During the first week of August (August 3-7), the A-share market showed initial signs of stabilization. The Shanghai Composite Index posted four consecutive gains, holding firm above the 3,900-point level, while all major core indices ended the week in positive territory. The Sci-Tech Composite Index led the gains with a 10.96% surge, and small-cap stocks saw a breakout, with the CSI 2000 and CSI 1000 indices rising 9.83% and 8.54%, respectively, for the week.
Positive market signals also included a return of trading volume to the 2.6 trillion yuan range. The ChiNext Index and the STAR 50 Index significantly outperformed the main board, with the technology sector leading the rally. Capital began to re-price earnings performance. The technology sector saw the launch of new innovation-themed ETFs, which is expected to bring incremental liquidity to the sector. On August 7, 16 fund companies filed for ETFs targeting two hardcore tracks on the ChiNext board: 10 firms, including E Fund Management, China Asset Management, China Southern Asset Management, and GF Fund Management, submitted applications for the ChiNext Computing Infrastructure ETF; while six companies, including China Southern Asset Management, Fullgoal Fund Management, and Huatai-PineBridge Fund Management, filed for the ChiNext Financial Technology ETF.
However, whether the market can stabilize remains to be seen. Great Wall Fund noted that external factors, such as the recurring uncertainty in the Middle East peace talks and fluctuations in U.S. Treasury yields, along with internal pressures from the mid-year earnings report verification window, could cause a rebound to revert to thematic-driven momentum if earnings delivery falls short.
Looking at this week's ETF performance, as of August 7, the onshore ETF market in China has returned to a size of 5 trillion yuan. The overall net asset value (NAV) increase for the period was 3.61%, with the broader market recording positive returns. However, net capital outflows during the same period totaled 743.59 billion yuan. This indicates two things: first, the growth in ETF scale was driven by NAV recovery, and second, a significant amount of capital is exiting, displaying a clear "fighting while retreating" characteristic.
Equity ETFs were the primary driver of outflows for the week, with net redemptions of 762.76 billion yuan. Broad-based index ETFs saw particularly heavy outflows, with nearly 472 billion yuan fleeing, signaling a strong profit-taking intent. By ETF type, commodity ETFs were the only category with significant net inflows, primarily due to gold. COMEX gold futures rose 7.20% for the week, marking the largest single-week gain since the week of January 23.
From the perspective of trillion-yuan-level ETF managers, all top 10 institutions experienced net capital outflows, but their rankings remained unchanged. China Asset Management and E Fund Management held their positions as the "duopoly" leaders, with ETF management scales of 644.845 billion yuan and 633.112 billion yuan, respectively. Among the trillion-yuan-level managers, there were no changes in rankings except for a swap between Yinhua Fund Management and Haitong Fund Management. All trillion-yuan-level ETF managers experienced significant "blood loss" during the week, with only Hua An Fund Management and Yinhua Fund Management recording net capital inflows, driven by gold and money market funds, while all other companies saw net outflows.
In terms of index-linked ETFs, the CSI 1000 Index-related ETFs saw the largest net outflow for the week, at 14.718 billion yuan. ETFs tracking the ChiNext Index, CSI 300 Index, and STAR 50 Index saw combined net outflows of 9.037 billion yuan, 8.792 billion yuan, and 6.565 billion yuan, respectively. For industry themes, indices related to semiconductor materials and equipment, as well as communication equipment, saw combined net outflows exceeding 9.3 billion yuan. On the inflow side, the two gold indices collectively attracted over 8 billion yuan, while the CSI 2000 Index and the CSI A500 Index each saw net inflows exceeding 2 billion yuan.
Among individual ETFs, the money market fund Yinhua Daily Yield Fund recorded a net inflow of nearly 4.6 billion yuan for the week, with its scale exceeding 100 billion yuan. Gold ETFs under Hua An Fund Management and Yongying Fund Management attracted net capital inflows of over 4 billion yuan and 2 billion yuan, respectively. For equity ETFs, inflows were more dispersed. The Huatai-PineBridge CSI 2000 ETF attracted the most capital, at 1.569 billion yuan, while the Fullgoal CSI Hong Kong Stock Connect Internet ETF and the GF CSI All-Share Securities Company ETF both saw net inflows exceeding 1 billion yuan.
Among the top 20 ETFs for net capital inflows this week, equity ETFs accounted for 14 slots. However, the themes were highly diverse, ranging from small-cap stocks to Hong Kong internet stocks, brokerages, power grid equipment, non-ferrous metals, semiconductor materials, and media. This lack of overlap suggests that capital has not yet formed a consensus on a single main theme.
Broad-based index ETFs experienced a systematic "capital drain." The top 20 ETFs for net outflows revealed three key characteristics. First, broad-based index outflows were dominant, with ETFs tracking the CSI 1000, ChiNext, CSI 300, CSI 500, and STAR 50 indices all appearing on the list. Second, the stronger the rally, the more aggressive the selling: the Guotai Communication Equipment ETF surged 13.40%, but saw capital outflows of 3 billion yuan; the ChinaAMC Semiconductor Materials ETF rose 10.33%, but experienced outflows of 5 billion yuan. Third, the "three musketeers" of the dividend strategy collectively faced capital outflows, with the Huatai-PineBridge SSE Dividend ETF, the Huatai-PineBridge Dividend Low Volatility ETF, and the E Fund CSI Dividend ETF seeing combined outflows of over 4 billion yuan.
The top 20 ETFs by weekly gains showed striking consistency, with 18 ETFs fully tracking Sci-Tech Innovation Board (STAR) related indices. Specifically, this included five Sci-Tech Growth ETFs from E Fund Management, Wanjia Asset Management, GF Fund Management, China Southern Asset Management, and China Universal Asset Management; 11 Sci-Tech 200 ETFs from 11 fund companies including Huatai-PineBridge Fund Management, Guotai Asset Management, Penghua Fund Management, and China Asset Management; and two Sci-Tech New Material ETFs from China Southern Asset Management and China Universal Asset Management. Additionally, the Yongying Satellite ETF and the Yinhua CSI 2000 Enhanced ETF also made the list. Despite the recovery in the technology sector, these ETFs did not see significant capital inflows, with only the Huatai-PineBridge STAR 200 ETF attracting 400 million yuan in purchases.
The weekly ETF loser list was essentially a collective "rest" for defensive sectors. Banking, consumer staples, dividend low-volatility strategies, and Hong Kong high-dividend stocks—the four "safe haven" asset classes—dominated the decline list. Besides the dividend strategy, the auto and oil & gas sectors also weakened. Notably, no STAR Board or technology-related products appeared on the loser list, a stark contrast to the winner list dominated by STAR Board products. This clearly indicates a rotation between large-cap and small-cap styles, as well as between growth and value styles.
In the view of institutions, after the adjustment in July, overheated market sentiment and overly concentrated stock positions have been corrected. The adjustment in the current round of AI-related sectors is likely in its late stages. The market in August is more likely to experience a mild upward recovery after bottoming out, but a stronger upward trend may require more time. Regarding allocation strategy, if the market rebounds, it is more likely to be broad-based, with various sectors potentially performing. However, Bank of China Fund warned that investors should be wary of the fund industry's concentrated holdings. During the rebound, it is advisable for investors to avoid sectors that are currently overly heavy in institutional positioning. Instead, focus on sectors with lighter institutional holdings, less crowded trading, and high景气度, such as non-ferrous metals, non-bank financials, power equipment, exports, innovative drugs, low-valuation consumer staples, and high-dividend directions. Furthermore, Bank of China Fund emphasized paying attention to the Shanghai Composite Index. Against the backdrop of continued capital inflows into broad-based ETFs and the major indices still posting negative year-to-date returns, the weighting sectors of the Shanghai Composite Index are more likely to attract net capital inflows. In the first week of August, growth sectors like technology showed clear signs of stabilizing. After a surge in volume, is the market steady? Great Wall Fund believes that the following six key indicators should be closely monitored: whether the two-day trading volume can stabilize above 2.5 trillion yuan; whether the ChiNext Index and the STAR 50 Index can hold their ground and narrow intraday volatility; whether the Middle East shipping agreement will be substantively implemented and oil prices can stabilize; whether Korean stock margin trading and the global semiconductor sector will stop trending downward; whether mid-year earnings and AI industry chain orders and price increases will continue to deliver; and whether U.S. Treasury yields and rate hike expectations will rise again.
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