Northbound Fund Flow Tracker – Strong buying interest in Bafang Electric & Jiangsu Guomao

While the A-share market was strong in Jul, the Northbound net fund inflow was only RMB10bn in Jul, down from RMB52.6bn in Jun. In 7M20, the net inflow reached RMB128.5bn. In this note, we focus on the top 30 stocks in each of Shenzhen and Shanghai market, in terms of foreign holdings between 1 Jul and 4 Aug. During this review period, Bafang Electric (603489 CH) and Jiangsu Guomao Reducer (603915 CH) reported the most notable increase in foreign holdings. 

 

Shanghai market:

  • Net fund inflow in Jul was only RMB701mn, down sharply from RMB24.4bn in Apr. In 7M20, the net fund inflow was RMB39.4bn.

 

  • Key changes in foreign holdings during the review period: Foreign holdings in Bafang Electric (603489 CH) jumped 13.4ppt to 21.5%. Bafang is a key component maker for pedelec with a focus in the European market. Another stock that reported major change is Jiangsu Guomao Reducer (603915 CH), with foreign holdings surging 7.4ppt to 9.5%. Listed in Jun 2019, Guomao is a manufacturer of speed reducers which are applied in various industries. Import substitution is expected to be the upcoming growth opportunity.

  

Shenzhen market:  

  • Net fund inflow in Jul was RMB9.7bn, down from RMB28.2bn in Jun. In 7M20, the net fund inflow was RMB89bn. 

 

  • Key changes during the review period: Foreign holdings in Han’s Laser (002008 CH) and Chacha Food (002557 CH) increased 5ppt and 3.2ppt, respectively, to 14.8% and 11.8%. Weichai Power (000338 CH, BUY), Zoomlion (000157 CH, BUY), Shenzhen Sunway (300136 CH) and Beijing Sinnet Tech (300383 CH) reported 2-3ppt increase in foreign holdings during the review period. Medical names, Hangzhou Tigermed (300347 CH, BUY) and Dian Diagnostics (300244 CH) saw 2ppt decrease in foreign holdings. That said, both stocks performed well during the review period.

  

CTIG (300012 CH) still top of the table. Foreign holdings in CTIG was 19.6% as at 4 Aug. The holdings increased 0.5ppt during the review period but still dropped 3.7ppt YTD, the most among the top 30 stocks. In spite of this trend, the stock has continued to outperform YTD.

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