As trading sentiment in the A-share market heats up, a substantial amount of capital is swiftly entering the market through ETFs to "sweep up" stocks.

Recently, E Fund's SSE STAR Market 50 ETF increased its holdings in Semiconductor Manufacturing International Corporation (688981.SH), causing its holding ratio to exceed the 5% disclosure threshold, which has attracted market attention. In the view of industry insiders, this move is actually due to multiple factors such as a large influx of capital, rapid growth in fund size, and the investment strategy of ETFs to track the index constituent stocks.

At the same time, this phenomenon is also a microcosm of the recent expansion of equity funds. According to statistics from First Financial, the scale of 13 ETFs has increased by more than 14 billion yuan in the past month. After this round of growth, the scale of these products has all exceeded 25 billion yuan. If the subsequent shares continue to increase, the situation of disclosing stakes in listed companies may still occur.

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The reporter also noted that the repurchase equity announcements issued by several listed companies show that multiple ETF products have recently taken actions to increase their holdings. Institutional investment research personnel interviewed said that after the A-share index quickly rises to a relatively high position, there is a certain pressure of profit-taking and closing positions. The market's bullish and bearish sides have begun to intensify their game, but in the medium and long term, the A-share market is still expected to have a sustainable slow bull market.

The "passive" disclosure of the STAR Market 50 ETF

Recently, Semiconductor Manufacturing International Corporation announced that on October 10, E Fund's SSE STAR Market 50 ETF increased its holdings in the company's domestic stocks by 9.6162 million shares. To date, the fund holds a total of 108.7 million domestic shares, accounting for 5.47% of the company's total domestic share capital and 1.36% of the company's total share capital.

This indicates that E Fund's SSE STAR Market 50 ETF's holding ratio of Semiconductor Manufacturing International Corporation has already broken through 5%, causing a "disclosure". If calculated roughly based on the closing price of Semiconductor Manufacturing International Corporation on that day of 75.02 yuan per share, the amount of this fund's increase is about 720 million yuan.

Before this, the semi-annual report data showed that E Fund's SSE STAR Market 50 ETF was already the third-largest circulating shareholder of Semiconductor Manufacturing International Corporation, with the number of shares held at 73.1436 million. In other words, the fund has successively increased its holdings by 35.5644 million shares in the second half of the year.

In the view of industry insiders, the disclosure of this ETF product is different from the situation where the fund manager is optimistic about a certain company and takes the initiative to "build a position". Behind it is actually the recent acceleration of a large amount of capital entering the market, leading to a rapid increase in fund size and causing a "passive" increase in the weight of the target index stocks.

According to the announcement, E Fund's SSE STAR Market 50 ETF mainly adopts a full replication method to closely track the target index, that is, the SSE STAR Market 50 constituent index, and pursues the minimization of tracking deviation and tracking error as the investment goal. And Semiconductor Manufacturing International Corporation is the largest weight stock of its target index, accounting for 9.87%, so the change in holdings is based on the fund's investment strategy for investment.First Financial reviewed historical announcements and found that this situation is not the first of its kind. In December 2022, the Huaxia SSE Science and Technology Innovation Board 50 ETF had previously flagged SMIC due to similar reasons, and subsequently issued cautionary announcements after increasing or decreasing its holdings for the same reason. To date, SMIC has issued six cautionary announcements due to changes in ETF holdings.

As of the end of the second quarter, among the top seven circulating shareholders of SMIC, four seats were held by ETF products. In addition to the Easy Fund SSE Science and Technology Innovation Board 50 ETF, the Huaxia SSE Science and Technology Innovation Board 50 ETF is the largest circulating shareholder of SMIC, holding 8.37% of the shares, while the Huaxia National Semiconductor Chip ETF and the Huaxia SSE 50 ETF rank fifth and sixth, respectively.

On the other hand, the scale of the Easy Fund SSE Science and Technology Innovation Board 50 ETF has indeed grown significantly recently. Wind data shows that as of October 14, the net asset value of this 50 ETF was 68.053 billion yuan, expanding by more than 70% compared to 39.252 billion yuan at the same time last month.

"We also have products that change positions due to scale changes," said a researcher from a medium to large fund company. The research team he is in has recently increased the position of stock investments overall, but the increase is relatively limited; on each sub-product, there are increases, flat positions, and decreases, mainly depending on the operational style and judgment of the fund manager.

ETFs continue to increase holdings in listed companies.

In fact, the rapid expansion of the scale of the Easy Fund SSE Science and Technology Innovation Board 50 ETF is just the tip of the iceberg of recent funds accelerating into stock ETF funds. Wind data shows that since September 24, 270.125 billion yuan of funds have flowed into the stock ETF market, and the net inflow in October has exceeded 139.8 billion yuan.

ETF products tracking the ChiNext Index and the Science and Technology Innovation 50 are the two most favored directions for funds, with monthly net inflows exceeding 30 billion yuan, at 35.719 billion yuan and 30.716 billion yuan, respectively. Among them, individual products such as the Easy Fund ChiNext ETF, Harvest SSE Science and Technology Innovation Board Chip ETF, Huatai-Pine Rich SSE 300 ETF, and Huaxia SSE Science and Technology Innovation Board 50 ETF have "sucked in" more than 15 billion yuan in five trading days.

This also means that the fund scale of these stock ETFs has grown rapidly. According to First Financial statistics, as of October 14, the number of stock ETFs with a fund scale exceeding 10 billion yuan is 34, compared to 25 a month ago. Among them, the scale of 13 ETFs has increased by more than 10 billion yuan in the past month.

Among the aforementioned products, the number of ETFs reaching the level of 100 billion yuan has expanded to 8, such as the largest Huatai-Pine Rich SSE 300 ETF at 407.693 billion yuan, in addition, the scale of products such as Harvest SSE Science and Technology Innovation Board Chip ETF and Southern Zhongzheng 1000 ETF is between 25 billion yuan and 70 billion yuan.

If the subsequent share increases continue, the situation of flagging listed companies may still occur. At the same time, the reporter also noticed that the latest top ten shareholders data disclosed with the repurchase of equity announcements issued by many listed companies also shows that during this round of market rebound and fluctuation, many ETF products have increased their holdings.On October 14th, Meichuan Shares, a company specializing in diamond wire tracks, disclosed a progress announcement on share repurchase and revealed the latest information on the top ten shareholders and the top ten shareholders with unlimited sale conditions. As of October 9th, Southern Zhongzheng 500 ETF increased its holdings by 1.3338 million shares, bringing the total to 3.8103 million shares, and rising to the sixth largest shareholder of the company.

In the amino acid sector, Meihua Biology's information on the top ten circulating shareholders on October 8th and September 23rd shows that Southern Zhongzheng 500 ETF has increased its holdings in the stock twice, with the latest holding amount reaching 35.24 million shares, making it the ninth largest shareholder of the company. In addition, a September 20th announcement by Kweichow Moutai showed that it has received additional investments from products such as Huaxia SSE 50 ETF, Huatai-Pine Rich CSI 300 ETF, and Yifangda CSI 300 ETF.

According to an incomplete statistics by First Financial, as of October 15th, in the past month, a total of 32 listed companies have issued announcements regarding the shareholding situation of the top ten shareholders and the top ten shareholders with unlimited sale conditions in matters related to share repurchase. Among them, many listed companies such as Wuchang Zhongda, Fangda Carbon, and Liaoning Port Shares have recently received additional investments from ETF products.

From the current point of view, Yang Gang, the Chief Economist of Golden Eagle Fund, told First Financial that from the market trend, the index has quickly retreated to the 50% retracement position after the start of this round of repair market in late September. At the current position, the profit and loss ratio for both bulls and bears has basically been equal. It is expected that the index will still fluctuate in the short term.

"Considering the ongoing positive policy guidance, the economic fundamentals are expected to stabilize and improve, and the trend of market risk preference repair has not been reversed. In the long term, A-shares are still expected to have a sustainable slow bull market," Yang Gang believes that since mid-September, the positive statements and actual actions on the policy side have slightly exceeded investors' previous expectations (subsequent positive policy actions are still on the way).

Based on this, Yang Gang said that A-share investors can continue to maintain a relatively optimistic attitude towards the market prospects in the medium term, and will not have a significant swing in confidence due to the huge fluctuations in the short-term market. They will continue to pay attention to high-risk preference directions such as sci-tech innovation.