Foreign investors conduct intensive research, covering 127 A-share companies

Since July, the enthusiasm of foreign-funded institutions for research on A-share listed companies has continued, with international investment banks, long-term asset managers and hedge funds all frequently appearing in relevant activities.

In terms of research priorities, technology manufacturing sectors such as AI hardware, semiconductors and communication equipment remain the core focus of foreign investors, while non-technology sectors including consumer goods, banking, home appliances and overseas-oriented manufacturing have also received a large number of research visits.

Wind data shows that as of August 4, among the publicly disclosed institutional research records since July 1, a total of 173 foreign-funded institutions have participated. Calculated by institutional caliber, foreign-funded institutions have conducted 408 research visits in total, covering 400 individual stocks; calculated by securities caliber, 127 A-share listed companies have received foreign institutional research, with the total number of foreign institutional participants reaching 719 person-times.

Apart from research visits, a number of foreign-funded institutions have also intensively released their views on the Chinese market recently. JPMorgan Chase continues to overweight Chinese stocks in its emerging market and Asian allocations, while AllianceBernstein lists China's AI sector, corporate governance improvement and balanced allocation as key clues for China's equity market in the second half of the year.

International investment banks, long-term asset managers and hedge funds frequently appear in research activities

Judging from the list of institutions, the lineup of foreign investors participating in A-share research recently is relatively diverse, including international investment banks such as Goldman Sachs, Bank of America, Morgan Stanley and Nomura, as well as long-term asset management institutions and hedge funds such as Temasek Fullerton, Neuberger Berman, Point72, Dymon Asia and Pinpoint.

According to the statistics of institutional names disclosed by Wind, Goldman Sachs (Asia) Securities Co., Ltd. has the largest number of research visits, having participated in 11 research visits involving 11 companies since July; NEUBERGER BERMAN EUROPE LIMITED, Point72 Asia Asset Management and Temasek Fullerton Investment Co., Ltd. all conducted 10 research visits, while DYMON ASIA CAPITAL LTD and Ningyuan Capital Limited conducted 9 research visits respectively.

The companies that several active foreign-funded institutions focus on are different. Since July, Goldman Sachs (Asia) Securities Co., Ltd. has researched companies including Betteny, Hongfa Technology and JinkoSolar; Point72 Asia Asset Management has appeared in the research list of Haid Group, Midea Group and Hongboard Technology; Temasek Fullerton has researched companies such as Shennan Circuits, Espressif Systems and Tfc Optical Communication.

In terms of research frequency, the activity of foreign-funded institutions shows obvious differentiation. Among the 173 institutions, 25 have conducted no less than 5 research visits since July, and 93 have only appeared once.

In terms of coverage, foreign investors are currently looking for fundamental clues in different sectors such as technology, manufacturing, consumer goods and finance, and continuously adjusting their focus according to industry prosperity, valuation level and performance realization.

127 companies have received research visits, with AI hardware topping the attention list

From the perspective of individual stocks, the technology industry chain still occupies the main position in the foreign institutional research list.

Wind data shows that the company with the highest foreign institutional attention since July is Montage Technology, with a total of 56 person-times of foreign institutions participating in its research; Dongpeng Beverage ranks second with 44 person-times. Guanghe Technology, Hongfa Technology and Huadian Technology have received 36, 32 and 29 person-times of foreign institutional research respectively.

Innolight, Huaqin Tech, Sifang Optoelectronics and BOE A are also at the top of the list, with the number of foreign institutional participants reaching 23, 22, 21 and 19 person-times respectively; HC Semitek, Tfc Optical Communication and Shenghong Technology have all received 18 person-times of foreign institutional research.

The top 10 most popular companies for foreign institutional research have attracted 300 person-times of foreign institutions in total, and the concentration of research on leading companies is obvious. Companies such as Montage Technology, Huadian Technology, Innolight, Tfc Optical Communication and Shenghong Technology are all in the AI computing power, server, optical module, PCB or semiconductor industry chain.

The industry distribution also reflects this feature. A total of 14 companies in the electronic components industry have received foreign institutional research, with 156 person-times of participating institutions in total; the integrated circuit industry involves 12 companies, with 116 person-times of foreign institutional participation; electrical components and equipment, and communication equipment have received 94 and 79 person-times of foreign institutional research respectively.

The total number of foreign institutional participants in the above four industries has reached 445 person-times, accounting for 61.89% of the total number of foreign institutional participants. Under the expectation of global AI capital expenditure, domestic substitution and computing power infrastructure construction, the hardware industry chain is still the most intensively covered direction for foreign institutional research.

Apart from the technology sector, the scope of foreign institutional research is also gradually expanding. The number of foreign institutional participants of Dongpeng Beverage is second only to that of Montage Technology. Bank of Ningbo has received 14 person-times of foreign institutional research. Consumer and manufacturing companies such as Midea Group, Sailun Tire and Anker Innovations have also received high attention. Consumer demand, bank dividends, overseas business expansion and global manufacturing capabilities have all become entry points for foreign investors to investigate the fundamentals of listed companies.

Foreign investors are still paying attention to the Chinese market, and their allocation clues are becoming more diversified

Corresponding to the research enthusiasm, in the market views released by foreign-funded institutions recently, the judgment on Chinese stocks is generally positive, but there is more discussion on the valuation and trading congestion of popular technology sectors.

The China Equity Strategy team of JPMorgan Chase believes that the policy signals released by the Political Bureau meeting in July are incrementally positive for the Chinese stock market, with the policy focus on short-term fiscal implementation and a commitment to increase counter-cyclical support. The "six networks" construction involving computing power network, power grid, communication network, water network, urban underground pipe network and logistics network is expected to become an important direction for subsequent policy and industrial investment.

JPMorgan Chase continues to overweight Chinese stocks in its emerging market and Asian allocations, and maintains its year-end target judgment on the MSCI China Index and CSI 300 Index. They believe that the recent correction in the AI sector is a healthy rotation rather than the end of the AI cycle, and the current pullback may form a more attractive entry point in August.

AllianceBernstein also pays attention to the capital expenditure and domestic substitution opportunities of China's AI industry. AllianceBernstein believes that unlike the US where AI investment is mainly driven by large technology companies, China's AI investment is jointly driven by the government and enterprises. Calculations show that the capital expenditure of sample Chinese technology enterprises accounts for about 50% of operating cash flow, which is lower than the level of about 92% of US technology enterprises, so the capital expenditure is relatively more sustainable. Domestic substitution, cost-effective large models and local deployment still have investment value.

In addition to AI, AllianceBernstein also regards the improvement of corporate governance as an important investment clue in the Chinese market. With the increase of dividend and share repurchase scale of listed companies, the market is gradually shifting from "net financing" to "net repurchase", which is expected to support the value performance of A-shares. In terms of industry allocation, AllianceBernstein focuses on urban commercial banks with stabilizing net interest margins and improved dividend capacity. At the same time, it believes that the market style switches quickly, so it is not suitable to blindly chase a single hot spot, and it is more appropriate to control portfolio volatility through active stock selection and balanced allocation.

From the capital perspective, foreign investors' attention to the Chinese market has not yet been fully translated into full net inflow. AllianceBernstein mentioned in the exchange that global mutual funds have not seen a large net inflow into the Chinese market as a whole in the first half of the year, but some positive signs have emerged in China's technology sector. With the rising valuation of some overseas markets and popular technology sectors, there is a possibility for global capital to rebalance its allocation.

Judging from the research list since July, foreign investors are still actively paying attention to the Chinese market, and foreign investors have not reduced their research investment in Chinese listed companies. Different from the previous focus on a few core assets, the current focus of foreign investors is further expanding from AI hardware to infrastructure, consumer goods, dividend sectors, corporate governance and overseas-oriented manufacturing.

This article is from the WeChat official account "CLS.cn", author: WU Yuqi, authorized for release by 36Kr.