Reporter Mao Yirong
Recently, in order to attract more overseas medium and long-term funds to enter the market, promote international investors' understanding of the investment value of Shanghai-listed companies, and promote the high-level opening of the capital market, the Shanghai Stock Exchange once again organized the "International Investors Go to Domestic Research on Listed Companies" activity. Nearly 20 representatives of international asset management institutions from the United Kingdom, France, Singapore and other countries visited the front lines of Shanghai's science and technology innovation enterprises to experience the solid operating fundamentals and diversified growth drivers of Shanghai's science and technology innovation enterprises.
Since the beginning of this year, the number of foreign investment institutions investigating A-share listed companies has continued to increase. Wind data shows that as of September 27, 640 foreign-funded institutions have participated in surveys of A-share listed companies during the year, with the total number of surveys reaching 5,949.
The leading overseas institutions have outstanding research enthusiasm. Goldman Sachs Asia Securities ranked first with 160 surveys, and eight foreign institutions including Point72 Asset Management, Bank of America Securities, and JP Morgan Chase also conducted more than 100 surveys.
The research routes of foreign-funded institutions are an important window for observing international investors’ thoughts on A-share allocation. The intensive research itineraries of foreign-funded institutions reflect international capital’s recognition of China’s economic resilience, industrial upgrading results, and technological innovation capabilities. The certainty, scarcity and global allocation value of Chinese assets are constantly emerging, and their long-term attractiveness is increasing.
The research landscape continues to expand
From the perspective of the research time rhythm, the financial reporting window period of A-share companies is the peak period for foreign investment institutions to conduct research. Institutions use financial reporting nodes to communicate directly with the management of listed companies to understand operating conditions.
From an industry perspective, the research path of foreign-funded institutions shows a pattern of focusing on technology, supplemented by consumption and medicine. Among them, listed companies in high-end manufacturing fields such as integrated circuits, semiconductor equipment, electronic instruments, photovoltaic equipment, and electrical equipment are favored by foreign investment institutions. During the year, Montage Technology, Aobi Zhongguang, and Opto were surveyed by 298, 222, and 151 foreign-funded institutions respectively. The pace of new business expansion, production line expansion and delivery, and downstream business application scenarios were focused on.
Innovative drugs and medical devices are also important directions for foreign investment research. During the year, BeiGene, Mindray Medical, and United Imaging Medical were investigated by 184, 116, and 112 foreign investment institutions respectively. The progress of R&D pipelines, high-end product commercialization capabilities, and overseas layout were focused on.
The consumer track has also attracted the attention of foreign investment institutions. Consumer segment leaders such as Anjing Food and Dongpeng Beverage were surveyed by 41 and 90 foreign-funded institutions respectively. Factors such as channel construction and product matrix, dividend scale, gross profit margin and other factors of listed companies were focused on.
Different types of foreign-funded institutions also have obvious differences in their research starting points and focus areas. At the hedge fund level, hedge funds such as Point72 Asset Management Company, Millennium (Millennium Management), and DYMON ASIA (Dingya Capital) focus on the technology growth track. They have a high proportion of research on electronics and semiconductor targets on the Science and Technology Innovation Board, and their trading styles are relatively flexible.
The research coverage of international investment banks such as Goldman Sachs, Bank of America, JPMorgan Chase, Morgan Stanley, and Citigroup covers a wide range of areas, including technology, manufacturing, and consumption. Large overseas asset managers such as BlackRock, Fidelity, Schroders and Allianz focus their research on manufacturing and pharmaceutical leaders with long-term growth logic, and pay more attention to the long-term fundamentals of listed companies.
The foreign-funded institutions surveyed were mainly European and American institutions, and the participation of institutions in the Asia-Pacific region has also increased significantly. The number of institutional surveys from Saudi Arabia, South Korea, Malaysia, Thailand and other countries has gradually increased, reflecting the increasing attractiveness of A-share assets to global capital.
Some foreign-funded institutions have implemented their research judgments into position adjustments. Wind data shows that as of September 27, some A-share companies have updated their latest top ten shareholder lists in the buybacks and major asset restructuring announcements disclosed in the third quarter. Many foreign institutions such as Goldman Sachs and Barclays have entered the top ten shareholder lists of 35 A-share companies in the third quarter.
Optimistic about China’s industrial upgrading prospects
Chinese assets are increasingly recognized by international investors. In recent years, the high-tech track in the A-share market has shown explosive development. A number of outstanding companies have emerged in the fields of humanoid robots, computing power industry chains, semiconductor equipment, etc., and have received increased holdings from many foreign-funded institutions. These foreign-funded institutions are not only optimistic about the valuation advantages of A-share assets, but also optimistic about the development prospects of China's industrial transformation and upgrading.
Lu Ting, chief economist at Nomura Securities China, said: "In the past few years, China has saved a lot of money, made a lot of investments, formed a huge capital accumulation, and established an excellent infrastructure system in the world; at the same time, China's manufacturing industry has scale advantages, high-end, intelligent, and green transformation and upgrading are accelerating, and international investors have confidence in China's manufacturing industry."
Wang Tao, senior research consultant at UBS Investment Bank, said: "The innovation capabilities, technological development and progress of high-end manufacturing of Chinese enterprises are obvious to all the world. China's manufacturing capabilities are constantly increasing, manufacturing products are constantly being upgraded, more categories can be produced, and efficiency is higher, and economies of scale have been formed, especially in industries such as automobiles."
Under the disturbance of the external environment, the certainty of Chinese assets has further consolidated the stability of the A-share market. Wang Zonghao, head of China equity strategy research at UBS, told a reporter from Securities Daily that the overall performance of the Chinese stock market is driven more by domestic conditions rather than external interest rates, and the A-share market is usually less affected than H-shares.
"At present, our judgment on the overall market and industry has not changed, and it is expected that this round of interest rate hikes will not last too long. Rising oil prices and the Federal Reserve's interest rate hikes will make Chinese stocks more attractive in the global region." Wang Zonghao said that in the field of technology, he is optimistic about storage, foundries and semiconductor equipment. Outside of the technology sector, I am optimistic about banks, non-ferrous metals and "overseas" stocks.
The intensive research and continuous deployment of A-shares by foreign investment institutions is inseparable from the continuous promotion of institutional opening up and optimization of the business environment in China's capital market. In recent years, my country's capital market has unswervingly deepened reform and opening up, comprehensively improved the convenience of foreign investment, and created a stable, transparent, and predictable institutional environment for long-term capital to settle, take root, and deepen development.
The continued release of institutional dividends has upgraded the attractiveness of China's capital market from "staged opportunities" to "long-term advantages." Regarding how to further enhance the attractiveness of Chinese assets, Guan Tao, chief economist of Huafu Securities, suggested that Chinese assets should win the confidence of international investors and users with their own competitiveness. It is necessary to continue to consolidate the foundation of the real economy so that foreign investors can obtain reasonable returns for holding Chinese assets; deepen the reform of the capital market, promote the integration of domestic rules, regulations, standards and management with international standards, and improve the investment experience of investors; steadily promote the opening of capital projects and improve the convenience and certainty of foreign investment entering and exiting the Chinese market.
