During the five trading days (January 3 to January 9) since the beginning of the year, the A-share market showed a volatile upward trend, and northern funds continued to flow into A-shares as risk appetite gradually recovered. A total of about 280 billion won of net purchases supported the rise of A-shares. By the end of January 9, the Shanghai Composite Index had risen 2.81% over the past five trading days, marking its fifth consecutive gain. The Shenzhen Component Index increased by 3.94% during this period. The ChiNext index is up 3.99% during this period. .
Industrial Securities says Chinese assets will be the cheapest in 2023 in terms of global asset allocation. Behind the net inflow of funds from the north, there is a 'good start' effect due to the inflow of foreign funds at the beginning of the year. More importantly, current market concerns about the economy, Fed rate hikes, and other factors are easing and are certain to improve.
Market analysts said three main factors contributed to the rapid return of foreign capital to A-shares. First, China's economic stability is excellent. According to the National Bureau of Statistics, from January to November 2022, the operating income of large-scale industrial enterprises nationwide reached 123.96 trillion yuan, an increase of 6.7% over the previous year. The added value of industrial enterprises increased by 3.8% compared to this year. The National Economic Research Center of Peking University predicted that in 2023, the annual growth rate of added value of industrial enterprises above fixed scale could be stable and moderate, and the annual growth rate would be stable throughout the year. It may be around 6.5%.
Second, the renminbi has recently appreciated moderately, making Chinese assets even more attractive. In the five trading days since the start of 2023, the renminbi's central parity exchange rate has maintained its "five consecutive gains" against the US dollar. Data showed that on January 9, the renminbi's central parity ratio against the US dollar increased by 647 basis points to reach 6.8265.
Third, in terms of investment value, the valuation of A-shares is still at a world-wide low level. According to data, as of the end of January 9, the stock's recent dynamic price-to-earnings ratio was 16.70x, and the Shanghai Composite Index and Shanghai-Shenzhen 300 Index's latest dynamic price-earnings ratio was 12.63x. times and 11.63 times, both lower than the evaluation level of major overseas indicators during the same period.
Xia Fengguang, manager of Rongzhi Investment Fund, a subsidiary of Paipai.com, told reporters that overall A-share values were at a low level and continued inflows from Northern funds showed that foreign investment in Chinese assets was briskly growing.
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