Guosen Securities: New high in A-share market, how are various funds moving?

This week, the Shanghai Composite Index broke through the intraday high point since September 24 last year, reaching a new high in nearly four years. At the same time, the total turnover of the entire A shares exceeded 2 trillion yuan for three consecutive trading days, reflecting the continuous increase in various types of fund sentiment as the index surged to new highs with high trading volume. Specifically, this week saw a continuous inflow of high-risk preference funds represented by margin trading, while public funds and foreign capital continued to improve marginally. The proportion of new equity funds issued by public funds further increased this week, and the proportion of northbound funds' transactions in the entire A shares also increased marginally. ETFs, as contrarian funds, saw net outflows this week, with more redemptions in the ChiNext 50 ETF and TMT industry theme ETF. In addition, insurance funds have been intensively acquiring Hong Kong stocks this week, accelerating their layout in Hong Kong dividend assets amid the continuous market rally. I. Public Funds The issuance scale of active equity funds this week remained unchanged from last week, while the proportion of new equity fund issuances marginally increased. With the continuation of active outperformance, the issuance of new active equity funds is expected to continue to rise. In terms of passive index funds, there is still a high issuance heat, with fund companies actively deploying index funds, with a total of 19 index funds reported this week. Overall, since March of this year, the issuance scale of equity funds (active + passive) has increased to over 40%. With the significant market profit effect, the issuance of equity funds is expected to further rise in the future. II. ETFs There was a significant net outflow of ETFs this week, with noticeable net outflows from ChiNext 50/100 and TMT industry-themed ETFs, while the marginally improved wide-based ETFs such as the CSI 300 and CSI 500. Since July, net inflows into industry-themed ETFs have become an important marginal increment in the market, with net outflows increasing for the ChiNext 50/100 index ETFs and TMT-related industry-themed ETFs this week. III. Margin Trading This week, margin balance increased by 45.7 billion yuan, with leveraged funds continuing to flow in rapidly. Since the end of June, leveraged funds have maintained a net inflow of around 30 billion yuan per week, serving as an important driving force for the market breakthrough this round. Currently, the margin balance of the Shanghai and Shenzhen stock exchanges has exceeded the high point of March this year. In terms of structure, technology growth remains the preferred direction of margin trading funds, while consumer healthcare has also seen a period of inflow improvement. This week, industries such as electronics, machinery equipment, pharmaceuticals, computers, communications, power equipment, banks, and basic chemicals saw net inflows in margin trading. IV. Foreign Capital Foreign attention to Chinese assets has been increasing recently, with northbound funds' transactions as a proportion of total A shares transactions continuing to rise, and EPFR data showing that foreign funds, mainly passive ones, have been continuously increasing their allocation to A shares recently. This year, the capital market has mainly seen domestic participation, with leveraged funds and insurance funds serving as important marginal increment funds in the market. However, as the market warms up, foreign participation in A shares continues to rise. V. Southbound Regarding Hong Kong stocks, southbound funds continued to buy this week, with a net inflow of 34.9 billion yuan through the Hong Kong Stock Connect. As of Wednesday this week, the top stocks that received the most southbound inflows were China Life Insurance, Tencent, Innovent Bio, BYD Electronic, and Xiaomi-W, while the top stocks with the most outflows were Kuaishou-W, Anta Sports, Meituan-W, Wuxi Bio, and China Merchants Bank. In addition, insurance funds have been intensively acquiring stakes in Hong Kong stocks recently, with Ping An Life and Minsheng Life acquiring stakes in Postal Savings Bank of China and China Zheshang Bank, with insurance funds acquiring stakes in Hong Kong stocks a total of 20 times this year. VI. Financing & Shareholder Changes This week, the IPO and refinancing scale was 1.7 billion yuan, a decrease from last week. Although the IPO and refinancing scale has increased in July, financing demand has dropped to low levels again since August. From a full-year perspective, the financing end of the market is still at a low level this year, providing an important impetus for market activity. In terms of share changes, industrial capital reduced its holdings by a net 7.4 billion yuan this week, almost unchanged from last week.