China Securities Co., Ltd. released a research report stating that the A-share market is projected to welcome a considerable scale of incremental funds in 2026, which is expected to help sustain a slow-bull market. From a timing perspective, the first quarter represents a peak period for maturing time deposits, potentially channeling funds from insurance capital and wealth management products into the equity market, making it the point of most abundant incremental funds for the year. Structurally, medium to long-term funds are expected to account for approximately one-third of the total inflows, serving as a crucial cornerstone for A-shares' micro-liquidity; public and private funds are anticipated to be the two areas with the most significant marginal improvement, and their allocation preferences could influence market style performance. The primary market dynamic in 2026 is expected to shift towards the verification of sector prosperity and the realization of corporate earnings, with medium to long-term funds providing a safety buffer, while active funds like public and private offerings further reinforce the dual main themes of "technology + resources." Concurrently, sector rotation may accelerate. Medium to long-term funds represent a core source of incremental capital; driven by the migration of household deposits and pressure from a scarcity of quality assets, premium income for insurance funds continues to grow robustly, with the equity allocation ratio rising to 15.5% in Q3 2025, nearing a historical high, and a reduction in risk factors potentially unleashing additional hundreds of billions in investment capacity; wealth management and "fixed-income+" products benefit from a wave of maturing time deposits totaling 45 trillion yuan, and an increase in their equity allocation ratio in 2026 is expected to bring incremental funds to the A-share market; combined, these two sources are projected to contribute over 900 billion yuan in medium to long-term funds entering the market. Public fund flows are expected to see a net inflow of 230 billion yuan in 2026, with passive funds becoming the main driver, as retail investors' motivation to enter the market strengthens, judging that the peak pressure from fund redemptions has passed, and public funds benefit from net asset value recovery and the wealth effect. Other funding channels present a mixed picture of divergence and improvement: "National Team" funds are expected to see a significant slowdown in inflows in a bull market environment, with a projected net inflow of only about 20 billion yuan in 2026, and ETFs becoming the primary allocation channel. High-risk appetite funds, such as margin financing and private placements, remain active, with margin financing expected to see a net inflow of 450 billion yuan in 2026, and the scale of private placement funds potentially growing to 8.5 trillion yuan, bringing approximately 700 billion yuan in incremental funds. Foreign capital is entering a "4.0 era," with global funds expected to make strategic allocations to Chinese assets, and northbound capital projected to see a net inflow of about 100 billion yuan. Bolstered by incremental funds, the market focus in 2026 will be on the verification of sector prosperity. The A-share market is projected to welcome a considerable scale of incremental funds in 2026, which is expected to help sustain a slow-bull market. From a timing perspective, the first quarter represents a peak period for maturing time deposits, potentially channeling funds from insurance capital and wealth management products into the equity market, making it the point of most abundant incremental funds for the year. Structurally, medium to long-term funds are expected to account for approximately one-third of the total inflows, serving as a crucial cornerstone for A-shares' micro-liquidity; public and private funds are anticipated to be the two areas with the most significant marginal improvement, and their allocation preferences could influence market style performance, with technology growth and resource stocks standing to benefit the most. The primary market dynamic in 2026 is expected to shift towards the verification of sector prosperity and the realization of corporate earnings, with medium to long-term funds providing a safety buffer, while active funds like public and private offerings further reinforce the dual main themes of "technology + resources." Concurrently, sector rotation may accelerate. Currently, popular sectors in the A-share market await earnings realization, while concept themes and catch-up sectors show prominent elasticity.
Comments