Capital going north has always been called "smart money" and its every move has attracted much attention from investors. Despite its great reputation, what is its record? A review of historical data found that the overall performance of Beishang Capital outperformed the Shanghai and Shenzhen 300 Index, but the floating losses of individual stocks currently account for about 60%.
In August, the net outflow of capital from Beijing hit a record high in a single month, triggering heated discussions in the market. In recent years, the market value of Beishang Capital's stock holdings has frequently hit new highs, and it has successfully hunted the bottom several times. Therefore, it is called "smart money" and "market bellwether" by some investors. But is this really the case? Databao reviewed the operations of Beishang Capital over the years and found that Beishang Capital is not necessarily "smart". The overall flow direction is not highly correlated with the trend of the market. The meaning of the wind vane is limited, and its shareholding winning rate is also relatively average.
The “right to speak” of shopping malls is not high
In November 2014 and December 2016, the Shanghai-Shenzhen-Hong Kong Stock Connect was launched successively, increasing the channels for overseas funds to invest in A-shares, becoming a milestone event in the A-share market. Since then, the global attractiveness of Chinese assets has increased significantly, and foreign investment in A-shares has also increased.
According to statistics from Securities Times·Databao, as of the end of the second quarter of this year, the total market value of Beishang capital positions was 2.37 trillion yuan, accounting for 3.36% of the total market value of A-shares in circulation. Calculated on a comparable basis, the total market value of public fund holdings is 5.51 trillion yuan, accounting for 7.8% of the circulating A shares; the market value of positions held by social security funds, pension funds, insurance funds and other organizations is calculated at 972.813 billion yuan, accounting for 1.38% of the circulating A shares. It can be seen that compared with the circulating market value of A-shares, Beishang Capital’s shareholding ratio is not high; and compared with institutional investors, Beishang Capital’s “voice” is also relatively limited.
So, why do funds going north get so much attention? On the one hand, compared with public funds, social security funds and other institutions, the daily trading data of Beishang Capital is completely open to the public; on the other hand, the attitude of domestic investors towards foreign shareholdings is somewhat "reference material, which can be used to attack jade". mean. In the context of limited shareholding and relatively direct access to information, the guiding significance of Beishang Capital’s shareholding intentions for A-share investment remains to be discussed.
There is a weak correlation between capital inflow and the market
Since 2017, capital from the north has begun to flow into A-shares at an accelerated pace. At that time, the valuation of central A-share assets was at a low level, and the CSI 300 Index was located near 3,300 points. The market was slowly recovering after a sharp decline, and the net inflow of funds from the north was basically consistent with the trend of the index. From 2019 to February 2021, A-share central assets experienced a bull market, and the CSI 300 Index soared from 2,900 points to 5,800 points. During this period, the trend of net inflows of funds going north was far away from the strong index, thus confirming the view that funds going north are "smart funds." However, during the period when the Shanghai and Shenzhen 300 Index strengthened significantly, the speed of capital inflows from the north did not accelerate significantly and seemed a bit "calm".
In 2018, when the Shanghai and Shenzhen 300 Index turned around and fell, with a cumulative decline of more than 25%, the net purchase volume of funds from the north was 294.218 billion yuan, and most of the bargain hunting funds were locked up; from March 2021 to the present, the Shanghai and Shenzhen 300 Index has shown a downward trend, during which Funds heading north still maintain a net inflow trend.
Therefore, in the long run, funds from the north show a continuous net inflow into A-shares, and there is no significant correlation with the rise and fall of the market index. Broad market indexes generally have relatively obvious fluctuations and cycles, and the flow of funds heading north does not have a clear directional meaning for the short- to medium-term rise and fall of the index.
In addition, Beijing Capital, as a collection of international funds entering the A-share market, has diverse ingredients, complex structures, and different investment styles. In other words, the overall flow of funds going north is actually the result of the game between various funds, and it cannot be inferred that foreign investors have a consistent view of the A-share market and specific stocks.
Business activity is strongly related to shopping malls
Although the reference significance of capital flows from Beijing to Beijing is limited, as an important participant in the A-share market, its trading activity is affected by the overall market. Data show that from the beginning of this year to the end of August, the total daily trading volume of Beijing-based funds and the trend of daily trading volume in the A-share market showed a high degree of consistency, with a correlation coefficient as high as 0.78. The strong positive correlation between the two also reflects the characteristics of northbound funds actively participating in short- and medium-term business.
Because they participate in short- and medium-term transactions in the market, Beijing-bound funds inevitably engage in trading behaviors such as "taking advantage of hot spots" and "chasing the rise and killing the fall." Take Perfect International as an example. In the first quarter, benefiting from the popularity of the AIGC concept, Perfect International's stock price rose sharply, with a cumulative increase of more than 33%. During this period, Beishang funds increased their positions aggressively, increasing their holdings by as much as 101 million shares. After the stock price peaked in late April, Beishang funds began selling again, and have reduced their holdings by a total of 92.1406 million shares so far.
In addition, compared with mainland funds, northbound funds are subject to more factors, the most obvious ones being the Federal Reserve’s monetary policy, the RMB exchange rate, etc., which will have a significant impact on their trading behavior. Therefore, investors should treat the funds going north rationally and not follow the trend or blindly follow the trend.
Annualized return outperforms the CSI 300 Index
As can be seen from the above, capital going north is not necessarily "smart", and the meaning of the weather vane is also limited. A review of Beishang Capital’s operations over the years shows that although its annualized rate of return is not high, it also outperforms the Shanghai and Shenzhen 300 Index.
As of the end of August this year, Beishang Capital held a total of more than 2,700 A-share stocks. By looking back at the stock prices of these stocks at important time points and the increase or decrease in holdings during the trading days, the profit and loss of Beishang Capital's holdings can be roughly calculated. Since the specific positions of Beishang funds have been released since March 17, 2017, the research of this article is also based on the data after that.
Take Kweichow Moutai as an example. On March 17, 2017, Beishang Capital held 73.73 million shares of the stock, and the average transaction price on that day was regarded as the average shareholding cost; on March 20, Beishang Capital increased its holdings by 12,611 shares, and the average transaction price on that day was 383.44 yuan/share. Average holding cost (if the stock enters the top ten active stocks on the day, the average cost will be calculated using the published trading volume). Based on this calculation, the average cost of Beishang Capital holding the stock on March 20 was 379.06 yuan/share. Combined with the closing price of 386.41 yuan/share, it can be concluded that the share of floating profit of Beishang Capital’s positions traded on that day was 1.94%, and the floating profit was 1.94%. 542 million yuan.
According to the above method, Databao calculated the profit and loss of Beijing Capital's shareholdings over the years, and compared it with the shareholding value at the end of the year to calculate the share of profits and losses in each year. Data show that in 2017, 2019, and 2020, the profit margin of northbound funds exceeded 20%, while in 2018 and 2022, the loss exceeded 20%. Compared with the Shanghai and Shenzhen 300 Index, Beijing-based funds outperformed the index in 2017, 2018, 2020, and 2021, but underperformed the index in 2019 and 2022.
If calculated using the average annualized rate of return, Beishang Capital’s cumulative profit from March 17, 2017 to the end of August 2023 was 501 billion yuan, accounting for more than 22% of the stock market value at the end of August, with an annualized rate of return of 3.4%. , the annualized return rate of the CSI 300 Index during the same period was 1.43%.
60% of holdings suffered floating losses
Overall, since March 17, 2017, Beijing’s capital surplus has been 501 billion yuan. Among them, the profit scale of Kweichow Moutai ranks first, reaching 157.5 billion yuan. In addition, Beishang Capital's profits in nine stocks including Wuliangye, CATL, Midea Group, China Duty Free, and Yangtze Electric Power all exceeded 10 billion yuan.
China Duty Free's stock price has fallen sharply this year, but the capital going north still maintains a huge surplus. First, the stock’s cumulative increase from March 20, 2017 to the end of August this year is still as high as 362%; second, Beijing Capital has continued to significantly reduce its holdings in the stock since 2020, retaining the fruits of early success to a large extent. In 2020, Beishang Capital held a maximum of more than 15% of the circulating shares of China Free Shipping, and the latest amount was less than 9%.
The stock with the largest loss was Longi Green Energy, with a cumulative loss of 7.7 billion yuan. The stock fell by more than 31% last year, and fell by more than 36% from the beginning of this year to the end of August. Buying high and selling low became an important reason for the capsize of Beijing Capital's capital in this stock. Data shows that at the end of 2021, Beishang Capital held 12% of the stock, which increased to 14% at the end of 2022. It continued to increase its holdings in early 2023, and its share once rose to more than 16%; during the recent sharp decline in the stock, Beishang Capital has made a large-scale reduction of its holdings, and its shareholding has dropped to about 9% at the end of August.
Although Beishang's funds are overall in profit, from the perspective of individual stocks, they are losing more and making less. Based on the shareholding data as of the end of August, more than 1,600 stocks held by it showed floating losses, accounting for about 60%. Among them, 57 stocks have floating losses exceeding 1 billion yuan. In addition to the above-mentioned Longi Green Energy, Vail Holdings, Ping An Bank, Han's Laser, SF Holding, Vanke A and other shareholdings have floating losses exceeding 4 billion yuan; the loss amount is 100 million There are 323 stocks in the range of 1 billion yuan, and 1,248 stocks with losses below 100 million yuan.
There are more than 1,100 stocks with floating profits in Beishang Capital, and 10 stocks have floating profits of more than 10 billion yuan; 87 stocks have floating profits of 1 billion to 10 billion yuan, including Sanhua Intelligent Control, BYD, AIER Ophthalmology, Haier Smart Home and other stocks; 298 stocks had floating profits between 100 million and 1 billion yuan; there were 709 stocks with floating profits below 100 million yuan.
More than half of the stocks with high shareholdings suffered floating losses
There are various indications that funds going north are not necessarily smart, have limited influence on the A-share market, and lose more than they earn in individual stocks. Not only that, even the stocks it holds a large share of have fallen more than they have risen. Data show that as of the end of August, there were 71 stocks in which Beijing Capital’s capital holdings accounted for more than 10% of the circulating shares, of which 38 stocks had floating losses, accounting for nearly 54%.
Specifically, Beishang Capital’s floating losses on Haier Biotech topped the list, exceeding 100% (that is, the amount of floating losses has exceeded the current stock market value), Aide Biotech, Shandong Pharmaceutical Glass, Jinyu Medical, Weill Co., Ltd., Yutong Bus, etc. The floating loss range of individual stocks exceeded 50%.
The above data reflect that from a long-term perspective, the factor of "high shareholding of northbound funds" does not have a significant positive effect on individual stock trends. From a short-term perspective, among these 71 stocks, 34 stocks fell in stock price from the beginning of the year to the end of August, accounting for nearly half. It can be seen that the high proportion of capital holdings from the north does not mean that individual stocks will inevitably rise in the later period.