Trading opportunities should be monitored through top analyst research reports, which offer authoritative, professional, timely, and comprehensive insights to uncover potential thematic trends. Northbound capital returned to net inflows in the fourth quarter, primarily flowing into technology sectors such as non-ferrous metals, electronics, and power equipment. In the first week of the new year, margin financing saw a substantial net inflow, contributing significant incremental capital to the market as A-shares continued their spring rally. Looking ahead, A-shares are expected to maintain their upward trajectory, with the primary theme of a tech and cyclical bull market in January remaining unchanged; for style selection, large-cap growth stocks are more recommended.
Core Views ⚑ Northbound capital flowed back into A-shares in Q4: In terms of total amount, northbound capital recorded a net inflow of 9.5 billion yuan in the fourth quarter, accounting for 2.63% of the A-share circulating market capitalization. By specific direction, the capital primarily flowed into the ChiNext and STAR Market boards, with a slight outflow from the main board. At the precise Shenwan primary industry level, the largest inflows were into non-ferrous metals, power equipment, and electronics; the main sectors sold were pharmaceuticals and biologics, food and beverage, and non-bank financials. On a stock-specific basis, the top three stocks by net purchase were Contemporary Amperex Technology (CATL), Luxshare Precision, and Weichai Power, while the top three net sold were Kweichow Moutai, WuXi AppTec, and BYD.
⚑ Monetary Policy and Interest Rates: Last week (1/5-1/9), the central bank conducted a net withdrawal of 1,221.4 billion yuan via open market operations. In the coming week, 138.7 billion yuan in reverse repos are set to mature. Money market rates rose, short-term government bond yields fell, long-term government bond yields increased, the issuance scale of interbank certificates of deposit (NCDs) expanded, and their issuance rates were mixed. As of January 9, R007 was up 6.3 basis points (bp), DR007 rose 4.4 bp, the 1-year government bond yield fell 4.4 bp, the 10-year government bond yield increased 3.6 bp, the NCD issuance scale grew by 35.69 billion yuan, 6-month NCD rates rose, while 1-month and 3-month NCD rates declined.
⚑ Capital Supply and Demand: Trackable funds in the secondary market. Margin balances increased, with net purchases by margin financing funds reaching 85.78 billion yuan; ETFs saw a net inflow of 970 million yuan; the share volume of newly established equity-oriented public funds decreased. Net减持 by major shareholders increased, and the announced planned减持 scale expanded.
⚑ Market Sentiment: Last week, the trading activity of margin financing funds intensified, and the equity risk premium declined. The style indices and major sectors that saw relatively increased attention were the ChiNext Index, TMT, and the CSI 1000. The VIX index fell, indicating an improvement in overseas market risk appetite.
⚑ Market Preferences: By sector preference, non-ferrous metals, defense and military industry, and non-bank financials attracted relatively high net inflows from various types of capital. Broad-market ETFs were predominantly net redeemed, with the A500ETF seeing the largest redemptions; sector ETF subscriptions and redemptions were mixed, with Materials ETFs receiving more subscriptions and Information Technology ETFs experiencing more redemptions. The ETF with the highest net subscription was the E Fund CSI 300 Non-Bank Financial ETF; the one with the highest net redemption was the Penghua CSI Liquor ETF.
⚑ Overseas Developments: Data released by the U.S. Department of Labor on January 9 showed that the U.S. added 50,000 non-farm payroll jobs in December 2025, below the market expectation of 55,000, with data for the previous two months also revised downwards, indicating a continued softening of the U.S. labor market.
⚑ Risk Warning: Economic data and policies may fall short of expectations; overseas policies could tighten more than anticipated.
01 Liquidity Special Topic ※ Northbound Capital Trading Behavior in Q4 Northbound capital returned to net inflows in the fourth quarter. In terms of total amount, northbound capital recorded a net inflow of 9.5 billion yuan in the fourth quarter, accounting for 2.63% of the A-share circulating market capitalization. By specific direction, the capital primarily flowed into the ChiNext and STAR Market boards, with a slight outflow from the main board. At the precise Shenwan primary industry level, the largest inflows were into non-ferrous metals (24.5 billion yuan), power equipment (17.0 billion yuan), and electronics (15.8 billion yuan); the main sectors sold were pharmaceuticals and biologics (-16.0 billion yuan), food and beverage (-15.3 billion yuan), and non-bank financials (-9.7 billion yuan). In terms of portfolio weight, northbound capital's holdings in non-ferrous metals, electronics, and machinery equipment reached historical highs, while its holdings in real estate, food and beverage, and pharmaceuticals and biologics hit record lows. On a stock-specific basis, the top three stocks by net purchase were Contemporary Amperex Technology (CATL) (12.1 billion yuan), Luxshare Precision (6.0 billion yuan), and Weichai Power (5.2 billion yuan), while the top three net sold were Kweichow Moutai (-8.6 billion yuan), WuXi AppTec (-5.0 billion yuan), and BYD (-4.8 billion yuan).
02 Regulatory Developments
03 Monetary Policy Tools and Funding Costs Last week (1/5-1/9), the central bank conducted a net withdrawal of 1,221.4 billion yuan via open market operations. To maintain reasonable and ample liquidity in the banking system, the central bank conducted 102.2 billion yuan in reverse repos, while 1,323.6 billion yuan in central bank reverse repos matured during the same period, resulting in a net reverse repo withdrawal of 1,221.4 billion yuan. Additionally, 60 billion yuan in treasury cash deposits matured. In the coming week, 138.7 billion yuan in reverse repos are set to mature. Money market rates rose, with the spread between R007 and DR007 widening; short-term government bond yields fell, long-term government bond yields increased, leading to a widening term spread. As of January 9, R007 was 1.52%, up 6.3 bp from the previous period, DR007 was 1.47%, up 4.4 bp, with the spread between them widening by 1.9 bp to 0.04%. The 1-year government bond yield fell 4.4 bp to 1.29%, while the 10-year government bond yield rose 3.6 bp to 1.88%, causing the term spread to widen by 7.9 bp to 0.59%. The issuance scale of interbank certificates of deposit (NCDs) expanded, with mixed movements in issuance rates. Last week (1/5-1/9), 289 NCDs were issued, an increase of 210 from the previous period; the total issuance amount was 176.36 billion yuan, an increase of 35.69 billion yuan from the previous period; as of January 9, the issuance rates for 1-month, 3-month, and 6-month NCDs changed by -8.0 bp, -2.5 bp, and +7.3 bp respectively from the previous period, to 1.53%, 1.63%, and 1.72%.
04 A-Share Market Capital Supply and Demand
(1) Capital Supply On the supply side, last week (1/5-1/9), 960 million shares of new equity-oriented public funds were established, a decrease of 7.54 billion shares from the previous period. Equity ETFs saw a net inflow compared to the previous period, corresponding to a net inflow of 970 million yuan. The entire market saw net margin financing purchases of 85.78 billion yuan last week, shifting from a net outflow in the prior period to a net inflow. As of January 9, the A-share margin balance stood at 2,609.92 billion yuan.
(2) Capital Demand On the demand side, last week (1/5-1/9) it rebounded to 1.24 billion yuan. One company conducted an IPO. According to announcements as of January 9, one company is scheduled for an IPO in the coming week, with a planned fundraising size of 1.61 billion yuan. Net减持 by major shareholders expanded, reaching 14.50 billion yuan; the announced planned减持 scale was 27.23 billion yuan, an increase from the previous period. The market value of lifted sales restrictions was 162.48 billion yuan (lifted restrictions on IPO original shareholder lock-up shares: 108.36 billion yuan; lifted restrictions on general IPO shares: 430 million yuan; lifted restrictions on private placement shares: 47.14 billion yuan; others: 6.55 billion yuan), an increase from the previous period. The lifted restriction scale for the coming week decreases to 48.56 billion yuan (lifted restrictions on IPO original shareholder lock-up shares: 36.53 billion yuan; lifted restrictions on general IPO shares: 4.61 billion yuan; lifted restrictions on private placement shares: 1.24 billion yuan; others: 6.17 billion yuan).
05 Market Sentiment (1) Market Sentiment Last week (1/5-1/9), the margin financing purchase amount was 1,605.60 billion yuan; as of January 9, it accounted for 12.7% of the A-share turnover value, an increase from the previous period, indicating enhanced trading activity by margin financing funds and a decline in the equity risk premium. Last week (1/5-1/9), the Nasdaq Index rose 1.9%, and the S&P 500 Index rose 1.6%. The VIX index retreated last week, dropping 0.0 points from the previous period (January 2) to 14.5, reflecting an improvement in market risk appetite.
(2) Trading Structure Last week (1/5-1/9), the style indices and major sectors that saw relatively increased attention were the ChiNext Index, TMT, and the CSI 1000. The top five sectors ranked by historical percentile of weekly turnover rate were: Cyclicals (96.0%), TMT (95.4%), ChiNext Index (94.9%), Consumer Discretionary (94.8%), and Beijing Stock Exchange 50 (94.5%).
06 Investor Preferences (1) Sector Preference In terms of sector preference, last week (1/5-1/9), non-ferrous metals, defense and military industry, and non-bank financials attracted relatively high net inflows from various types of capital. Equity ETFs experienced a net outflow of 580 million yuan last week. Sectors with relatively high net inflows were non-ferrous metals (8.85 billion yuan), basic chemicals (2.57 billion yuan), and defense and military industry (2.15 billion yuan). Sectors with relatively high net outflows included electronics, power equipment, and banking. Margin financing funds recorded a net inflow of 85.78 billion yuan, with sectors seeing relatively high net purchases being electronics (+15.81 billion yuan), non-ferrous metals (+9.56 billion yuan), and defense and military industry (+9.17 billion yuan), while net selling occurred in food and beverage (-650 million yuan) and utilities (-10 million yuan).
(2) Stock Preference Stocks with relatively high net purchases by margin financing were Sunway Communication (+1.88 billion yuan), Ping An Insurance (Group) Company of China, Ltd. (+1.87 billion yuan), and Goldwind Science & Technology Co., Ltd. (+1.62 billion yuan), among others; those with relatively high net selling were Eoptolink Technology Inc., Ltd. (-2.56 billion yuan), Sungrow Power Supply Co., Ltd. (-800 million yuan), and Semiconductor Manufacturing International Corporation (SMIC) (-670 million yuan), among others.
(3) ETF Preference Last week (1/5-1/9), ETFs experienced net redemptions, with a net redemption of 9.64 billion shares for the week. Broad-market ETFs were predominantly net redeemed, with the A500ETF seeing the most redemptions; sector ETF subscriptions and redemptions were mixed, with Materials ETFs receiving more subscriptions and Information Technology ETFs experiencing more redemptions. Specifically, CSI 300 ETFs saw a net subscription of 470 million shares; SSE 50 ETFs had a net redemption of 130 million shares. STAR 50 ETFs witnessed a net redemption of 5.44 billion shares. A50 ETFs had a net redemption of 270 million shares; STAR&ChiNext 50 ETFs saw a net redemption of 9.35 billion shares; ChiNext ETFs experienced a net redemption of 2.46 billion shares; CSI 500 ETFs recorded a net subscription of 350 million shares. Among sector ETFs, the Information Technology sector had a net redemption of 3.38 billion shares; the Consumer sector had a net redemption of 740 million shares; the Pharmaceutical sector had a net subscription of 480 million shares; the Brokerage sector had a net subscription of 770 million shares; the Financials & Real Estate sector had a net subscription of 1.69 billion shares; the Military Industry sector had a net subscription of 360 million shares; the Materials sector had a net subscription of 9.62 billion shares; and the New Energy & Smart Auto sector had a net redemption of 2.37 billion shares. Last week (1/5-1/9), the equity ETF with the highest net subscription size was the E Fund CSI 300 Non-Bank Financial ETF (+2.70 billion shares), followed by the Penghua CSI Segmented Chemical Industry Theme ETF (+2.44 billion shares); the ETF with the highest net redemption size was the Penghua CSI Liquor ETF (-2.40 billion shares), followed by the GF CSI A500ETF (-2.30 billion shares).
07 External Liquidity Changes (1) Moves by Major Foreign Central Banks Atlanta Fed President Raphael Bostic stated in a radio interview on January 9 that, against a backdrop of broader uncertainty, the U.S. labor market is in a state of "low hiring, low firing." He noted that, compared to the employment goal of the Fed's dual mandate, current monetary policy is deviating more significantly in its efforts to restrain inflation.
(2) Important Overseas Economic Data Data released by the U.S. Department of Labor on January 9 showed that the U.S. added 50,000 non-farm payroll jobs in December 2025, below the market expectation of 55,000, with data for the previous two months also revised downwards, indicating a continued softening of the U.S. labor market.
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