Guotai Haitong: Post-holiday foreign investment and financing funds returning to the market.

Guotai Haitong released a research report, stating that after the post-holiday outflow of foreign capital and financing capital, funds have once again flowed back into the Chinese market, with a slowdown in ETF inflows and both domestic and foreign funds increasing their positions in the electronics and non-ferrous metal sectors. In terms of A-share industry allocation, there is a preference for technology and cyclical sectors, with both domestic and foreign funds increasing their positions in electronics and non-ferrous metals. The southbound capital inflow has decreased, with foreign funds marginally flowing into developed markets. Guotai Haitong's main points are as follows: Market pricing status: Active trading activity in the current market. 1) Market sentiment (upward): Trading activity has rebounded significantly in this period, with the average daily turnover of the entire A-share market rising to 26 billion, the average daily number of stocks hitting limit up rising to 71.6, the maximum consecutive trading limit reaching 7, the limit up rate rising to 70.2%, and the number of stocks listed on the Dragon and Tiger list increasing to 66; 2) Profitability effect (upward): The proportion of stocks rising in this period has increased to 54.1%, with the median weekly returns of all A-share stocks rising to 0.4%; 3) Trading concentration (upward): The concentration of trading activity in industries continues to increase, with 11 industries having historical turnover percentile above 90% in this period, and the automobile industry maintaining the top spot in turnover for four consecutive periods. A-share fund flows: Post-holiday foreign capital and financing capital returned to the market, while ETF fund inflows slowed down. 1) Public offerings: The new issuance scale of equity funds in this period decreased to 870 million, and various types of public offering funds reduced their holdings of stocks compared to the previous period; 2) Private placements: The private placement confidence index in October slightly decreased, with the position approaching the highest level of the year (as of 09/19); 3) Foreign capital: Inflows of 3.0 billion USD (as of 10/08), with the northbound capital transaction ratio reaching a historical percentile of 30.5%; 4) Industrial capital: The IPO raised 190 million yuan in this period, and the privately placed stocks amounted to 21.1 billion yuan (as of 10/05), with the unlocking of restricted stocks totaling 79.12 billion yuan; 5) ETF: Passive fund inflows accelerated, with a net inflow of 37.7 billion yuan in the past four trading days, and the passive turnover ratio after the National Day holiday was 6.7%, maintaining a relatively high level, and the ETF premium discount rate also increased; 6) Financing: Net purchases of 50.81 billion yuan in this period, with the turnover ratio rising to 12.9%; 7) Retail investors: Alternative indicators show that the activity of retail investors decreased marginally in this period. A-share industry allocation: Preference for technology and cyclical sectors, with both domestic and foreign funds increasing their positions in electronics and non-ferrous metals. 1) Foreign funds: (as of 10/08) Net inflows of electronics (+34.7 billion yuan)/non-ferrous metals (+20.4 billion yuan) ranked top, while home appliances (-4.6 billion yuan)/banks (-3.1 billion yuan) experienced net outflows; 2) Financing: (as of 10/09) Net inflows of electronics (+108.5 billion yuan)/non-ferrous metals (+65.8 billion yuan) ranked top, while comprehensive industries (-0.2 billion yuan) experienced net outflows; 3) ETF: Passive fund flows were concentrated in primary industries, with net inflows in non-bank financials (+37.4 billion yuan)/electric equipment (+28.9 billion yuan) ranking top, and net inflows in securities/batteries ranking top in secondary industries; net outflows were observed in communication (-7.0 billion yuan)/computers (-2.8 billion yuan) in the secondary industries, with net outflows in communication devices/consumer electronics ranking top. ETFs that were most held in this period include securities ETFs/battery ETFs, with Hong Kong innovative drugs/securities company ETFs ranking top in net financing; China A500 ETF/communication ETFs rank top in net redemptions, while Heng Seng Technology/30-year government bond ETFs rank top in net sales. In addition, in the two trading days before the holiday, ETFs mostly increased their holdings in electronics, new energy, and computers, while reducing holdings in non-bank financial industries; 4) Dragon and Tiger List funds: The top three industries on the Dragon and Tiger list were non-ferrous metals, machinery equipment, and environmental protection. Hong Kong and global fund flows: Decrease in southbound capital inflows, with foreign funds marginally flowing into developed markets. The Hang Seng Index fell by 1.0% in this period, with most major global markets experiencing declines rather than gains, and the Brazilian stock index (+2.5%) leading the gains. In terms of fund flows: 1) Southbound capital inflows for the week decreased to 2.65 billion yuan, at the 78th percentile since 2022 (MA5). In this period (as of 10/08), Foreign funds flowed into the Hong Kong stock market by 500 million USD. 2) In this period (as of 10/08), net flows of active and passive funds in developed markets were -3.03 billion USD and 21.63 billion USD respectively, while in emerging markets, the net flows of active and passive funds were -0.53 billion USD and 1.69 billion USD respectively. Looking only at the foreign funds, global funds continue to marginally flow into developed markets this period, with a significant decrease in the inflow scale, with the United States (+3.46 billion USD) and China (+7.0 billion USD) leading the inflows. When considering the overall global flows including domestic funds, the United States and China are the top in inflows, while Japan and the UK experienced outflows. North American funds had a net subscription, with net subscriptions to US stock medical/financial funds leading, while technology funds saw outflows. Risk warning: Statistical discrepancies in data; errors in data calculations; risks of data discrepancies obtained from third-party institutions.