Markets Jul 23

Chinese stock markets hit historical high

Wind information statistics show that the scale of funds raised via equity exceeds 770 billion yuan ($110 billion) this year

Chinese stock markets hit historical high
A Chinese investor looks at stock index and prices of shares (red for price rising and green for price falling) at a brokerage house in Nanjing city in eastern China's Jiangsu province in this photo from February 2019. Wind data shows that the scale of funds raised by equity topped 770 billion yuan this year. Photo: AFP.

(ATF) Wind information statistics show that the scale of funds raised via equity exceeds 770 billion yuan ($110 billion) this year, surpassing the 769.1 billion yuan in 2015 and setting a record for a six-month period in China.

Some 334 partial equity funds have been issued, with a scale of 770.236 billion yuan. Previously, the highest annual fundraising amount of partial equity funds was 2015, when some 769.1 billion yuan was raised over the whole year.

Hu Lifeng, general manager of China Galaxy Securities Fund Research Center, told Economic Daily that 2020 is a year of explosive development for public equity funds. Traditional fund sale models would encounter challenges, and new models and new business formats will emerge.

In the last two weeks of July – from the 20th to July 31st, 13 partial-share hybrid funds will be issued. Boshi Fund, Harvest Fund, E Fund and other influential companies will issue new funds. On July 30, for example, the Rongtong Industry Trend Selected Stock Securities Investment Fund will be issued.

In response to the recent performance of the A-share market, the person in charge of the Shanghai Pudong Development Bank's AXA Fund said that consumer and pharmaceutical stocks with faster market gains in the previous period ushered in adjustments, which released accumulated pressure to a certain extent; some current valuations were relatively high.

Partial cyclical stocks with low performance and a marked improvement from the previous month had been favoured by funds, and the overall upward trend of the A-share market had not reversed. Based on a medium and long-term perspective, industry trends and performance trends were still the core of stock selection in the A-share market. High-quality individual stocks in the consumer, pharmaceutical, and technology industries that represent the future core development direction of the Chinese economy were still our long-term investment targets, he said.

CBIRC lifts equity cap for insurers

The China Banking and Insurance Regulatory Commission recently issued a "Notice on Optimising the Supervision of Insurance Companies' Equity Asset Allocation", which said that equity asset allocation of insurers could account for up to 45% of total assets at the end of the previous quarter.

The capital market also attracts incremental funds. The China Securities Regulatory Commission (CSRC) issued a document to encourage industry organisations to implement market-oriented mergers and acquisitions and reorganisations in accordance with the law, so the overall market expectation is positive.

Economic Daily said the main investment focus was on the traditional infrastructure industrial chain such as machinery and building materials, technology such as 5G and cloud computing, pharmaceutical consumption and new energy automobile industry chains.