According to the report released by China International Capital Corporation on the Zhitong Finance APP, this week, boosted by positive signals from the 'basket' policies of the three financial departments and the political bureau meeting, investor sentiment quickly warmed up. From a funding perspective, trading and passive funds may be dominant. Hedge funds and other trading funds act faster and more flexibly, similar to the situation of the sharp rise in Hong Kong stocks in April and May. Also, during the market surge, the short sell scale of Hong Kong stocks also increased, indirectly indicating the long and short game of trading funds.

In addition, passive fund inflows at EPFR surged, and it is not ruled out that non-institutional investors substantially increased holdings through ETFs, which is consistent with the phenomenon of significant rise in 'core assets' with heavier weightings in the A-share and Hong Kong stock indices.

The noteworthy changes in global funding this week include:

1) According to China International Capital Corporation's tracking of EPFR fund data, as of Wednesday this week (September 25th), overseas active funds accelerated outflows from A-shares and overseas Chinese stocks, but passive funds flowed in substantially.

2) Regarding the Stock Connect schemes, this week saw a significant increase in northbound fund transaction volume, while southbound fund inflows narrowed, and even temporarily flowed out.

3) Global equities, bonds, and currency markets all saw inflows.

4) U.S. stocks and Japan shifted to outflows, while outflows accelerated in emerging markets.

In the domestic market, trading is dominated by passive funds, and long-term foreign capital has not yet flowed in significantly, with some profits taken by southbound funds.

This week, boosted by positive signals from the financial three ministries' "basket" policy and the political bureau meeting, investor sentiment quickly improved. With both markets setting historical new highs in trading volume, A-shares and H-shares rebounded strongly, with the Shanghai and Hang Seng Indexes returning to the 3000 and 20000-point levels respectively. In terms of funds, who are the main buyers? Foreign or domestic funds, long-term or short-term, active or passive? China International Capital Corporation combines data from various sources (EPFR, Shanghai-Hong Kong Stock Connect, etc.) and customer interactions to find out:

1) Long-term foreign capital has not yet significantly flowed in. China International Capital Corporation previously mentioned that EPFR's active funds can serve as an important window to characterize long-term institutional investors (Long Only). Both active foreign capital in A-shares and H-shares continued to outflow this week. At the same time, the communication between China International Capital Corporation and its clients has essentially confirmed that long-term foreign capital is more about reducing underweight positions to prevent significant underperformance, rather than aggressively increasing positions.

2) Trading and passive funds may dominate. Hedge funds and other trading funds act faster and more flexibly, similar to the situation during the sharp rise in Hong Kong stocks in April and May. Additionally, during the market rally, short selling in Hong Kong stocks increased, indicating the long and short game of trading funds. Furthermore, there has been a significant increase in passive fund inflows in EPFR, with the possibility of non-institutional investors significantly increasing their holdings through ETFs. This aligns with the phenomenon of substantial gains in core assets with higher weights in the A-share and H-share indexes.

3) Southbound fund inflows have narrowed and even temporarily reversed, with some leading southbound targets that have performed well experiencing overall net selling. This might be due to profit-taking or portfolio adjusting activities.

On a global scale, both US and Japanese stocks have turned into outflows, while inflows in the Indian market have diminished.

As of Wednesday this week (September 19-25), active foreign fund inflows in the Indian market slowed to $0.16 billion (compared to $0.39 billion inflow last week), US stocks turned back into outflows by $0.22 billion after an inflow of $0.6 billion last week, and Japanese stocks also turned into outflows by $0.19 billion (compared to an inflow of $0.01 billion last week).

Editor/ping