A research report released by Guotai Haitong Securities indicates that while market trading activity has cooled this period, the wealth-generation effect has improved at the margin. From a capital flow perspective, margin financing saw slight inflows, ETF funds recorded minor outflows, new issuance of equity-oriented public funds picked up marginally, and foreign capital flowed into both A-shares and Hong Kong-listed stocks.
Market Pricing Conditions: Trading heat declined, while the wealth-generation effect strengthened. First, market sentiment weakened as the turnover rate dropped, with average daily turnover across all A-shares falling to 1.8 trillion yuan. The average daily number of limit-up stocks declined to 61.6, the maximum consecutive limit-up count stood at 4.8 boards, and the seal rate rose to 71.2%. Second, the wealth-generation effect improved, with the proportion of advancing stocks climbing to 56.3% and the median weekly return for all A-shares rising to 0.7%. Third, trading concentration increased at both the primary and secondary industry levels this period. The historical turnover percentile for the agriculture, forestry, animal husbandry, and fishery sector, as well as the retail trade sector, remained above 90%, while no industry exceeded the 99% threshold.
A-Share Capital Flows: Margin financing and foreign capital recorded inflows, while ETF funds saw modest outflows. First, for public funds, new issuance of equity-oriented funds expanded to 14.62 billion shares, though overall equity positions of public funds declined. Second, for private funds, the September confidence index rose 6.5% from August, while positioning declined marginally at the margin (as of August 14). Third, foreign capital recorded inflows of $290 million (as of September 16), with the historical percentile of northbound trading turnover (MA5) climbing to 68.0%. Fourth, in terms of industrial capital, IPO proceeds reached 3.91 billion yuan, private placement scale totaled 9.85 billion yuan, and the upcoming lock-up expiry for restricted shares stood at 15.11 billion yuan. Fifth, passive funds swung from inflows to outflows, recording net outflows of 5.87 billion yuan this period, while the proportion of passive trading turnover rose to 6.8% and the industry concentration ratio CR5 increased. Sixth, margin financing saw net buying rise to 7.27 billion yuan, with margin trading volume accounting for 8.6% of total A-share turnover. Seventh, alternative indicators suggested retail investor activity declined marginally during this period.
A-Share Industry Allocation: ETF funds flowed into banks, while margin financing moved into electronics. First, for foreign capital (as of September 16), net outflows were widespread across primary industries this period, with electronics (net outflow of $38.6 million) and non-ferrous metals (net outflow of $16.2 million) leading the declines. Second, for margin financing (as of September 17), electronics (+6.78 billion yuan) and building materials (+1.59 billion yuan) led net inflows, while pharmaceuticals and biotechnology (-1.18 billion yuan) and non-bank financials (-660 million yuan) led net outflows. Third, for ETFs, passive funds recorded net outflows of 5.87 billion yuan at the industry level. Banks (+1.31 billion yuan) and telecommunications (+660 million yuan) led net inflows, while electronics (-8.55 billion yuan) and pharmaceuticals and biotechnology (-720 million yuan) led net outflows. Within secondary industries, telecommunications equipment (+700 million yuan) and joint-stock banks II (+520 million yuan) led net inflows, while semiconductors (-8.32 billion yuan) and software development (-400 million yuan) led net outflows. Indices with notable increases in holdings this period included the CSI 500 and the SSE 50, while the STAR 50 and semiconductor materials and equipment indices saw the largest redemptions. During this period, the CSI Semiconductor Materials and Equipment Thematic ETF and the STAR Semiconductor Materials and Equipment Thematic ETF saw net margin buying, while the CSI Short-Term Financing ETF and the CSI Innovative Drug Industry ETF saw net margin selling.
Hong Kong and Global Capital Flows: Southbound capital inflows decreased, while global foreign capital marginally moved into U.S. markets. The Hang Seng Index closed down 0.2% this period, with global markets seeing more decliners than advancers, led by the Dow Jones Industrial Average. From a capital flow perspective: First, net buying by southbound capital fell to 12.01 billion yuan, placing it at the 34th percentile since 2022 (MA5). Second, in this period (as of September 16), developed markets saw active and passive net inflows of -$2.81 billion and $79.18 billion, respectively, while emerging markets recorded -$1.34 billion and $3.94 billion in active and passive net inflows. Looking solely at foreign capital, global foreign funds marginally flowed into the U.S. this period, with the U.S. leading in inflow scale. Including domestic capital from various countries, the U.S. and China saw inflows, with the U.S. shifting from outflows to inflows. Global funds saw an increase in net subscriptions, with North American funds swinging from outflows to inflows.
Risk Disclosure: There are risks of deviations in data statistical methodologies, errors in data estimation, and potential inaccuracies in data obtained from third-party sources.
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