Last week, A shares went on a roller coaster, and this week, after a sharp fall in the first half of the week, it was violently pulled up this week, testing the hearts of investors.

Greedy when others are afraid, overseas long-term investment institutions have stepped in.

The trillion-dollar asset management giant Capital Group has recently increased its holdings in Chinese stocks.

Let's take a look.

Capital groups increase their positions in an all-round way

Data show that the active Management ETF of Capital Group, a well-known long-term investment institution in the United States, increased its positions in a number of Chinese stocks last week. The head of China, an European asset management giant, told the fund that "some overseas clients are more cautious, but our message to our clients is: there is no problem with investing in China for a long time." Goldman Sachs Group also said on March 14 that he insisted on being over-matched with China.

Capital Group is an American asset management institution headquartered in Los Angeles, which is good at active stock selection and long-term investment, and has a joint management system of multi-fund managers with a management scale of 2.6 trillion US dollars. It is also one of the global asset managers most respected by domestic public and private equity leaders. Capital Group launched six active ETF managers in February this year. Among them, 5 are only stock products and 1 fixed income product. Of the five stock products, three invest in the US market and two invest in the global market, including the Chinese market.

As a result of actively managing ETF to update its positions every day, the investment trend of the global asset management giant in China has been exposed.

Fund Jun compared his positions on March 11 and March 21 and found that two global market stocks, ETF, had taken positions in the vast majority of Chinese stocks. For example, CGXU has increased its positions in Chinese stocks such as Pharmaceutical Biotechnology, Wuxi Apptec, ENN Energy, Huichuan Technology, Meituan and Guizhou Moutai. CGGO increased its position in two of the three Chinese stocks (Guizhou Moutai\ Ping An Insurance) and emptied one real estate stock (Country Garden Holdings).

CGXU and CGGO just launched in late February 2022, the current size of the two ETF is only tens of millions of dollars, accordingly, the number of absolute shares held in China is also relatively small.

HKEx's disclosure shows a similar trend. For example, capital groups bought 1.88 million shares of pharmaceutical biotechnology at an average price of HK $45 on March 16, according to the Hong Kong Stock Exchange. Since a number of funds owned by the Capital Group hold Pharmaceutical Biotechnology, this suggests that in addition to the above-mentioned proactive management of ETF, other funds may have increased their holdings during the period.

It's not just capital groups, Goldman Sachs Group Asia-Pacific strategist Timothy Moe said in an interview with Bloomberg on March 14, although the Chinese market is under a lot of pressure, but its forecasts for China already reflect these risks. After ADR's sell-off in the past two days, most of ADR's shares are now near the three standard deviations on the left of the median valuation (valuations are historically low). That is to say, share prices fully reflect the risks faced by these companies. Looking ahead, stock prices may still be volatile, but the returns of Chinese stocks over the next 12 months will be attractive. What specific areas is Goldman Sachs Group optimistic about? Goldman Sachs Group currently focuses on areas that are consistent with policies, including topics related to new infrastructure, green economy and common prosperity.

However, Timothy Moe also said the market is looking forward to more supportive policies, and he believes that overall sentiment among overseas investors is fragile.

Senior executives of foreign institutions: don't worry about long-term investment in China

As of Tuesday, March 22nd, there was a net outflow of 9.34 billion yuan from the northbound direction this week. This month, the net outflow exceeded 60 billion yuan.

In terms of individual stocks, only 9 stocks have a net inflow of more than 100 million yuan in the past seven days. They are Midea, China Merchants Bank, Sany heavy Industry, Industrial Bank, CITIC, Muyuan shares, Shanghai Pharmaceutical, Zhifei Bio, Shanghai Fosun Pharmaceutical and so on. The 10 stocks with the largest net outflow are Guizhou Moutai, Enjie shares, Wuliangye, Ningde Times, Oriental Wealth, Yili shares, Wanhua Chemical, Ping An Insurance, Wuxi Apptec and China China exemption. It can be seen that the net outflow is more for the pre-fund to pile up heavy stocks.

In response to the phenomenon that northward has encountered a net outflow one after another and returned after the net inflow on Thursday and Friday, a head of the European asset management agency in China explained as follows: we have recently learned in our exchanges with overseas customers that overseas customers are more concerned about the transparency and predictability of industry regulatory policies. Last week's high-level speech has dispelled a lot of concerns, and people may pay attention to landing later. The geopolitical situation is also the focus of attention to a certain extent.

However, he said: northbound funds in and out do not have to worry, in the long run, "We think it is okay to invest in China." "

The fund learned that many fund managers investing in China overseas have increased the frequency of communication with clients after the sharp fluctuations in the market last week.

25 billion US dollars buyback boosted confidence, BABA rose sharply

In the past two days, positive signals have gradually appeared in the market.

For example, BABA announced on Tuesday that he would increase the size of share buybacks from US $15 billion to US $25 billion, equivalent to nearly 9% of BABA's market capitalization, making it the largest buyback in the history of Chinese stocks. The share price of BABA (Hong Kong stock) rose sharply under the stimulation of the news. Us-listed ADR also opened sharply higher, leading to a general rise in US-listed stocks.

BABA said in the announcement that the decision to increase the size of the buyback reflects the board's confidence in the company's continued growth in the future. The repurchase plan is valid for two years (until March 2024). As of March 18 this year, BABA had repurchased 56.2 million American depositary shares under the previously announced buyback plan, totaling about US $9.2 billion.

This buyback is also the second time in a row that BABA has expanded its buyback scale in the past three quarters. In December 2020, BABA said he would buy back $10 billion of American depositary shares; in August last year, he announced that he would expand the buyback to $15 billion.

Three fund managers of BlackRock Port Equity Vision, the world's largest asset manager, said on March 22 that they had seen positive signals and that the valuations of high-quality Hong Kong companies in the crisis had reached a level hard to dream of.

The fourth largest overseas Chinese stock fund increases its holdings of Ping An Insurance

At the same time, overseas Chinese equity funds have disclosed changes in their positions in February. We found that major overseas Chinese equity funds made some stock swaps in February.

For example, the latest size of the fourth largest overseas Chinese stock fund, "JPMorgan Funds-China Fund," is US $5.432 billion. In February, the fund increased its holdings in Ping An Insurance and China Overseas Land & Investment in the same period. Stocks with relatively large reductions include Yao Ming Biotechnology.

For another example, the second largest overseas Chinese stock fund is "JPMorgan Funds-China A-Share Opportunities Fund", with a latest scale of more than 40 billion yuan. In February, the top 10 major positions of the fund did not change much, slightly reducing their holdings in Wuliangye and slightly increasing their holdings in Baoxin Software.

External uncertainty is high and the stock market is likely to remain highly volatile in 2022. However, in terms of the movement of the institution, there may already be some positive signals.