13 Jan, 2020 11

Foreign Investments in China's A-shares Weekly

This weekly report is available on Thomson Reuters Eikon, Bloomberg 10.58 bln +2.7% BMART, S&P Capital IQ, Wind, iFinD, Dazhihui, Choice and FactSet Embargoed Northbound Stock Change in % Research. Connect (RMB)

2.26% +0.04%

Value of Connect Stock's Change in % Global Markets Performance vs All A-shares

Index Value Change %

SZSE 10,880 2.1

SSE 3,092 0.3 HSI 28,638 0.7 0.18% 310 NASDAQ 9,179 1.8

Nikkei225 23,851 0.8 QFII's Holdings vs. All A- No. of Companies

DJIA 28,824 0.7 shares' Value in Q3 Invested in Q3

FTSE100 7,588 -0.5 Top 20 Companies with largest Stock Connect investment (as of Jan 10, 2020) No. of shares held Cumulative net purchase Code Name by Stock connect (Since 2019) (mln shares） （RMB bln） 000651 GREE APPLIANCES 930.0 23.04 000001 1,533.7 15.30 000333 MIDEA GP 1,198.2 15.11 600036 CMB 1,030.8 11.66 601318 PING AN OF CHINA 830.2 9.50 600276 HENGRUI MEDICINE 535.5 7.74 Subscription： 000002 489.0 7.22 China Distribution：Jack Hua 300498 WENS 182.5 5.87 Email：[email protected] 600690 SMART HOME 843.9 5.79 002475 LUXSHARE PRECISION 320.7 5.48 TEL：(86) 21 6607 5069 600585 CONCH CEMENT 496.7 5.18 300760 MINDRAY BIO-MEDICAL 31.6 4.93 ： Global Distribution Ted Worley 603259 APPTEC 61.2 4.66 Email：[email protected] 002027 1,359.1 4.25 000725 BOE 1,481.9 3.90 Asia Help Desk: Catherine Yap 300015 AIER EYE 244.4 3.90 Email:[email protected] 300347 TIGERMED CONSULTING 111.1 3.87 601166 607.0 3.83 002304 YANGHE 132.9 3.83 300124 INOVANCE TECH 197.6 3.59

Foreign lnvestments in China’s A-shares Weekly 1 13 January, 2020 ...... 11

News Highlights

⚫ 10 Jan, SZSE disclosed that as of Jan 9, the shares of (000333) held by foreigh investors through QFII / RQFII / Stock Connect accounted for 27.71% of the company's total share capital, a record high. The capped limit for foreign investment in a single stock is 28%. Foreign investors hold 26.26% of Centre Testing International Group's (300012) total share capital through QFII / RQFII / Shenzhen Stock connect, which has also established record high.

⚫ 6 Jan, according to Ministry of Finance, in order to further expand the opening-up of financial market, local government’s financial departments must relax the restrictions of foreign-funded banks, Sino- foreign joint venture banks and foreign bank’s branches to participate in local government bond underwriting. Such participation of foreign banks in local government bonds is conducive to broadening its issuance channels, promoting the diversification of local government bond investors’ base, ensuring the long-term sustainability of local government bond market, and help boosting the internationalization of RMB.

⚫ Last year the total trading volume of foreign investors in A-shares through the Shanghai Shenzhen HK Stock Connect totaled RMB 9.75 trln, including RMB 4.99 trln in SSE and RMB 4.76 trln in SZSE. Among the trading, the most popular A-shares were (600519), Group (601318) and (000858), with a total investment of RMB 317.33 bln, RMB 255.94 bln and RMB 220.44 bln, respectively.

⚫ 2019’s investment in China’s bonds by foreign institutional investors exceeded RMB 1 trln to reach RMB 1.1 trln. To date, the total value of China’s bonds held by foreign institutional investors has exceeded RMB 2 trln. China’s bond market has shown significance gains with the opening-up of China's financial market.

Foreign lnvestments in China’s A-shares Weekly 2 13 January, 2020 ...... 11

Foreign Institutional Investors' Holdings by Industry 12%

10%

8%

6%

4%

2%

0%

Sources: China Knowledge In Q4 the market capitalization of A-shares held by foreign investors increased to 2.5% of entire A- shares. The top 3 industries with largest share of foreign investment were electronics, home appliance and Textile & Apparel. Mining industry was still placed on the least popular with merely 0.27%. No. of A+, A, B, C and D-rated Companies by Industry No. of Company A+ A B C D by % 240 0.6

200 0.5

160 0.4

120 0.3

80 0.2

40 0.1

0 0

Sources: China Knowledge Ratings Definition The ratings definition is to provide user(s) a quantitative and qualitative analysis on foreign institutional investors’ trading activities on a listed company in China. As part of China’s liberalization of its stock markets we also factor in foreign investor relations performance metrics and management interaction with foreign investors. The rating results do not constitute a long/short recommendation. Please read the disclaimers below before applying or constitute our rating in your investment decision. A+: To make it to the highest rating, a company must have foreign investment proportion higher than the average of all A-shares and its industry’s average. Its latest quarter should see an increase of more than 10% in foreign investment over previous quarter, or a net growth rate higher than A-shares’ average over a period most current 4 quarters. On the qualitative aspects we assigned foreign investor relations performance metrics to the overall scoring. We find companies rated A+ in most current quarter as sound investment for foreign institutional investors. Only 225 among 3,400 companies rated here make it to A+ for Q4 2019’s rating. A: The company’s proportion of foreign investment is either higher than the A-shares average or its industry’s average. It must see positive net growth over the latest 4 quarters. 327 companies are rated A for Q4 2019’s rating. B: Its foreign investment is lower than the average of all A-shares and its industry’s. Its latest quarter has either declined or remained the same level. Performance on foreign investor relations’ metrics has little impact on overall scoring due to very small proportion of foreign investors and the total sum invested. 395 companies are rated B for Q4 2019’s rating. C: This rating shows little or almost no foreign investment. Its proportion of foreign investments is below all A-shares’ average and industry’ s average in its latest 4 quarters. Scoring on foreign investor relations’ performance metrics is insignificance if the FIIs are not participating in investing the company. D: This lowest rating is given to company that failed to meet all 5 core benchmarks. It shows zero or no foreign investment, has poor coverage in both domestic and foreign news, and very few Chinese or English analysts’ reports. Its IR management does not meet professional standards.

Foreign lnvestments in China’s A-shares Weekly 3 13 January, 2020 ...... 11

Stock Connect Trading Volume Daily Avg Each Week

Hong Kong Shenzhen Shanghai RMB bln Stock Connect Stock Connect Stock Connect

36 33 30 27 24 21 18 15 12 9 6 3 0 Wk3 Dec Wk4 Dec Wk1 Jan Wk2 Jan

Sources：HKEx, China Knowledge

Last week, avg daily trading volume of Northbound Stock Connect was RMB 59.9 bln, up 12.7%. In comparison, avg trading volume via Southbound Connect totaled RMB 13.5 bln, down 0.5%.

Bond Connect Trading Volume Avg Per Day Each Month Average Daily Net Value of Trading Volume(RHS) Foreign Funds(LHS) RMB bln RMB bln 18 20

16 18

16 14 14 14 12 12.9 12 10 10 8 8 6 6 4 4

2 2

0 0 Sep Oct Nov Dec Sources: HKEx In Dec 2019, average daily trading volume was RMB 12.9 bln, down 27.9% since last month. Net value of foreign funds was RMB 14 bln, up 19.7% over the last month.

Foreign lnvestments in China’s A-shares Weekly 4 13 January, 2020 ...... 11

Foreign Funds Flow Breakdown

Northbound Southbound RMB bln 25

20.8 20

15

10.2 10

5

0 Wk3 Dec Wk4 Dec Wk1 Jan Wk2 Jan

Sources: China Knowledge

With respect to Mainland China, net inflow of foreign funds via Northbound Connect was RMB 20.8 bln. Net inflow of foreign funds via Southbound Connect was RMB 10.2 bln.

Southbound Connect: Northbound Connect: RMB 10.2 bln RMB 20.8 bln

With respect to Mainland China, net inflow of foreign funds is RMB 10.6 bln.

Foreign lnvestments in China’s A-shares Weekly 5 13 January, 2020 ...... 11

Top 10 A-shares traded last trading day (10 Jan)

Shanghai Connect Northbound

% of outstanding Stock Code Name Buy (RMB mln) Sell (RMB mln) Shares held thru Connect 600519 KWEICHOW MOUTAI 1132.4 492.5 8.1%

601318 PING AN OF CHINA 526.1 502.1 7.7%

600276 HENGRUI MEDICINE 596.3 253.2 12.2%

600009 SH AIRPORT 310.3 415.6 21.7%

600030 CITIC SECURITIES 244.6 252.6 2.6%

601888 CHINA INT'L TRAVEL 246.1 162.8 13.2%

600036 CMB 179.4 188.6 5.0%

600585 CONCH CEMENT 123.3 218.3 12.4%

600048 POLY REAL ESTATE 154.1 184.5 3.3%

600050 62.4 256.9 3.7%

Sources: China Knowledge

Shenzhen Connect Northbound

% of outstanding Stock Code Name Buy (RMB mln) Sell (RMB mln) Shares held thru Connect 000858 WULIANGYE 1430.0 287.8 8.7%

000333 MIDEA GP 610.4 257.5 17.2%

300059 EAST MONEY 184.4 530.9 1.8%

002475 LUXSHARE PRECISION 250.8 423.1 6.0%

002415 176.6 442.0 6.4%

002304 YANGHE 472.5 111.4 8.8%

000651 GREE APPLIANCES 416.1 151.9 15.5%

000063 ZTE 406.0 103.8 3.0%

300498 WENS 157.9 349.3 3.4%

000725 BOE 164.5 313.1 4.4%

Sources: China Knowledge

Foreign lnvestments in China’s A-shares Weekly 6 13 January, 2020 ...... 11

Sectors Traded via Stock Connect

RMB bln 300 10th Jan 3rd Jan

250

200

150

100

50

0

Utility

Media

Mining

Banking

Telecom

Electrical…

Computer

Mechinery…

Chemicals

Agriculture

Electronics Commerce

Automobile

Real Estate Real

Iron & Steel & Iron

Health Care Health

Construction…

Light Industry Light

Conglomerate

Transportation

Architectural &… Architectural

Leisure Service Leisure

Defense Military Defense

Textile & Apparel & Textile

Home-appliances

Food & Beverage & Food

Non-ferrous Metal Non-ferrous Non-bank Finance Non-bank

Sources：China Knowledge

Over the past week, the market value of Mainland stocks traded on Stock Connect increased across most sectors. The largest increase was in the Food & Beverage, and the largest decrease was Banking.

Top 10 A-shares Increment on Stock Connect Top 10 A-shares Reduction on Stock Connect

Change in Change in Code Name Mkt Value Change % Industry Code Name Mkt Value Change % Industry (RMB bln) (RMB bln) KWEICHOW Food & PING AN OF Non-bank 600519 5.4 4.9 601318 -1.0 -1.5 MOUTAI Beverage CHINA Finance GREE Home Transportat 000651 4.0 6.6 600009 SH AIRPORT -0.9 -4.7 APPLIANCES Appliance ion Home CONCH Constructio 000333 MIDEA GP 3.4 5.0 600585 -0.8 -3.1 Appliance CEMENT n Materials Food & PING AN 002304 YANGHE 2.4 17.6 000001 -0.7 -2.7 Banking Beverage BANK CHINA INT'L Leisure YANGTZE 601888 1.6 7.2 600900 -0.5 -2.0 Utility TRAVEL Service POWER HENGRUI Health HEAVY Machinery 600276 1.6 3.5 600031 -0.4 -3.5 MEDICINE Care INDUS Equipment TIGERMED Health 300347 1.2 17.5 600036 CMB -0.4 -1.0 Banking CONSULTING Care Food & Real 000858 WULIANGYE 1.1 2.5 000002 VANKE -0.4 -2.5 Beverage Estate CHINA 000063 ZTE 1.1 39.0 Telecom 600050 -0.4 -7.4 Telecom UNICOM Health 300015 AIER EYE 1.0 11.2 601398 ICBC -0.3 -4.2 Banking Care Sources: China Knowledge

Foreign lnvestments in China’s A-shares Weekly 7 13 January, 2020 ...... 11

Weightage of QFIIs' Stocks

QFII

2019 Q3 Mkt Value QoQ % change Industry (RMB hundred mln) (RMB hundred mln)

Banking 262.20 -8.54

Health Care 204.62 56.42

Home Appliance 182.82 21.23

Electronics 76.78 22.93

Food & Beverage 47.63 -2.09

Transportation 42.05 -1.41

Computer 36.44 10.72

Construction Materials 34.80 17.11

Machinery Equipment 28.24 2.13

Chemicals 26.17 17.80

Utility 20.90 1.55

Architecture & Interior Design 20.69 -0.94

Automobile 20.56 8.77

Leisure Service 17.29 -1.25

Non-bank Finance 16.70 2.48

Iron & Steel 15.66 1.31

Media 15.23 4.90

Agriculture 14.62 4.25

Telecom 11.89 4.79

Light Industry 9.35 0.94

Commerce 8.98 2.25

Real Estate 8.83 4.05

Non-ferrous Metal 7.11 3.44

Electrical Equipment 6.55 2.08

Mining 3.38 0.97

Textile & Apparel 2.80 0.01

Conglomerate 1.53 0.97

Military 1.06 1.06 Sources: China Knowledge

Foreign lnvestments in China’s A-shares Weekly 8 13 January, 2020 ...... 11

QFIIs' Top Investments Ranking

Top 20 Stock Holding Proportion by QFII (As of Previous Week Closing)

Stock holding Change % Stock Code Name Industry proportion by QFII over past week

601169 BANK OF BJ 13.6 -1.6 Banking

600901 JIANGSU LEASING 11.0 -3.2 Non-bank Finance

603708 JIAJIAYUE 9.3 -0.2 Commerce

603416 XINJE ELECTRIC 8.8 8.5 Electrical Equipment HUAFON 300180 7.1 -0.8 Chemicals MICROFIBRE 600761 ANHUI HELI 7.0 2.3 Machinery Equipment

603060 CHINA TEST GROUP 6.1 -0.3 Conglomerate

300298 SINOCARE 5.6 -1.6 Health Care

603605 PROYA 5.6 9.6 Chemicals FOCUSED 300203 5.5 -3.9 Utility PHOTONICS 300593 SUPLET POWER 5.5 6.4 Electrical Equipment

002938 AVARY HOLDING 5.3 7.2 Electronics CHONGQING 600132 4.9 1.8 Food & Beverage BREWERY 002008 HAN'S LASER 4.9 3.8 Electronics LIANGXIN 002706 4.7 2.6 Electrical Equipment ELECTRICAL 603056 DEPPON 4.4 2.7 Transportation

002439 VENUSTECH 4.3 5.6 Computer

002891 CHINA PET 3.9 -1.7 Agriculture

002916 SHENNAN CIRCUITS 3.9 5.9 Electronics

000887 ZHONGDING 3.9 8.6 Automobile Sources:SAFE, China Knowledge

Foreign lnvestments in China’s A-shares Weekly 9 13 January, 2020 ...... 11

Top 20 Stock Holding Value by QFII (As of Previous Week Closing)

Stock holding value Change % Stock Code Name Industry by QFII (RMB bln) over past week

601169 BANK OF BJ 13.3 -1.6 Banking

000333 MIDEA GP 11.6 3.0 Home Appliance

600276 HENGRUI MEDICINE 5.9 1.8 Health Care

300015 AIER EYE 3.7 6.0 Health Care Construction 600585 CONCH CEMENT 2.9 -2.3 Materials 603259 APPTEC 2.7 2.0 Health Care

600690 HAIER SMART HOME 2.6 4.1 Home Appliance

000651 GREE APPLIANCES 2.5 3.9 Home Appliance

600009 SH AIRPORT 2.4 -1.8 Transportation

002142 2.0 -0.1 Banking

002008 HAN'S LASER 1.8 3.8 Electronics TIGERMED 300347 1.7 12.5 Health Care CONSULTING 300003 LEPU MEDICAL 1.5 6.9 Health Care

000858 WULIANGYE 1.5 2.4 Food & Beverage CHINA CONS Architecture & Interior 601668 1.3 -1.3 ENGINEERING Design 002410 GLODON 1.3 4.4 Computer

600019 BAO IRON 1.3 -1.0 Iron & Steel

002439 VENUSTECH 1.2 5.6 Computer

600901 JIANGSU LEASING 1.1 -3.2 Non-bank Finance

601888 CHINA INT'L TRAVEL 1.1 3.7 Leisure Service

Sources: China Knowledge

Foreign lnvestments in China’s A-shares Weekly 10 13 January, 2020 ...... 11

Sources of QFII's Funds

QFII

Others, 19.6% U.S, 23.5%

U.K, 3.9%

Switzerland, 3.9% France, 3.9% Hong Kong, Canada, 17.6% 5.9% Taiwan, Singapore, 9.8% 11.8%

Top 20 QFII by Market Value of Holdings(As of 2019 Q3)

2019 Q3 Mkt Value No. of companies Institutional Investor QoQ % change Country (RMB hundred mln) invested ING Bank N.V. 13.3 -9.3% 1 Netherlands Government of Singapore 12.2 -8.1% 19 Singapore Investment Corp BNP Paribas 11.2 3.3% 2 France Canada Pension Plan 7.6 -0.6% 3 Canada Investment Board Hillhouse Capital GR 6.2 45.4% 4 Singapore

Norges Bank 6.0 20.2% 30 Norway

Oppenheimerfunds Inc 5.9 22.2% 1 U.S

UBS 5.4 30.9% 52 Switzerland

Merrill Lynch International 5.4 272.6% 9 U.S

HSBC (Hong Kong) 5.3 16.2% 7 Hong Kong ABU Dhabi Investment 4.5 178.2% 29 UAE Authority Monetary Authority of 3.5 44.8% 14 Macau Macao Of Malaysia 2.8 5.9% 2 Malaysia Temasek Fullerton Alpha 2.3 133.5% 2 Singapore Investments Pte Ltd Fidelity Fund (Hong Kong) 2.1 64.2% 9 Hong Kong Oversea-Chinese Banking 2.0 4.0% 1 Singapore Corporation Hong Kong Monetary 1.9 6.3% 9 U.S Authority，HKMA Caisse de dépot et 1.4 172.6% 8 U.S placement du Qué International Finance 1.1 -5.7% 1 Corporation E Fund Management 1.0 -42.0% 2 Hong Kong (Hong Kong) Co. Scources: SAFE, China Knowledge

Foreign lnvestments in China’s A-shares Weekly 11 13 January, 2020 ...... 11

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Foreign lnvestments in China’s A-shares Weekly 12 13 January, 2020 ......