The beginning of 2026 saw a significant divergence in ETF fund flows: core broad-based ETFs experienced large-scale net outflows, while sector-specific and thematic ETFs became highly sought after. Wind data shows that in January 2026, the scale of several sector-specific and thematic ETFs, including those focused on non-ferrous metals, chemicals, power grid equipment, satellites, semiconductor equipment, and STAR Market chips, increased by over 100 billion yuan. Concurrently, commodity gold ETFs and Hong Kong stock ETFs also accelerated their expansion. Interviewees pointed out that the favor gained by sector-specific and thematic ETFs highlights a market consensus on sub-sectors supported by industrial policies and exhibiting positive fundamental trends. For the A-share market, with the recent cooling of market sentiment, institutions anticipate that February's market performance may feature rapid rotation. Investors need to be cautious about volatility risks in short-term overheated sectors while positioning along the dual main themes of "growth and pro-cyclical" stocks.
Funds Shift Towards High-Growth Themes Recently, as market capital switched direction, some popular sector-specific/thematic ETFs and commodity ETFs rapidly expanded in size. According to Wind statistics, as of January 31, 2026, a total of 14 ETFs saw their scale increase by over 100 billion yuan compared to December 31, 2025. This group includes 7 equity ETFs, 4 commodity ETFs, 2 cross-border ETFs, and 1 bond ETF. Notably, behind the scale growth of the aforementioned equity ETFs, there was a普遍trend of both volume (fund inflows) and price (fund net asset value per unit) rising, signaling a phased market bullishness on the related industry sectors. Specifically, among the equity ETFs, all products that increased in scale by over 100 billion yuan in a single month were sector-specific ETFs: Southern Non-ferrous Metals ETF, ChinaAMC Non-ferrous Metals ETF, Penghua Chemicals ETF, ChinaAMC Power Grid Equipment ETF, Guotai Junan Semiconductor Equipment ETF, Harvest STAR Market Chips ETF, and Yongying Satellite ETF. In January 2026, the scale of these 7 sector-specific ETFs increased by 242.17 billion yuan, 169.52 billion yuan, 165.59 billion yuan, 129.21 billion yuan, 117.45 billion yuan, 110.3 billion yuan, and 106.59 billion yuan, respectively. During the same period, except for the Harvest STAR Market Chips ETF, which received 39.11 billion yuan in net inflows, the other 6 equity ETFs all attracted net inflows exceeding 100 billion yuan. From the perspective of net subscriptions, Penghua Chemicals ETF, Southern Non-ferrous Metals ETF, and ChinaAMC Power Grid Equipment ETF were the most favored, with their fund units increasing by 15.967 billion, 8.197 billion, and 7.14 billion units respectively in January. They were followed by ChinaAMC Non-ferrous Metals ETF, Guotai Junan Semiconductor Equipment ETF, and Yongying Satellite ETF, all of which saw unit increases of over 5 billion units. The Harvest STAR Market Chips ETF had a relatively smaller unit increase of 1.389 billion units. In terms of performance, in January this year, the two aforementioned non-ferrous metals ETFs both delivered monthly returns exceeding 22%; the semiconductor equipment ETF also had a monthly return close to 20%, while the Harvest STAR Market Chips ETF achieved a monthly return of 18.13%. The chemicals ETF, satellite ETF, and power grid equipment ETF posted monthly returns of 11%, 12%, and over 16%, respectively. "The fact that multiple equity ETFs increased in scale by over 100 billion yuan in a single month reflects a significant rebound in overall market risk appetite. Capital is shifting from defensive positioning to offensive strategies, focusing on resource sectors like non-ferrous metals and chemicals, as well as hard tech and advanced manufacturing tracks such as semiconductor equipment, satellites, and power grid equipment. This highlights a consensus view favoring sub-sectors supported by industrial policies and exhibiting positive fundamental trends," said Dai Jingxia, Senior Analyst at Morningstar (China) Fund Research Center. Simultaneously, she believes that the large-scale entry of capital through sector-specific/thematic ETFs also indicates an intensification of institutional allocation characteristics, with a clear trend of market funds concentrating on high-growth structural themes. Besides the aforementioned 7 equity ETFs, 4 gold ETFs saw their scale increase by over 100 billion yuan in January 2026. Among them, Huaan Gold ETF's scale increased by 335.4 billion yuan, making it the ETF with the largest scale increase that month; one gold ETF each from Guotai Junan, Bosera, and E Fund saw scale increases exceeding 110 billion yuan. Additionally, the Hong Kong Stock Connect Non-Bank Financials ETF and the Hong Kong Stock Connect Internet ETF (both cross-border ETFs) saw their scales increase by 122.26 billion yuan and 112.23 billion yuan, respectively, in January. Among bond ETFs, only Bosera's Convertible Bond ETF saw a scale increase exceeding 100 billion yuan in January.
Caution Advised Against Volatility Risks in Short-Term Overheated Sectors Overall, ETF fund flows in January 2026 exhibited extreme structural divergence. According to Morningstar Direct data, core broad-based ETFs (such as those tracking the CSI 300, SSE 50, CSI 500, CSI 1000, etc.) experienced large-scale net outflows. In contrast, sector-specific/thematic ETFs focusing on sub-sectors like non-ferrous metals, chemicals, gold, power grid equipment, semiconductor equipment, and satellites attracted capital against the trend, with multiple products seeing scale growth exceeding 100 billion yuan in a single month. Concurrently, cross-border ETFs also gained favor, overall reflecting a trend of capital shifting from broad-based indices towards high-growth sub-sectors and safe-haven assets like gold for concentrated allocation. Coinciding with this shift in ETF fund direction, the A-share market also underwent a process of market sentiment transitioning from exuberance to cooling. At the beginning of 2026, the A-share market rose rapidly, with the Shanghai Composite Index breaking through 4,100 points on January 9 (the closing price on December 31, 2025, was 3,968.84 points). However, starting from mid-January, against the backdrop of policy guidance aimed at cooling the market, the major indices entered a consolidation range, and several concept sectors that had garnered significant attention in the first half of the month experienced pullbacks. The large-scale net redemptions from broad-based ETFs were also seen as one of the measures contributing to market cooling. Regarding the market performance in the coming period, some institutions believe that regulatory policies will continue to impact February's market trends. A China Merchants Securities strategy research report pointed out that looking ahead to February, after previous regulatory signals to cool the market and substantial ETF outflows, the market is expected to be dominated by consolidation in the near future. February includes the long Spring Festival holiday. Before the holiday, due to the lack of clear catalysts during the long break, market activity is expected to decline further. After the Spring Festival, as the "Two Sessions" approach, policy catalysts are expected to accelerate, and indices are likely to perform better post-holiday. Regarding market style, the Wealth Management Department of GF Securities judges that after the release of annual report forecasts by the end of February removes uncertainty, market styles favoring high win rates and small caps may dominate. Coupled with increased profit-taking pressure in high-growth sectors that have seen excessive gains by month-end, the short-term market is expected to exhibit rapid rotation. Specifically for investment strategy, GF Securities Wealth Management Department recommends bargain-hunting around three main themes: First, overseas expansion. On one hand, the global manufacturing recovery is expected to support prices of globally priced resources like copper and oil. On the other hand, the recovery in overseas traditional industry sentiment creates opportunities for the overseas expansion of Chinese manufacturing sectors with global advantages, including power equipment, motorcycles, construction machinery, and other sub-sectors. Second, "anti-involution." Some industries, after prolonged supply-side adjustments and optimization of competitive landscape, are expected to experience price elasticity when demand marginally improves. The景气recovery in traditional sectors like chemicals under supply-side constraints deserves attention. Third, technology growth (AI applications, humanoid robots). Artificial intelligence remains the clearest theme in terms of industrial景气, but investment should gradually shift from thematic speculation towards convergence on earnings drivers, focusing on certainty brought by supply shortages. Regarding the non-ferrous metals sector, which saw significant gains in January, it cautioned: resource sectors influenced by global pricing power carry trading risks that are bearish in the short term but bullish in the long term. Dai Jingxia also reminded investors that against the backdrop of high gold asset popularity, they need to be aware that gold prices have already accumulated substantial gains and should be cautious of short-term volatility risks. Allocation should be based on individual risk preferences and asset allocation needs, avoiding overly concentrated positions in a single asset. Furthermore, attention should be paid to marginal changes in core influencing factors such as Fed monetary policy, global geopolitics, and the US dollar trend, and blindly chasing highs is not advisable. Additionally, the Asset Allocation Department of Guotai Junan Securities believes that the A-share market will transition short-term from "speculating on hotspots" to "earnings-based investment," with investment opportunities becoming more dispersed. It recommends maintaining a growth-style orientation, continuing a dual-theme configuration of pro-cyclical + technology stocks, and being vigilant about themes like non-ferrous metals where leveraged capital participation is excessive.
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