QFII investment favors "small and medium-sized enterprises"; stocks like Pinggao Electric have been increased in holdings.

QFII investment map emerges, favoring "small and medium-sized innovation"

As the annual reports of listed companies for 2015 are gradually disclosed, the QFII's holdings at the end of last year have also surfaced. Statistics show that among the listed companies that have disclosed their annual reports, 18 companies have QFII among their top ten circulating shareholders, with 9 of them being newly added in the fourth quarter of last year. Compared to before, the QFII style has changed, showing a preference for small and medium-sized innovation stocks.
QFII's new investments in 9 stocks favor "small and medium-sized innovation"

As the annual reports of listed companies for 2015 are gradually disclosed, the QFII (Qualified Foreign Institutional Investor) holdings at the end of last year have also surfaced. According to statistics, as of March 8, among the 255 listed companies that have disclosed their 2015 annual reports, QFII appeared among the top ten circulating shareholders of 18 companies, with 9 of them being newly added in the fourth quarter of last year.

The newly added stocks include Chuangjiang New Materials (002171), Yixintang (002727), Qianeng Hengxin (300191), Huayuan Biological (300401), Xian Dao Intelligent, Shaanxi Guotou A, Wanhua Chemical (600309), Tibet Tourism (600749), and Tiancheng Zikong (603085). Among these, Yixintang and Wanhua Chemical have a market value exceeding 100 million yuan.

In terms of increasing and decreasing holdings, four stocks including Pinggao Electric (600312), Tangchen Beijian (300146), Shandong Haohua (000822), and Yanggu Huatai (300121) saw an increase in QFII holdings in the fourth quarter of last year. Meanwhile, GoerTek (002241), Juguang Technology (300203), and Enhua Pharmaceutical (002262) experienced a decrease in QFII holdings in the fourth quarter.

From the above holdings, it can be seen that in the fourth quarter of last year, QFII changed its traditional focus on main board stocks, with small and medium-sized innovation stocks becoming the new mainstream. A notable feature is that among the 8 stocks with a market value exceeding 100 million yuan, 7 stocks including GoerTek, Aidi Xi (002468), Juguang Technology, Pinggao Electric, Yixintang, and Tangchen Beijian are all small and medium-sized innovation stocks, with only Wanhua Chemical being a Shanghai stock.

In this regard, analysts have stated that many small and medium-sized listed companies have withstood the test of slowing economic growth and maintained good growth momentum. In addition, these companies' unique functions in attracting talent, promoting innovation, and industrializing technology play a significant role in structural adjustment and transformation, and with policy support, small and medium-sized growth stocks are likely to continue to be favored by QFII.

In terms of market value of holdings, currently, GoerTek has the highest market value held by QFII, with the Norwegian Central Bank holding 14.566279 million shares at the end of last year, ranking seventh among the top ten circulating shareholders. Based on yesterday's closing price of 23.04 yuan, the market value of the holdings reaches 337 million yuan. However, this institution reduced its holdings in the fourth quarter of last year, with the number of shares held at the end of the third quarter being 15.906441 million shares.

Industry insiders point out that among various institutional investors, QFII has always been regarded as one of the representatives of precise stock selection, and its investment trends are the most closely watched by investors. The changes in QFII investment style reflected in the annual report are worth investors' attention.

QFII's new investments and increased holdings generally outperform the market.

From the performance of related stocks, QFII's selection of these stocks has mostly performed well. Among them, Huayuan Biological and Xian Dao Intelligent have achieved gains against the market this year, with cumulative increases of 23.99% and 12.52%, respectively. Data shows that Huayuan Biological is the largest manufacturer globally, providing the most diverse range of vitamin D3 upstream and downstream products, with both production and sales ranking among the top in the world. Notably, the overall trend of this stock is very stable, and its price recently reached a new high since the end of July last year.

Xian Dao Intelligent specializes in the research, design, production, and sales of automated complete equipment and provides overall automation solutions. In 2015, it achieved a net profit increase of 122.28% year-on-year, with an annual distribution plan of "10 transfers to 20 and a dividend of 5.5"; in addition, the company expects a net profit of 44 million to 51 million yuan in the first quarter of 2016 (an increase of 77.92% to 106.23% year-on-year), mainly due to increased sales revenue.

On the other hand, the latest information disclosed by the China Securities Depository and Clearing Corporation shows that QFII has opened new accounts for 49 consecutive months, with a total of 984 accounts opened. In January of this year, 7 new accounts were opened, including 4 in the Shanghai market and 3 in the Shenzhen market. QFII refers to foreign professional investment institutions investing domestically, and this batch of globally-minded capital continuously opening accounts indicates a certain level of recognition of the current valuation of A-share listed companies by foreign funds.
From past experience, QFII has been quite precise in timing its capital increase in A-share investments. Based on statistics of the 17 instances where QFII opened more than 20 accounts in a month relative to the stock index levels at that time, except for the major bottom of 1664 points during the bear market of the Shanghai Composite Index in 2008, QFII has basically caught the subsequent bottoms or lows. The stock index fell to 1849 points in June 2013 and to 1974 points in March 2014, both of which were major bottoms, while the number of monthly accounts opened by QFII around 2000 points between August 2013 and 2014 was also the highest, accounting for 11 out of the first 17 instances.

Additionally, among the remaining months with more than 20 new accounts, such as October 2014 when the stock index was at a short-term correction low, February 2015 when the stock index was at a mid-term correction low, and July 2015 when it rebounded after a sharp drop, only June 2015 with 23 new accounts was at an absolute high. It can be seen that most of the time when QFII opens a large number of new accounts, it is basically at the bottom or a phase low of A-shares, making it evident that the timing of QFII's entry is worth paying attention to.