What is this "northbound fund"?
In fact, for most ordinary investors,
1. We don't have much time to study the company's financial statements and policy trends.
We don't have enough funds for trial and error.
Therefore, observing some large investment institutions or large capital flows can help us judge the trend of the whole market.
What is "northbound capital"?
Let's take a look first:
1. What is "northbound capital"?
The above is the explanation given by Baidu Encyclopedia.
To put it bluntly, northbound capital is the money invested by foreign investors in the China market.
Because of our country's monetary policy, coupled with the control of foreign exchange and capital markets.
Foreign funds can't directly invest in A shares, and we can't directly buy foreign stocks ourselves. So, how should foreign capital invest?
Foreign investors who want to invest in China can apply for QFII investment quota. With QFII qualification and quota, you can invest in China's capital market.
QFII refers to qualified overseas institutional investors.
In May 2020, the State Administration of Foreign Exchange of China issued a list of investment quotas for qualified foreign institutional investors, which can be downloaded and viewed in official website if necessary.
However, in recent years, the national quota of QFII has been gradually tightened, but foreign investors still have to invest. What should we do?
At this time, in addition to QFII, there is another way of foreign investment, namely:
Direct domestic investment through the Shanghai-Shenzhen-Hong Kong Stock Connect of the Hong Kong Stock Exchange.
For most foreign investors, they buy stocks in Shanghai or Shenzhen directly through the Hong Kong Stock Exchange. Because Hong Kong is located in Shenzhen, south of Shanghai, when a large amount of foreign capital flows into the Hong Kong market to buy stocks in Shanghai and Shenzhen stock markets, we call it northward capital inflow, and vice versa.
Therefore, northbound capital can also be called "capital of foreign capital flowing into China market".
1. northbound funds are transparent and easy to observe.
Since the capital going northward needs to be carried out in Hong Kong, relevant information will be disclosed. It is also easy for us to get information from Northbound Fund to guide our investment.
2. There is a strong analysis team behind it.
The essence of northbound capital is foreign capital. But is this foreign capital really all foreign capital as everyone thinks? That's not true!
A small amount of funds are returned to A shares by domestic people through the Hong Kong market, but according to the research report of Haitong Securities, about 70% or more of the funds going north are foreign capital.
At the same time, there are many kinds of foreign capital, such as Buffett's investment in international companies or other foreign hot money. They dare to invest in foreign markets, which are generally very strong. Moreover, they have a strong investment and research team behind them, and there are many news and global perspectives that ordinary investors do not have.
3. The overall risk appetite is low. Judging from the previous performance, it far exceeds the market.
For the China market, the northbound capital is the most sensitive to external events, and the northbound capital has been in a state of slow inflow recently.
For long-term investors, it is very important to make a good layout of capital. It is the key to be optimistic about the country's long-term policy and choose a good track. What we want to achieve is long-term profit, not short-term profit-seeking, so as long as we act according to our investment rhythm, we can achieve good profits as the case may be.
For short-term investors, it is a good choice to follow the trend and get off in time. Don't chase after the heights blindly, or you will easily fall to the bottom.
Of course, "northbound capital" has never been the only criterion for judging the trend of A shares. The regulation of the whole market also involves the macro-control of our national team and government as well as foreign capital.
"Northbound Capital" can provide us with a reference. Remember, you can't follow blindly.
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