The Empirical Study Of The Factors That Shaping QFII's Shareholding Preference In China's A-share Market

Amid the economic globalization,China keeps on deepening its opening policy and pushing RMB into international market.As the second largest economy,China has grown into an integral part of the world economy.Against that backdrop,QFII(Qualified Foreign Institutional Investors)system,a means to open our capital market,has run in China for the past 16 years.During this time-frame,QFII investors has gained remarkable profits from China's A-share market,which puts the concept of value investment under the spotlight correspondingly.Therefore,this paper attempts to analyze the investment tactics for QFII investors in China's A-share market from four different perspectives.To begin with,this paper gives an introduction to two core theories about QFII system,and in the part,foreign and domestic theories that essential to this paper,namely those related to the investment strategies for QFII investors are reviewed.Secondly,based on those theories,it attempts to analyze the factors that might affect the QFII investors' investment strategies.Then,based on the analysis of investment behaviors,this paper will figure out QFII investors' inclinations in the case of stock investment and industry investment.At last,a double logarithm model is used to analyze QFII investors' stock holding preference by means of regression.Based on modeling,the paper will list the financial indexes that have a significant bearing on the investment strategy making in accordance with different stock market quotations.With those analysis,we could draw following conclusions.Firstly,QFII investors remain committed to value investment and growth investment when investing in China's A-share market.And they tend to observe the listed companies from the following perspectives,that is,profitability,solvency,capability of asset management,capability of growth and capability of equity expansion.With accurate judgement of the economic landscape and periodic alteration of the industry,QFII investors pursue a investment portfolio that could bring the maximum profits while keeping the systematic risks at the lowest point.Secondly,QFII investors have their own inclinations when investing in China's Ashare market.When choosing stocks,QFII investors will show their preference for stocks with low P/E ratio,especially the stocks issued by corporates with excellent performance.And they tend to buy both the large-cap stocks issued by companied with good performance and the small-cap share with huge growth potential.In terms of the stocks holding duration,QFII investors are usually engaged in both long-term and short-term operation.As for investing in which industrial sectors,QFII investors prefer the industrial sector that less affected by the periodic alteration and could benefit from positive economic growth.Thirdly,QFII investors would focus on different financial indexes of the listed co mpanies in different stock market quotations.The asset management capability,growt h capability and profitability of the listed companies will be highlighted when the shar e index seesawed and took a declining trend.In a bullish market,QFII investors will p ay close attention to one company's solvency,capability of growth,equity expansion and assets management.When the share price fell under the maximum drawdown and then shot up in a short time,QFII investors will analyze the company's capability of a sset management,profitability,as well as P/E ratio and buy shares when they go up.When the share index plummeted,QFII investors focus more on the solvency,capabili ty of asset management,growth and equity expansion of the listed companies.Finally,based on the empirical research,this author of this paper will give his own suggestions on the development of QFII system in China and offer some tactics for QFII investing.