Investments, and US-based Krane Funds have successively announced the launch of China equity-related products, highlighting the confidence of foreign institutions in the Chinese market and indicating the potential for a significant influx of capital into the A-share market in the future.

On September 12, SPD Fund stated that, as a domestic investment advisor, its foreign shareholder, the internationally renowned investment institution AXA Investment, officially launched the China A-Share QFII Fund in Luxembourg in August, which has been approved for issuance in 13 European markets.

This year marks the tenth anniversary of AXA Investment's QFII Fund investing in the Chinese market.

From a global strategic perspective, SPD Fund believes that the current market environment is an excellent opportunity to deploy core assets in A-shares, with Chinese asset prices expected to rebound.

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The issuance of Chinese QFII funds in overseas markets also demonstrates the long-term confidence of foreign capital in investing in the A-share market.

SPD Fund stated that China's economic environment has been gradually warming up this year, and fundamentally, the domestic economy has entered a stage of stable recovery with strong resilience.

Data from the National Bureau of Statistics shows that the GDP grew by 5.0% year-on-year in the first half of the year, indicating an overall trend of economic recovery and improvement.

Import and export, service consumption, and investment data have also given both domestic and foreign institutions stronger confidence in the domestic economic recovery.

"At the current juncture, compared to overseas mature markets such as the United States, some high-quality high-dividend and new economy stocks in China's capital market are at historical lows in valuation, providing an attractive investment opportunity for overseas investors."

On September 9, UK asset management giant M&G Investments also announced the launch of a China equity fund, offering investors the opportunity to enter one of the world's most attractive long-term stock selection markets.

M&G stated that the launch of the fund coincides with the Chinese stock market being at the bottom of the valuation range, while many companies are increasingly focusing on improving shareholder returns.

"We believe that compared to China's economic scale, the current market value of the Chinese stock market is too small, and the valuation levels of many stocks are convincing."

David Perrett, M&G China Fund Manager and Co-Head of the Asia-Pacific Equity Investment Team, said that at the same time, many Chinese companies have shown stronger operational resilience in recent difficult times and are increasingly focusing on maximizing profits and increasing shareholder returns through higher dividends and stock buybacks.

KraneShares Alpha Index ETF launched by Krane Funds is also worth paying attention to.

The company believes that A-shares are undervalued in global indices, and allocating A-shares in China may bring diversified returns.

This view coincides with its long-standing judgment.

In fact, the uniqueness of the A-share market is precisely its appeal.

Compared to mature markets, the pricing efficiency of A-shares still has room for improvement, providing long-term investors with opportunities to obtain excess returns.

The increase in foreign institutions entering the market will undoubtedly have a positive impact on the A-share market.

First, it will enhance the internationalization of the market, which is conducive to introducing more advanced investment concepts and management experience.

Second, the continuous inflow of foreign capital helps to stabilize the market and reduce short-term speculative behavior.

Finally, the long-term investment strategy of foreign institutions will inject more rational forces into the A-share market, which is beneficial to the healthy development of the market.

Under the expectation that foreign capital will flow into the Chinese stock market on a large scale, it has also been continuously laying out heavy positions in A-shares.

In the middle of this year, QFII funds entered the top ten shareholders/circulating shareholders list of 702 A-share companies, implementing new heavy positions or continuing to increase positions in 491 of them; the Shanghai-Hong Kong Stock Connect entered the top ten shareholders/circulating shareholders of 2062 companies, with 1051 companies being further increased or newly heavily positioned during the second quarter.

In addition, it is worth noting that with the release of the buyback announcements of listed companies since the third quarter, the latest holdings of major shareholders have also been revealed in advance.

Many companies still continue to be heavily positioned by foreign QFII funds such as Goldman Sachs Group and UBS or Hong Kong Central Clearing Limited funds of the Shanghai-Hong Kong Stock Connect in the third quarter.

For example, Meibang Apparel, which is involved in the new retail concept, updated the major shareholder holding situation on July 12, showing that Goldman Sachs Group, BNP Paribas, and UBS have successively completed new heavy positions, ranking as the sixth, seventh, and eighth largest shareholders of the company.

Combining the secondary market performance, the company's stock price has also achieved a good rise in the recent period, with a phase increase of nearly 40%.

In the latest top ten shareholders' holding data of Dabo Medical, a medical consumables concept stock, on September 10, Hong Kong Central Clearing Limited further increased its holdings by 824,100 shares compared to the end of the second quarter.

Looking at the secondary market, the company has also achieved a rise in the recent period since the end of August.

Guoxin Securities, after being reduced in the first two quarters of this year, was favored by Hong Kong Central Clearing Limited again in the third quarter.

The latest top ten shareholders' holding situation on August 21 shows that Hong Kong Central Clearing Limited increased its holdings by 10.6468 million shares.

Since the bottom rebound of the company's stock price on July 15, the phase performance has been significantly stronger than the market average.

Similar situations also exist for companies such as WuXi AppTec, Gan & Lee Pharmaceuticals, GigaDevice, Yisheng Stock, and Optoelectronic Technology, which have all continued to be increased or newly heavily positioned by Hong Kong Central Clearing Limited since September.

In addition to the companies that have publicly increased or newly increased positions, combining with the recent institutional research data, foreign institutions have participated in the research of 121 A-share companies since September.

United Imaging Medical was "watched" by 79 foreign institutions, including Temasek Fullerton, Nomura International (Hong Kong), Merrill Lynch Securities International, Citigroup Global Markets Asia, and Goldman Sachs Group.

Chip concept stock Lanti Technology has also been concerned by 56 foreign institutions, including Hongsheng Capital, Franklin Resources, Pictet Investment Asia, and Wellington Management (USA).

In addition, companies such as Desay SV Automotive Electronics and Shengyi Electronics have also participated in research by more than 10 foreign institutions since September.