Batch limit up! Is this type of ETF attracting attention or becoming the 'sharpest spear'?
2024-10-09
On October 8th, the market opened sharply high and fell back, then rose again, and the ChiNext Index continued to record its largest single day increase in history. As of the close, the Shanghai Composite Index rose 4.59%, the Shenzhen Component Index rose 9.17%, the ChiNext Index rose 17.25%, and a number of ChiNext and Sci Tech Innovation Board ETFs, including the ChiNext Growth ETF (159967), ChiNext 100 ETF Huaxia (159957), and Sci Tech Innovation 100 ETF Huaxia (588800), hit the daily limit up of 20CM. The total transaction volume of the Shanghai and Shenzhen stock markets for the day was 3.45 trillion yuan, an increase of 860 billion yuan from the previous trading day, continuing to set a historical record. Overall, individual stocks have risen more than fallen, with over 5000 stocks rising in the entire market. In terms of sectors, semiconductor, software development, storage chips, data security and other sectors saw the highest gains, while a few sectors such as tourism fell. Goldman Sachs bluntly stated, 'If you don't rush now, when will you rush?' During the seven day National Day holiday, A-shares were closed for seven days, while Hong Kong stocks continued to soar. Global funds were bullish on Chinese assets, and sentiment continued to ferment. Both institutions and retail investors had optimistic expectations for the first trading day after the holiday. During the National Day holiday, economist Ren Zeping joked that the A-share market is expected to close at the opening next week, so you can leave work early. Foreign investment's comments are more radical. Goldman Sachs' Asia Pacific strategy team has upgraded its rating on Chinese stocks to 'increase holdings' and is optimistic about the potential for large-scale stimulus measures to boost valuations. Its strategy report straightforwardly states, "If we don't rush now, when will we rush?" Goldman Sachs points out that the repricing brought about by previous policy shifts rarely stops the stock market's gains at 30%. The response of the Chinese stock market to fiscal easing is more positive than that of monetary policy. Now that monetary policy has basically been implemented, if further fiscal stimulus measures are introduced in the future, the market may have a more positive response. Goldman Sachs has upgraded its rating on Hong Kong stocks to 'overbought', but is more bullish on A-shares compared to Hong Kong stocks. It is expected that A-shares will have a 14% to 15% upward potential in the next year. The bank also revealed that its holdings in the Chinese stock market are still relatively light and will improve with an increase in risk appetite. Although hedge funds have rapidly increased their risk exposure to investments in China, they are still at the 55th percentile of the five-year range, which is at a moderate level. The peak exposure in January 2023 when the Chinese economy reopened and the stock market rebounded was at the 91st percentile. The latest report from foreign investors buying Xingye Securities (7.500, 0.68, 9.97%) points out that during the long holiday period (October 2-4), major Hong Kong stock indices rose, with the Hang Seng Technology Index leading the way with a 10% increase. This also indicates a strong willingness of global funds to allocate Chinese assets, which is expected to catalyze the post holiday market of A-shares. According to EPFR fund data tracked by China International Capital Corporation (42.470, 3.86, 10.00%), as of October 2nd, overseas active funds have turned into net inflows for the first time after 65 consecutive weeks of outflows, and passive funds have accelerated significantly. CICC pointed out that the follow-up trend of active foreign investment is worth paying attention to, but its continued inflow requires more policies and more optimistic expectations to drive. As of the end of August, global active funds allocated 5% of Chinese stocks (the high point at the beginning of 2021 was 14.6%), with a 1 percentage point underallocation. By calculation, if we switch from low-end configuration to standard configuration, it will result in an inflow of nearly 40 billion US dollars (approximately 280 billion yuan), which is equivalent to the total outflow since March 2023. At the same time, the asset scale of many overseas listed Chinese ETFs continued to increase this week, such as KraneShares China Overseas Internet ETF (KWEB), MSCI China ETF iShares (MCHI), iShares China Large Cap ETF (FXI), etc. Eric Yee, Senior Portfolio Manager at Atlantis Investment Management in Singapore, stated, "We are reducing our long positions across Asia to provide funding for buying Chinese stocks. Everyone is doing this. This is a good policy driven recovery. You don't want to miss this opportunity." JPMorgan strategist Nikolaos Panigirtzoglou wrote in a report, "The significant rise in ADRs (American Depositary Receipts) of Chinese companies over the past week is mainly the result of new purchases rather than short covering. Short covering of individual stocks seems to have only played a small role." S3 Partners and Xiaomo both said that if short positions are forced to exit their bets, it may give further momentum to Chinese concept stocks. Ihor Dusaniwsky, General Manager of S3 Predictive Analytics, stated that if the upward trend continues, there is expected to be a "significant" short covering, which will further drive up the stock price. On the morning of October 8th, Zheng Zhajie, Director of the National Development and Reform Commission, stated at a press conference of the State Council Information Office that efforts will be made to boost the capital market. Relevant departments will take strong and effective comprehensive measures to vigorously guide long-term funds to enter the market, unblock obstacles for social security, insurance, wealth management and other funds to enter the market, support mergers and acquisitions of listed companies, steadily promote the reform of public funds, and study and formulate policy measures to protect small and medium-sized investors. At present, various policies are being accelerated in their implementation. The prosperity index of China's logistics industry in September was 52.4%, up 0.9 percentage points from the previous month. From the perspective of sub indices, the total business volume index, new order index, etc. have continued to rise and remain in the expansion range. The activity of e-commerce express delivery has increased, and the total business volume index of postal express delivery industry in September was 69.9%, far higher than the industry level. The key surveyed enterprises have a daily average month on month increase of about 8% in business volume. Leveraged financing is accelerating, but still below expectations and far from the peak of 2.2 trillion yuan. As of September 30th, the financing balance of the Shanghai Stock Exchange was reported at 750.256 billion yuan, an increase of 27.634 billion yuan from the previous trading day; The financing balance of the Shenzhen Stock Exchange was reported at 679.245 billion yuan, an increase of 18.164 billion yuan from the previous trading day; The total amount of the two cities was 1429.501 billion yuan, an increase of 45.798 billion yuan from the previous trading day. According to a research report by China International Capital Corporation (CICC), with the end of the National Day holiday and the A-share market being closed, global news coverage remained relatively stable, and Chinese assets led the world in performance. Domestic measures to stabilize growth, represented by the real estate sector, have been gradually implemented, and some travel and consumption data are good. Based on the comprehensive economic data and market performance both domestically and internationally during the long holiday, the short-term upward trend of A-shares is expected to continue after the holiday, and the mid-term "bottom" conditions are still being improved. CITIC Securities (29.920, 2.72, 10.00%) stated that there has been a significant change in policy signals, leading to a major reversal in market expectations. In the future, if domestic demand policies continue to increase or push price signals to arrive earlier, the market will usher in a major turning point; After the expected major reversal, the characteristic of incremental funds mainly consisting of retail investors entering the market is that the pulse like rise will continue in the short term; We are currently in a transitional stage of an expected major reversal towards a major turning point in the market, with low P/B and domestic demand recovery as the core. After the price signal is confirmed and a major turning point in the market is reached, an annual level bull market characterized by a credit cycle rebound will begin, and investors will have a better entry opportunity. Under multiple favorable conditions, the market is expected to form a second wave of relay, and the elasticity and space of the ChiNext and Sci Tech Innovation Fund products are expected to be better. It is recommended to pay attention to the ChiNext 100 ETF Huaxia (159957, Linked Fund: Class A: 006248, Class C: 006249), Sci Tech Innovation 100 ETF Huaxia (588800, Linked Fund: Class A: 020291, Class C: 020292), and ChiNext Growth ETF (159967, Linked Fund: Class A: 007475, Class C: 007474). ETFs are expected to become the sharpest spear in this round of market trend, and the mainstream funds' favor towards ETFs is impressive. Since the end of September, relevant indices represented by the ChiNext, Sci Tech Innovation, and Beijing Stock Exchange have performed well, with multiple indices increasing by more than 40%. The trading volume of ETFs has significantly increased, reflecting strong aggressiveness, and funds are also pouring in in in large quantities. As of the end of September, the size of ETFs in China's entire market has exceeded 3 trillion yuan for the first time, reaching 3.15 trillion yuan. The scale reaching a new high not only demonstrates investors' confidence in the capital market, but also reflects the changing trend of capital inflows in the current market. Compared with traditional investment methods, ETFs have obvious advantages: 1. ETF fees are low, and compared with the 1.2% management fee of active equity funds, the management fee of ETFs is generally between 0.15% and 0.5%; 2. ETFs are beneficial for risk diversification. Participating in A-shares through ETFs is equivalent to quickly holding a package of stocks for individual investors, with transparent and clear positions, no style drift issues, and avoiding the risk of individual stock "black swan" and corresponding difficulties in stock selection; ETFs have active trading and good liquidity, which is conducive to the rapid layout and inflow of large funds. Overseas, commodity and other varieties can achieve T+0; 4. In addition, participating in the market through ETFs can lower the threshold for a large number of retail investors, such as the 500000 threshold for the Hong Kong Stock Connect and the 100000+2-year threshold for the ChiNext board. When the market is sluggish, there are long-term funds such as the national team's low-level layout through ETFs. When the market rises, there are also active funds that quickly enter the market through ETFs. ETFs have risen rapidly in China, and in just 9 months, the total scale has expanded from 2 trillion at the end of last year to 3 trillion now, becoming an important channel for incremental funds to enter the market. (New Society)
Edit：Yao Jue Responsible editor：Ye Jing
Source：Securities Times
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