Who is the pushing hand in the huge volume of A-share transactions? Three indispensable funds, quantify private placement or for the largest founder, how much trading volume does this fund contribute?

September 2, 1.7 trillion yuan, September 1 A shares this huge volume of transactions to refresh this year's transaction records, the degree of brushing eyeballs of this data is also "setting a new record". From July 21 to September 2, the turnover in Shanghai and Shenzhen has exceeded trillion yuan for 32 consecutive trading days.

Market contraction is not welcome, but such a large number of transactions, and people are nervous, where does the incremental capital come from?

Li Lifeng, chief strategist at Huaxi Securities, believes that the huge amount of A-share capital trading mainly comes from three channels: first, the funds attracted by the structural bull market, including northward funds; second, the adjustment of institutional funds in the market; and third, quantitative trading, this part accounts for a large proportion.

Quantifying the contribution of private equity funds is recognized by more views. There are different opinions on the proportion of quantitative transactions in the whole market. According to a reporter from the Financial Associated Press, a securities firm with a relatively concentrated concentration of quantitative transactions has more than doubled its stock-based trading volume this year compared with the same period last year. The head of the express counter of a brokerage expressed a similar view to the Financial Associated Press. He said, "the increase in the trading volume of the whole market leads to the increase of the quantitative trading volume. If the trading volume of the whole market is very small, the quantitative trading scale will also be very small. These are two variables that pull each other."

Li Lifeng told the Financial Associated Press that when the market fluctuates greatly, the market style is determined by quantitative funds in the short term; in the medium and long term, it is determined by the prosperity and fundamentals of the industry, and the style tends to high-quality growth.

Chen Xianshun, chief strategist of Guotai Junan Research Institute, also mentioned earlier that the adjustment of institutional positions has magnified the trading volume of the market. In the second quarter of this year, under the leadership of the technological growth market, the mid-market blue chip began to gradually become the consensus of funds. Prior to the blue-chip white horse market as the main market style officially switched to the mid-market growth style. In the second quarter of 2021, active funds increased their allocation of mid-cap stocks, with the proportion of blue-chip allocation rising by 1.5 per cent in the mid-market of 300-100 billion, while the share of positions in more than 100 billion large-cap stocks fell sharply by 3.6 per cent.

"recently, the over-the-counter options of individual stocks are very popular, that is, investors pay a certain proportion of margin, and brokers buy the corresponding stocks in full. Over-the-counter options may also be one of the factors driving the expansion of market trading volume. " A person from the derivatives business department of the securities firm told the reporter.

Quantify how much volume private placement contributed?

From the perspective of yesterday's stock transactions, the top 11 transactions exceeded 10 billion yuan, and the first 20 stocks consumed hundreds of billions of funds. This kind of trading volume is also unimaginable in the super bull market atmosphere in the past, as is the case today. Zhongtai Securities has a view that with the growing growth of quantitative private equity funds, trillion trading volume can be said to be the norm, and trading volume may create breakthroughs again and again. If there is money in the stock market, it will not be too bad, and if there is active trading, there will often be opportunities.

Quantitative trading and market trading complement each other. On the one hand, quantitative trading contributes to part of the trading volume; on the other hand, the magnification of market-wide trading also promotes the scale of quantitative trading and arbitrage space.

There are different views on the proportion of quantitative trading in the whole market. Some sell-side analysts give a higher proportion of 50%; some brokerage-related business leaders expect this proportion to account for 15%. It is also said that at least 500 billion of the 1.7 trillion transactions on Sept. 1 came from quantitative products, close to 1/3.

Since the new regulations of asset management in 2018, quantitative private placement has developed very rapidly, and tens of billions of quantitative private equity has emerged rapidly. In the first half of this year, quantitative private placement ushered in another wave of great development. By the end of July 2021, the scale of quantitative private placement has exceeded trillion, the number of quantitative private placement has increased from 11 at the end of last year to 18, and the proportion of quantitative private placement in the whole private equity market has also increased to more than 21%, and there is room for further growth.

For the vigorous development of quantitative private placement and quantitative transactions. The securities trader said, "it is mainly because the market demand for quantitative private equity products has increased."

Quantitative private equity fund has the advantages of good liquidity, stable income and short evaluation cycle. Although the performance is not amazing, but the high price lies in the small withdrawal, matching the risk aversion needs of high net worth individual customers. Moreover, quantitative private placement takes only a few months to evaluate the effectiveness of the strategy, while subjective investment goes through a round of bulls and bears.

As quantitative trading can create considerable trading volume, many securities firms have recently attached importance to the issuance of quantitative private equity products, and mainly promote index enhancement or industry-related quantitative private equity products (quantitative FOF or single quantitative private equity manager products). According to a previous report by the Financial Associated Press, the cumulative sales of Sino-Thai Securities "Sino-Thai quantitative 30" FOF and proprietary products exceeded 10 billion in seven months, an increase of more than 10 times over the whole of last year.

The so-called index enhancement is to gain excess returns while obtaining index returns and reduce volatility after hedging risks. the index enhancement strategy has been very mature and is generally based on quantitative multi-factor stock selection.

According to the private placement network, the "Nine chapters Magic Square 500 Quantification Multi-Strategy No. 1" owned by 10 billion Quantification Private Magic Square Quantification has earned an excess profit of 40.78% this year, which is in a higher position. This year, many quantitative private equity products have won better excess returns.

At the same time, Jin GE Qirui, Qilin Investment and other 10 billion private equity have "closed the door", the neutral strategy, the CSI 500 index enhancement products are closed. Some quantitative private equity people said that the overall capacity is under pressure, and there is a contradiction between the research volume and the scale, and the future depends on the improvement of the strategy.

Obviously, if the quantitative private equity income is maintained at a high level, then the demand for such products will rise, and quantitative transactions will inevitably become an important provider of trading volume.

Short-term style is determined by quantitative funds.

Behind the huge transaction is the drastic change of market style.

Li Lifeng told the Financial Associated Press that if the A-share trading volume remains high, for example, more than 1.5 trillion, then the A-share market style rotation (value, growth rotation) is still very fast, and the higher the trading volume, the more volatile the market. On the contrary, if the follow-up A-share trading volume returns to less than 1.2 trillion, then the market style will be set in the structural market, dominated by technological growth and hard technology.

Li Lifeng also said that when the market is volatile, the counterpart of the transaction is quantitative capital, and the market style is determined by quantitative capital in the short term; in the medium and long term, it is determined by the prosperity and fundamentals of the industry, and the style tends to high-quality growth.