Chinese Fund Companies Have Exhausted 2018YE Cash Positions

A report from Galaxy Securities shows Chinese fund companies have exhausted all but 79.5 billion yuan in buying power based on the year-end portfolio snapshots. Although animal spirits revived in the Chinese stock market, investors haven't been buying funds. Money is flowing out of bonds and money markets, and into stocks. There was a large spike over the past week. The takeaway: capital is rotating from debt and cash to equity, but for this market to have legs it will require wider participation and new buyers stepping in.

21st Century:公募仅剩795亿子弹可打?热门指基连迎十亿级净申购
On February 26, a report released by the Galaxy Securities Fund Research Center showed that among the active stock funds, the remaining funds available for buying stocks based on the latest fund's net asset value were 79.5 billion yuan.

This data has caused huge market attention.

According to the report, the above analysis is based on public fund data at the cut-off point on December 31, 2018. If there are a large number of large purchases in the near future, the new funds will be improved. However, from the perspective of the information from various angles, there has not been a clear phenomenon of large-scale subscription of public funds in the whole society.
Capital is flowing away from bonds and money market funds though:
The 21st Century Business Herald reporter learned from a number of fund companies that the recent huge purchases have rarely occurred, but the situation of a significant increase in net purchases is constantly occurring, especially index products are leading the way.

Another noteworthy sign is that some of the recent redemption of money funds and bond funds has intensified, and the “stock bond” effect has begun to emerge.
If this is a new bull market in China, it is in its very early stages. Weekly account openings are one-fifth of the prior bull market peak:
According to data disclosed by China Settlement Disclosure on February 26, the number of new investors in China's securities market last week was 316,100, with a previous value of 208,600, a 53% increase from the previous month. This is the first time since April 2018 that the number of accounts opened in the first week exceeded 300,000. However, during the last round of bull market, the highest number of weekly accounts opened exceeded 1.6 million, far higher than the current number of accounts.
Some investors are heading for the exits though as redemptions pick up:
Insiders of a fund company in Shenzhen revealed to reporters on February 27 that during the downturn of the stock market, the total redemption amount of the company's cargo base was roughly 700 million yuan to 800 million yuan, but on February 25 and 26, the company's goods The net redemption amount of more than one billion and two billion, respectively, has risen significantly.

This situation is not a case. According to Wind statistics, as of February 27, 2019, the Monetary Fund's on-market circulation share was 188.46 billion, a decrease of 11.433 billion from the 1998.99 billion at the end of 2018; if compared with last Friday, that is, February 15 It is a reduction of 15.38 billion. It can be inferred from the two differences that the on-site cargo base suffered a significant redemption this year, and the redemption was mainly concentrated in the most recent week.

The situation of some bond funds is also very similar. A public fundraising director in South China bluntly told reporters that several of the bond funds they were responsible for had recently redeemed between 10% and 20%, with a majority of third-party sales platforms redeeming.

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