Guotai Junan: The proportion of actively managed funds' allocation to Hong Kong stocks reached a record high in the fourth quarter of 2024, with a significant increase in allocation to leading technology companies.

Guotai Junan released a research report stating that in the fourth quarter of 2024, actively managed funds reduced their positions and saw a significant decrease in scale, with increased allocations to technology stocks and a reduction in dividends to banks. In terms of allocation, actively managed funds continued the "barbell strategy" with some structural changes. The actual allocation ratio of Hong Kong stocks for actively managed funds in the fourth quarter of 2024 was 14.3%, an increase of 1.9% from the previous quarter, surpassing the second quarter of 2021 and reaching a historical high. Actively managed funds significantly increased their holdings of Hong Kong-listed technology giants. Key points from Guotai Junan: In the fourth quarter of 2024, actively managed funds reduced their positions and saw a significant decrease in scale, with increased allocations to technology stocks and a reduction in dividends to banks. In the fourth quarter, actively managed equity funds saw a decrease in their A-share holdings while their Hong Kong stock holdings increased, while passive funds continued to expand their holdings. The equity holdings of actively managed equity funds decreased by 301.7 billion yuan quarter-on-quarter, with 25.3 trillion yuan in A-shares and 367.6 billion yuan in Hong Kong stocks. Stock ETF holdings increased by 83.3 billion yuan quarter-on-quarter, with ETF holdings almost on par with actively managed equity funds. In terms of allocation, actively managed funds continued the "barbell strategy" with some structural changes: 1) They increased their holdings of large-cap blue-chip stocks represented by the SSE 50 Index and the CSI 300 Index, as well as small-cap stocks represented by the CSI 1000 Index, and reduced their holdings of mid-cap stocks represented by the CSI 500 Index; 2) Actively managed equity funds significantly increased their allocation to technology stocks, while reducing holdings in cyclicals and consumer stocks; 3) In terms of company type, holdings in public and private companies increased, while state-owned enterprises were significantly reduced, with noticeable reductions in state-owned enterprises in the non-ferrous metals and real estate sectors, as dividends shrank, state-owned enterprises in utilities and transportation were also reduced, while banks were increased. Industry allocation: Actively managed funds mainly increased their allocations to TMT/technology manufacturing and reduced their allocations to cyclicals and essential consumer goods. 1) Technology: TMT sector saw significant increase in allocations, with significant increases in the electronic industry, particularly in semiconductors and components, while computers/media saw slight increases. However, communications saw reductions, mainly due to reductions in communication equipment. The technology manufacturing sector also saw increased allocations, with more investments in power equipment, particularly batteries, and machinery equipment, particularly general equipment, while defense and military aerospace equipment saw significant reductions. 2) Cyclicals: Cyclicals were generally reduced, with significant reductions in upstream non-ferrous metals, coal, and basic chemicals, as well as downstream utilities and transportation, with significant reductions in industrial metals, precious metals, electricity, and coal mining. 3) Consumer: Optional consumer goods saw an overall increase due to government subsidies, with gradual expansion of pricing-related consumer goods in the fourth quarter; automobiles/light industry saw significant increases, with motorcycles/auto parts/home appliances leading the way. Essential consumer goods showed a clear trend towards price stabilization, with reductions in medical/pharmaceuticals and food/beverages, particularly significant reductions in liquor/medical equipment, while drinks/dairy/non-alcoholic beverages/general retail/snacks saw significant increases. 4) Major finance: Sector allocations varied, with non-bank financials and real estate leading the reductions, particularly significant reductions in real estate development and insurance, while city commercial banks and state-owned banks saw significant increases. Hong Kong stock allocation: The allocation ratio to Hong Kong stocks reached a historical high, with technology leaders receiving significant increases from actively managed funds. In the fourth quarter of 2024, the actual allocation ratio of Hong Kong stocks for actively managed funds was 14.3%, an increase of 1.9% from the previous quarter, surpassing the second quarter of 2021 and reaching a historical high. Actively managed funds significantly increased their holdings in Hong Kong-listed technology giants, with Xiaomi, Tencent, and Semiconductor Manufacturing International Corporation (H) leading the way in increases, while Meituan and Kuaishou saw some reductions. In terms of primary industries in Hong Kong, electronics/automobiles saw significant increases, particularly in electronics, with consumer electronics/semiconductors receiving significant increases, and Hong Kong passenger cars leading the way in increases. Passive fund holdings: Passive fund market value continued to grow, with increased allocations to electronics and non-bank financials. In the fourth quarter of 2024, the market value of A-share holdings of stock ETFs was 2.78 trillion yuan, an increase of 832.8 billion yuan compared to the previous quarter, continuing the growth trend. The concentration of individual stock holdings in passive funds further increased, with CR10 at 49.5% and CR20 at 66.1%. Passive funds were overweight in non-bank financials, electronics, and TMT, and underweight in cyclicals and optional consumer goods. In the fourth quarter, there were increased allocations to non-bank financials/electronics/coal, and reductions in automobiles/non-ferrous metals/banks. Both actively managed and passive funds increased their allocations to industries such as electronics/computers/machinery, while reducing allocations to industries such as non-ferrous metals/medical/pharmaceuticals/food and beverage/appliances. Risk warning: The data statistics methodology and calculation methods may have errors, and historical data is limited in guidance.