Aug 06, 2018 (China Knowledge) - As of the August 3, the overseas funds that transact A-share stocks through Hong Kong Shanghai Stock Connect and Hong Kong Shenzhen Stock Connect (hereinafter referred to as "Northbound funds") have been net buying A shares for 5 consecutive weeks, and the net turnover in a single week exceeded RMB 7.2 billion.
Since the beginning of this year, the northbound funds have experienced an accelerated inflow into A-share market. In February, they were affected by global market fluctuations and turned into net outflows. In March, the northbound turned to net inflows again, and the net inflows for the month were RMB 9.7 billion yuan.
Boosted by China's A-share MSCI inclusion, the net inflow of northbound funds surged in the second quarter and reached its highest peak YTD in May. In April and May, the net inflows recorded RMB 38.6 billion, 50.8 billion and 28.49 billion, respectively.
In July, the northbound funds inflow remained stable. The net buying YTD has reached RMB 28.47 billion, growing nearly 30% YoY.
From sector selection perspective, the northbound funds mainly favor financials and cyclical sectors.
At the end of July, the total market capitalization of financial stocks held by the northbound funds hit RMB 394.36 billion. At the same time, the northbound funds have increased their positions of steel, chemical, real estate and other cyclical stocks at a faster pace.
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