The data show that US investors are buying a lot of ETF-linked call options in China.

First, northbound funds returned to the horse gun, surging into A-shares since November. Now, American investors are using call options to be bullish.

Has the wind really changed?

Let's take a look.

The number of open contracts of American call options hit a new high.

The number of open call options linked to US-listed Chinese ETF-FXI hit an all-time high, according to the data. The agency believes that this shows that foreign investors are becoming more active towards China, using "call options", a "risk-controllable" derivative.

The number of open contracts on FXI's call options reached a new high of 4.4478 million on Friday, according to market chameleon, a US stock and options information website. At the same time, the number of open put contracts was 1.7244 million. Although the number of open contracts of put options is also higher than the average of the past year, the number of contracts of open call options is significantly more than that of put options, which is more than 1.6 times that of the latter. This shows that the interest of bullish is significantly higher than that of bearish.

The holder of a call option has the right to buy option-linked assets at a given price within a given time frame. Call option is a kind of derivative instrument with controllable risk and unlimited profit space. Overseas, many ETF have linked option contracts.

For example, the option-linked ETF-FXI is an ETF,FXI issued by Asustek, an ETF brand owned by global asset management giant Blackrock, which tracks the FTSE China 50 Index, which tracks the 50 most valuable Chinese stocks in Hong Kong. According to news from ETF.com, the top 10 heavy stocks in FXI are Tencent, BABA, Meituan, JD.com, China China Construction Bank Corporation, Industrial and Commercial Bank of China, Ping An Insurance, Bank of China Ltd., NetEase, Inc and Baidu, Inc..

FXI is a large-scale Chinese ETF listed in the United States, with the latest size of 4.65 billion US dollars.

It is not a unique instance, but has its counterpart.

As of Friday, the largest Chinese market in the US market, the number of open call options linked to ETF,MCHI also reached the highest level in the past year. The data show that the number of open positions on linked MCHI calls is 46467, close to the highest number in the past year (in the past year's 92 per cent quartile, with 100 per cent quartile being the highest), while the number of open put contracts linked to MCHI is 26916, below the average over the past year. The number of open contracts of call options is 1.6 times that of put options.

MCHI is the largest Chinese ETF in the US market, with the latest size of US $6.58 billion.

Let's take a look at the KWEB of overseas Internet celebrity China ETF-, which tracks China's Internet index. As of November 18, KWEB's latest open call options were more than three times the number of contracts for open put options. KWEB's latest size is $5.5 billion.

These data all point to the same conclusion: overseas attitudes towards the Chinese market have become more positive.

A salesperson of a foreign bank explained: the change in the policy of the epidemic, coupled with the adoption of supportive policies in the real estate sector. This is the reaction of the market. William MA, founder and chief investment officer of Grow Group, said that in the short term, global investors' attitude towards China has turned positive. They use call options as a risk-controllable way to take a long view.

However, William MA said that many foreign institutions are still worried that the repeated epidemic will affect China's economic recovery. For them, buying Chinese ETF directly is worried about volatility, but they don't want to miss the rebound in Chinese stocks, and they are willing to bet on a technical rebound in the short term. The downside risk of call options is limited, and the consumption of institutional capital is also very limited.

Northward capital has attracted a net inflow of 40 billion yuan in November.

Since the beginning of November, the market has shown positive signals. Overseas, Internet celebrity ETF-KWEB has reproduced net inflows, with KWEB attracting more than $30 million in inflows from November to November 18. Although the net inflow is small, compared with the previous large net outflow, it shows that overseas funds are pouring back into the Internet celebrity ETF.

On the other hand, in terms of northward funds, the net inflow of northward funds has reached 39.638 billion yuan from November 1 to 21.

As of November 21, there has been a surge of northward capital inflows in the past seven days. Among them, Guizhou Moutai, Midea, Zijin Mining Group, Ping An Insurance, China Merchants Bank and other five stocks attracted capital inflows of more than 2 billion yuan. Among these stocks, Guizhou Moutai, Midea, Ping An Insurance and China Merchants Bank are all heavy stocks of foreign funds.

Wall Street has "taken a turn" towards China.

After China's stock market rebounded in November, global institutions became more positive about China. For example, the fund's net worth rose 23.83 per cent from November 1 to 21 at ETF-MCHI, which tracks the MSCI china index.

Morgan Stanley recently raised its target price for the Chinese stock market, and the MSCI China index is expected to rise 14% by the end of next year. This round of Morgan Stanley is one of the most cautious institutions for both U. S. stocks and China. Recently, however, Morgan Stanley has been significantly more optimistic about the Chinese stock market than before.

Jonathan Garner, chief Asian and emerging market equity strategist at Morgan Stanley, said in a recent interview that with the good news, the Chinese market will have an optimistic performance, and the optimistic trend will continue for several quarters. Bank of America also turned bullish on the tactical nature of Chinese stocks.

In a report released in mid-November, Goldman Sachs Group maintained an over-rated rating on the MSCI China Index, which is expected to return as much as 16% over the next 12 months, with returns of 19% and 21% if exchange rate factors are taken into account. Goldman Sachs Group also raised China's Hong Kong shares from low to even.

Huang Ruilin, managing director and fund manager of Allianz Investment, said in an interview that the epidemic will pass sooner or later, and China's economy will recover sooner or later. At a time when many foreign institutions are still relatively pessimistic about China, Huang Ruilin is already relatively optimistic.

UBS: favorable policies or push the market to rebound further

The rebound began with a change in policy. Some foreign-funded institutions believe that favorable policies may continue to promote the market rebound.

On November 16th, UBS's Office of Wealth Management Investment Director (CIO) issued an institutional view that the Chinese stock market is expected to rebound further. Although economic data softened in October, the potential for a follow-up rebound is strong. Specifically, in the economic troika in October, consumption and investment in fixed assets are difficult to stand out. But recent policies have been very positive, which UBS believes may provide potential for a follow-up economic recovery.

UBS said that first, the government has introduced intensive positive policies on the property market, and second, the positive atmosphere of the meeting between the heads of state of China and the United States has further boosted investor sentiment. In terms of the property market, the Banco Insurance Regulatory Commission, the Ministry of Housing and Construction and the people's Bank of China jointly issued a notice on Monday (14th) to guide commercial banks to issue letters of guarantee to high-quality real estate enterprises to replace pre-sale regulatory funds, so as to ease the financial pressure on developers. UBS believes that the latest move is more specific than the guidelines on pre-sale capital regulatory accounts issued at the beginning of the year, and it is estimated that developers receive additional cash equivalent to 15% of short-term debt (based on our upside scenario). The proportion of funds received by some developers to cover short-term debt may be higher. Finally, UBS also pointed out that in recent days, China has further optimized its epidemic prevention policy and launched several rounds of policies to support the real estate market. UBS believes that China's economic growth will rebound by about 5% next year. Economic activity is expected to pick up gradually from October as epidemic prevention restrictions are adjusted in the coming months.