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from china securities

against the backdrop of qdii funds flowing back to build positions, the fund's underweight stocks significantly outperformed the group stocks, implying a signal of a switch in large-cap and small-cap styles.

securities times and china securities journal reporters noticed that in the past month, the varieties that were under-allocated or even "unallocated" by funds significantly outperformed the public offering stocks in the same track. there was a phenomenon that the stocks in the group fell sharply while the under-allocated stocks had a strong offensive. many varieties that rebounded sharply had little institutional selling pressure and severe declines, and the absolute amount in the fund holdings was almost negligible. among the top ten heavily-held stocks of many funds, the varieties with holdings of only one million yuan rose strongly, highlighting the demand for institutional covering. industry insiders believe that this is related to the imminent start of the overseas interest rate cut cycle, the gradual implementation of domestic policies to stabilize growth, and the market risk preference is tending to change. small-cap stocks that are severely oversold and have little selling pressure will benefit first in the selection of position covering.

switching expectations trigger underweight fund products

despite the lack of support from hong kong stock connect funds during the holiday period, the severely oversold technology sector continued to strengthen on monday and tuesday, which may be related to the public qdii's position flow back to the underweight hong kong stock sector.

on september 17, hong kong stockshang seng indexit rose again by about 1.3%, which further strengthened the recent oversold rebound trend, especially the low-allocation stocks of funds significantly outperformed the heavily-weighted stocks of funds. data copyright saas leaderfubo groupin the past month, the cumulative rebound was about 34%, and the sports technology platformKeepthe rebound in the last month was about 12.9%, and the leader in manufacturing ai softwareinnovationit has risen by 20% in the past month, innovative drug company genting new medicines has risen by 21% in the past month, and ascentage pharmaceuticals has risen by 30% in the past month.

securities times china brokerage reporter noticed that most of the above-mentioned active varieties are under-allocated varieties of funds, and due to the previous reduction and liquidation of funds, the daily trading volume of such under-allocated stocks of funds has shrunk extremely. however, with the recent cost reduction and efficiency improvement of relevant companies gradually reflected in the semi-annual reports, against the background of full pessimistic expectations for the fundamentals of individual stocks, varieties with large declines, small selling pressure and serious under-allocation have become a major advantage in attracting the return of foreign capital and qdii fund managers.

morgan stanleyshi dongzhen, from the fund's multi-asset investment department, believes that in the short term, the style is likely to continue to switch, that is, small-cap stocks may outperform large-cap stocks, and growth stocks may outperform value stocks in the future. he emphasized that changes in market structure come from seasonal factors and changes in policy expectations. as the performance is about to be disclosed, some growth sectors have begun to rebound, focusing on high-end manufacturing and tmt. these two directions are the areas where growth stocks are concentrated. although it is difficult for investors to optimistically value the mid- and long-term performance of growth stocks based on pessimistic economic expectations, it can be seen from the performance in the first half of the year that some excellent companies may be at a turning point in performance and have alpha advantages. after the semi-annual performance is disclosed, their valuation levels will be repaired. policy expectations are more complicated. the current economic environment undoubtedly requires more powerful policy releases to bring rare opportunities for the layout of growth stocks.

the rise of "heavy holdings" worth millions of yuan implies fund replenishment

it is obvious that small-cap stocks that are under-allocated or even completely "unallocated" by funds are providing opportunities for returning institutions due to their advantages of small institutional selling pressure and large declines.open a positiontiming, especially for qdii funds that reduced their holdings in hong kong stocks and switched to us stocks a year ago.

take fubo group, which was heavily held by only one small fund after institutional selling. the stock was previously held by funds, but after the large-cap and small-cap styles were switched, the market value of fubo group fell to less than hk$4 billion in just three years. the stock price lost about 90% at the highest point of the decline. as of june 30, 2024, the only fund with a heavy position in fubo group was huatai-pinebridge hong kong stock connect era opportunity fund managed by fund manager he qi. the latter is a mini fund product with a scale of about 66 million yuan. he qi holds 2.6 million shares of fubo group in the above fund. although fubo group's holdings account for 4.5% of the fund, the amount of fubo group held was only about 2.96 million yuan as of the end of june this year. however, the public offering positions of the above-mentioned oversold stocks are close to being cleared, which also means that the selling pressure has been greatly alleviated. the slight improvement in fundamentals brought about by cost reduction and efficiency improvement can drive the stock price to rebound, so that fubo group, which has only one mini fund holding 3 million yuan, has risen rapidly by 34%.

it is particularly obvious that under-allocated stocks in the pharmaceutical sector have significantly outperformed group stocks, highlighting that institutional funds are interested in looking for stocks with less selling pressure and avoiding stocks with greater selling pressure.

take ascentage pharma, which has risen by 30% in the past month and doubled in the past four months, as an example. as of the end of june this year, only xinyuan health industry fund under xinyuan fund was left holding this stock. this fund is an initiator-type fund with an asset size of only 22 million yuan. it lists ascentage pharma as the seventh largest holding of the fund, but the total holding amount was only 1 million yuan as of the end of june this year. the "heavy holding" of one million yuan by public funds means that there is basically no institutional selling pressure on the stock, which has enabled ascentage pharma to double its share price in the past four months and its market value has therefore exceeded 10 billion hong kong dollars.

small-cap stocks have little downside potential, which is their core advantage

the re-inclusion of small-cap stocks in the fund managers' field of vision and the potential pressure faced by large-cap stocks that have been grouped together have become a general signal of the current market switching.

securities times china securities journalist noted that the russell 2000 index, which represents the trend of small-cap stocks in the us stock market, rose by about 4% in the third quarter, while the s&p 500 index, which is heavily favored by fund managers, only rose by about 2.5% in the third quarter. in response, some institutional sources emphasized that the overseas interest rate cut cycle is about to start, domestic policies to stabilize growth are gradually being implemented, and market risk appetite is temporarily stabilized and repaired. the valuation of small and medium-cap stocks that have lagged behind this year is expected to usher in a temporary repair. small and micro-cap stocks represented by the csi 2000 index may have a higher allocation value at the current point.

relevant persons from great wall fund also believe that from a long-term perspective, after small-cap stocks are eliminated and the true ones are retained, listed companies with standardized operations will place more emphasis on long-term shareholder value, which will be conducive to the healthy development of the capital market. at present, with domestic economic data yet to be further verified and a certain period of pain for new policies, market risk appetite may further decline, but an environment for "becoming better and stronger" in finance is gradually taking shape. it is recommended to "focus on stability", pay attention to structural opportunities, and focus on industrial chains and individual stocks with competitive advantages.

li shen, manager of tianzhi quantitative core selection, also believes that at present, we should try to choose some targets with strong alpha attributes, with low concentration of individual stocks, allocate a basket of stocks, diversify and mitigate risks, and use the alpha of individual stocks to enjoy the beta of the track. with the domestic real estate entering a new equilibrium cycle and the background of local government debt reduction, the upward elasticity of the total economy is limited, but the fields related to new quality productivity are expected to maintain a high level of prosperity, and the added value of high-tech industries and fixed asset investment will maintain a relatively fast growth rate. as the number of central banks cutting interest rates around the world gradually increases, financial conditions tend to be loose overall, and the short-term recovery of the global manufacturing industry has certain twists and turns but is at a relatively bottom area.

zou xinjin, manager of guolian andes fund, which has heavy holdings in small-cap stocks, believes that the market is fatigued by general policy measures, and thus has doubts about the expected effects of the policies. it remains pessimistic before seeing definite economic data improvement. however, after the key policy meeting, current investment will be an important window for observing policies in the second half of the year. the overall market position has returned to the low valuation range, and further downward space is expected to be very limited. under the current low valuation, after the improvement of the market trading structure, accompanied by the gradual recovery of the economy under weak expectations, the entire market situation will rise step by step in the future.