Chinanews.com, February 1 (Xie Yiguan, Chinanews Finance and Economics reporter) In January 2023, the TV series "Hurricane" hit the air, and the northbound funds, which were regarded as the "weather vane" of A-share investment, also started a "hurricane" trend, five times in a month. The net purchase amount exceeded 10 billion, and the single-day net purchase amount on January 30 hit a new high since December 2021.

The net purchase in a single month exceeded 140 billion, setting a new record!

　　Northbound funds have been net-buying for 15 consecutive days. According to the statistics of the reporter, the cumulative net buying volume in 16 trading days in January reached 141.29 billion yuan, which greatly exceeded the 88.992 billion yuan in December 2021, setting a record for net inflows in a single month.

Since the net purchase of northbound funds in 2022 is 90.02 billion yuan, this also means that the net purchase of northbound funds in January this year has exceeded the entire year of last year.

　　Judging from the recent net inflow of northbound funds into industries, post-epidemic recovery, pro-cyclical, post-real estate cycle, and industries with high prosperity are favored.

Among them, power equipment, non-bank finance, and food and beverage are the industries with the largest net purchases.

　　From the perspective of net purchases of individual stocks, Ningde Times is the most popular with northbound funds. As of January 30, the net purchases in January exceeded 10 billion yuan, followed by Kweichow Moutai and China Ping An, with net purchases in January exceeding 8 billion yuan .

Wuliangye, Longji Green Energy, China Merchants Bank, CDFG, BYD, etc. were also frequently bought.

The top stocks with net inflows of northbound funds in January (as of January 30).

Data from Flush iFinD.

　　The reporter noticed that this wave of northbound capital inflows was also accompanied by the strengthening of A shares.

Judging from the trend of A shares, the three major stock indexes have started a strong rebound since late December 2022.

Prior to this, there had been consecutive net inflows of northbound funds for many days.

Why is the northward capital flowing into A shares at an accelerated rate?

　　Looking at the trend of northbound funds in 2022, although net purchases have been achieved throughout the year, the speed of capital inflows has slowed down significantly, hitting a new low since 2017.

Entering 2023, why will the inflow of northbound funds be greatly accelerated?

　　"In January, the northbound funds basically showed a unilateral net buying trend, with a net inflow of more than 100 billion yuan. On the one hand, it is because the valuation of China's A-shares is relatively low compared with overseas market valuations, and international funds are more interested in this." Gui Haoming, chief market expert of Shenwan Hongyuan, told the reporter of Zhongxin Finance that on the other hand, due to the correction of the US dollar index, the appreciation of the renminbi is more obvious, and the willingness of foreign capital to allocate Chinese assets has increased.

　　Data show that in December 2022, the US CPI rose by 6.5% year-on-year, the smallest year-on-year increase since October 2021; the CPI fell by 0.1% month-on-month, the first month-on-month decline in two and a half years.

The market believes that as the Fed's interest rate hike expectations slow down, global liquidity will usher in an improvement, and the appreciation of the renminbi will provide impetus for northbound capital inflows.

　　"After the adjustment of China's epidemic prevention and control policy, economic activities gradually resumed, and the market has high expectations for China's economic growth in 2023, which in turn attracted foreign capital to accelerate the return." Gui Haoming said.

　　According to Bloomberg, many companies have raised their forecasts for China's economic growth.

For example, Goldman Sachs expects China's economy to grow by 5.5% this year, higher than its previous forecast of 5.2%.

　　The market's confidence in China's economic growth also makes A shares continue to be optimistic.

According to Hong Kong's "South China Morning Post", Goldman Sachs raised its year-end target for the MSCI China Index to 85 from 80 in a report to clients on January 27, which means there is a 13% upside from the current level.

The report also raised the target of the CSI 300 Index from 4,500 to 4,800, representing a potential gain of 15%.

This is the third time Goldman Sachs has raised the target of the MSCI China Index in more than two months.

　　In the view of Wang Xinyue, an analyst at Galaxy Securities, the large net inflow of northbound funds has a calendar effect. "In the past five years, northbound funds have had the law of increasing their positions in the A-share market at the beginning of the year."

Data map: RMB.

Photo by Chinanews.com reporter Li Jinlei

What is the impact of the large increase in northbound funds on A shares?

　　"The recent net inflow of northbound funds has increased the buying interest in the A-share market to a certain extent." Gui Haoming said that this time has also boosted the popularity of the A-share market and has significantly improved the enthusiasm for the domestic market.

　　"After the large net inflow of foreign capital, the market has seen a phased rise." Wang Xinyue mentioned that looking back at the phases of large-scale buying of northbound funds since 2019, most of the A-share market has good excess returns.

Compared with the northbound capital industry flow in the same period, industries with more foreign capital inflows performed better in the same period and in the future market.

　　The China Securities Research Report pointed out that as the economic recovery is expected to strengthen and the market environment continues to improve, the product issuance of domestic institutions is also expected to speed up to form internal and external resonance, driving A-share funds to face better.

Will northbound funds continue to "buy, buy, buy"?

　　In 2023, China's economic growth is expected to stabilize and overseas risk appetite will continue to recover. From the market's point of view, northbound funds may continue to maintain a large inflow trend.

　　Wang Xinyue believes that the current period is a period of rapid rise in the valuation of some industries, and it is also a period of rapid capital increase. It is expected that the net inflow of northbound funds will continue to increase throughout the year.

　　Industrial Securities pointed out that according to calculations, it is conservatively estimated that foreign capital will inflow 300 billion yuan this year, and considering capital replenishment, global liquidity from tight to loose, and the reappearance of China's asset advantages, the scale of inflow may reach 400-500 billion yuan, exceeding expectations It has become one of the most important sources of incremental funds for the A-share market this year.

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