On the evening of May 20, FTSE Russell, an international index compilation company, announced the results of the quarterly review of the FTSE global stock index series. The adjustment will take effect after the market closes on June 17.
This adjustment involves fewer Chinese stocks, and the leading lithium battery leader Pioneer Intelligence, with a market value of over 70 billion yuan, has become the only A-share large-cap stock subject to be excluded.
4 new Hong Kong stocks were included, all of which were micro-cap stocks; 1 B-share was excluded, which was *ST Shandong Airlines B.
Lithium battery leader leading intelligent was "kicked"
The announcement shows that 4 new Hong Kong stocks have been included in the FTSE global stock index series, all of which are micro-cap stocks, including Eagle Eye Technology, Hongcheng Environmental Technology, Connaught Optical, and UJU HOLDING.
At the same time, 1 A share is excluded from the large-cap stocks category, which is the leading intelligence; 1 B-share is excluded from the small-cap stocks, which is *ST Shandong Airlines B.
It is worth noting that the leading lithium battery leader Pioneer Intelligence with a market value of 77.6 billion yuan was removed, becoming the only large-cap A-share stock to be removed this time.
According to the announcement, the stock was removed because it did not pass the free float adjustment review.
This means that the foreign shareholding ratio of Pioneer Intelligence has reached the upper limit, and it was excluded due to insufficient space for foreign investors to buy.
According to the official website of the Shenzhen Stock Exchange, as of May 19, the foreign shareholding ratio of 10 stocks including Pioneer Intelligence, Sanhua Intelligent Control, Oriental Yuhong, and Qiaqia Foods have all reached the warning line.
Since the beginning of this year, the foreign shareholding ratio of Pioneer Intelligence has remained high, exceeding the early warning line of 27% for many times.
The latest data shows that the total number of A shares held by foreign investors in Pioneer Intelligence is 416 million shares, accounting for 26.62% of the company's total share capital.
According to the regulations of the exchange, when the foreign shareholding ratio exceeds 24%, the latest foreign shareholding situation of the stock will be announced on the next trading day; after it exceeds 28%, the Shanghai and Shenzhen Stock Connect will suspend buying and only sell; if it exceeds 30% %, all foreign buying channels are closed and only selling.
When Pioneer Intelligence had too much foreign shareholding, it no longer had sufficient investment space for foreign investors, so it was excluded by FTSE Russell.
It is understood that, in general, index companies will exclude the subject observation for 12 months, or include it again if the conditions are re-satisfied after 12 months.
*ST Shandong Airlines B is excluded from delisting risk
Another excluded *ST Shandong Airlines B was issued a delisting risk warning by the Shenzhen Stock Exchange in April this year due to the company's negative net assets in 2021.
Judging from the annual report, the company has suffered serious losses for two consecutive years: in 2020, the company's net profit will lose 2.382 billion yuan, and in 2021, it will lose 1.814 billion yuan.
The company's recently disclosed first quarter report also suffered a serious loss, amounting to 1.332 billion yuan, and the net profit attributable to the parent company decreased by 59.48% year-on-year.
The company's stock price has fallen all the way, and its market value has shrunk significantly.
In the face of delisting risks, the company stated in the announcement that the board of directors will actively seek support, and at the same time, take the initiative to take measures to eliminate delisting risks. The main measures include strengthening production organization and revenue control; striving for high-quality routes and developing market opportunities; strengthening costs management and control to ensure capital security; deepen synergy advantages and promote strategic resource sharing.
Foreign investors are optimistic about the trend of A shares for a long time
Since the beginning of this year, the trend of A-shares has fluctuated, but the trend that foreign investors are optimistic about A-shares has not changed.
Zhao Yaoting, global market strategist at Invesco Asia Pacific (excluding Japan), commented that China's liquidity conditions were further loosened, and the central bank lowered the five-year loan market quoted rate (LPR) by 15 basis points from 4.60% to 4.45%. The biggest drop since 2019.
Zhao Yaoting believes that the LPR cut, coupled with the regulator's announcement last week to reduce bank financing costs and the lower limit on mortgage rates for first-time buyers, could revive home sales.
In addition, consumption and economic activity are expected to pick up in late 2022, according to economic data on retail sales and factory activity released earlier this week.
Goldman Sachs China Equity Strategy Research Team believes that the risk-reward of "investing in recovery beneficiaries" has become attractive.
Looking ahead, Goldman Sachs sees manufacturing-related stocks outperforming, with consumer-related stocks expected to rebound later in the day as consumer activity normalizes.
Focusing on the manufacturing economy will provide a more favorable risk-reward for investors in recovery-themed deals.