To The Moon

After analyzing the latest global headline fund positions in Chinese stocks, CICC found some interesting trends.

Despite a small decline in the market value of Chinese stocks held by overseas capital management institutions in the first quarter, some large institutions such as $American Vanguard (AVD)$ Vanguard and Capital Group have bucked the trend by increasing their positions in Chinese stocks. This suggests that some leading investors still have faith in Chinese stocks despite the overall market trend of reducing holdings.

Changes in investor positions by region reveal subtle differences in attitudes towards Chinese stocks across regions.

• The size of U.S. institutional investors' positions remained stable in the first quarter, with the market value of their holdings of Chinese stocks unchanged from the previous quarter, accounting for a slight decline, which may indicate that U.S. investors are holding a wait-and-see attitude towards Chinese stocks or waiting for clearer market signals.

• In contrast, institutional investors in Canada and Australia showed a more positive stance, with position sizes rising 3.9% and 3.6% YoY respectively. This increase in holdings, especially against the backdrop of a 2.2% overall decline in market indices, suggests that investors in these regions may be confident in the long-term value and potential returns of Chinese stocks.

• The UK saw a small decline of 0.8% in the market value of positions and a reduction in the percentage of positions held, which may reflect the short-term caution of UK investors towards Chinese stocks. Hong Kong, China (excluding Chinese institutions) saw a more significant decline in the market value of institutional positions, to 4.5%, and a larger decline in the percentage of positions, which may be closely related to the market environment and investor sentiment in the region.

These regional position changes indicate that investors in different regions make different investment decisions based on their respective judgments of the market outlook and their different tolerance for risk.

• The stable position of U.S. investors may stem from their sophisticated markets and diversified investment strategies.

• The increase in holdings by Canadian and Australian investors may be based on a reassessment of the value of Chinese stocks and recognition of market potential.

• The reductions in the United Kingdom and Hong Kong, China may be related to concerns about current market conditions and considerations of future uncertainty.

Of particular note, some stocks such as $Met-W (03690) $ , $Tencent Holdings (00700)$ $Tencent Holdings ADR(TCEHY) $ $XIAOMI-W(01810)$ and others received significant additions, while $Yum! China (YUMC)$ and $Alibaba ( BABA)$ $Alibaba-SW( 09988)$ and others have suffered reductions. This may be related to investors' different views on the fundamentals and market outlook of these companies.

Looking ahead, although some of the inflow of foreign capital in the short term to promote the rapid rebound of the market, but the long-term sustained reflux still need to be supported by the fundamentals.

Considering that the current allocation ratio of various types of global active funds to Chinese stocks has declined significantly, a sustained return of capital will require not only the cooperation of market conditions, but also positive changes in the policy environment, especially the strength of fiscal policy in addressing the issues of declining inflation and credit contraction.