Domestic Capital: A-shares Rise, Northbound Outflows.
"Today, a rare scene occurred! Has domestic capital finally returned?" When people see this sentence, they might think I've taken the wrong medicine. A few days ago, it was said that the trend of public fund outflows for the next year will not change, so why is it said today that domestic capital has finally returned? Isn't this contradictory?
In my view, domestic capital is not just public funds; other institutional funds are also considered domestic capital, right? For example, is insurance considered domestic capital?
The reason I bring up this topic is that today's market showed a relatively rare scene. I don't know if everyone has observed and compared the recent inflows and outflows of Northbound capital. Yesterday morning, the inflow of Northbound capital was very obvious. I can't remember the exact amount, but from the data at the end of yesterday's closing, it flowed in 4.2 billion yuan. However, at the end of yesterday, Northbound capital was in a net outflow state. In the first half hour of this morning's opening, Northbound capital directly flowed out 2.6 billion yuan. If you add the outflow at the end of yesterday, it's equivalent to almost all the Northbound capital that flowed in during the market's surge yesterday morning being sold off at the end of yesterday and at the opening of this morning. This phenomenon often sends a bad signal to the market.
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From the normal logic, according to past experience, when Northbound capital flows out during the day, the A-share trend usually follows a rapid downward dive, which is a typical follow-the-trend effect. This kind of follow-the-trend trend has occurred countless times in A-shares. However, what is strange today is that in the first half hour after the market opened this morning, when Northbound capital flowed out rapidly, the trend of the Shanghai Composite Index was exactly the opposite of the outflow of Northbound capital. Not only did the Shanghai Composite Index not fall when Northbound capital flowed out rapidly, but it also showed a relatively strong upward trend on the minute chart. This situation continued until 10:30, which is a phenomenon that has not appeared for a long time. Northbound capital sold, and A-shares went against the trend and went up, and the trend was quite strong. It can be said that this kind of market phenomenon is indeed rare.
A-shares went against the trend and soared, who was buying?
Since A-shares can go against the trend and soar when Northbound capital continues to flow out, this shows that domestic capital and foreign capital have formed a sharp contrast. At this time, a new question arises: who is buying when foreign capital sells? This question seems complicated, but it's not that difficult to understand. There are only two types of funds: foreign and domestic. When foreign capital continues to flow out, the market can go against the trend and go up, which must be domestic capital buying.
In my view, the two visible and large-scale funds in domestic capital are public funds and insurance funds. Only these two major fund forces can shake the market. Nowadays, public funds seem to have various negative changes, and the redemption effect of fund holders seems to continue. At this time, what can be felt from the market style is the obvious differentiation of insurance funds. After all, this kind of fund is more inclined to varieties with obvious dividend rates.
What can set off waves in the market before is the coal sector, because the high dividend market speculates that it is likely to be favored by insurance funds. But if you look at the minute chart of a sector and compare it with today's Shanghai Composite Index, you may find some clues.
That is the China Securities Bank Index. Today, it rose rapidly in the first half hour after the opening, and the increase of the China Securities Bank Index was 0.64% at 10 o'clock, while the Northbound capital had already flowed out 2.7 billion yuan. It was also the rapid rise of the bank index that made A-shares not follow the outflow of Northbound capital and fall, and there was a situation of soaring against the trend at the opening. Looking at the current position of the bank index, it is in the stage of just stabilizing, and the position is not very high. The key logic is that the dividend and dividend rate of banks are generally high, which is a good stable investment method under the low risk preference of the market. Today, there is also a piece of news, that is, the Great Wall Life Insurance Company has raised the bank of Wuxi, why did the insurance company choose this time to raise the bank? According to the professional, it is mainly because the current valuation level, volatility and dividend rate of the bank sector are very suitable for the requirements of insurance funds. Insurance funds can also obtain stable investment returns by holding bank stocks.
Speaking of this, if you still feel that the argument of the conclusion is not strong enough, you can also look at the representatives of high dividends that have been adjusted for two days before, China Shenhua and Yangtze River Power, which are very strong today. This is the same as the high dividends of banks, which just shows the resonance characteristics of market buying funds, that is, the high dividends of value investment. What kind of funds like this style, the conclusion is self-evident.Disclaimer: The content in this article is for reference only and does not constitute any investment advice or suggestions. The stock market involves risks; please exercise caution when investing!
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