Sinolink: Market trading activity and volatility have both fallen, with overall leverage funds flowing back.

Sinolink released a research report stating that the overall trading activity in the market continued to decline last week. The trading activity of sectors such as real estate, textiles and apparel, construction, electricity and utilities, banks, and coal were all above the 80th percentile. The research activity for sectors such as electronics, pharmaceuticals, non-ferrous metals, communications, and machinery were leading, while the research activity for sectors such as consumer services, light industry, chemicals, steel, and non-ferrous metals continued to rise. According to Sinolink's calculations, the positions of actively managed equity funds had decreased slightly, while overall the northbound trading continued to be net sellers, but with obvious fluctuations in pace. The consensus for buying ETFs and northbound trading continued to decline, as well as the consensus for buying on margin and in the dragon and tiger rankings. This means that margin trading has become the main source of incremental funds in the market, while the fluctuations of northbound funds are still one of the main sources of market volatility, and the market may still face disturbances in trading. Sinolink's main points are as follows: Macro liquidity: Last week, the US dollar index rose, and the degree of the US-China interest rate "inversion" showed some convergence. The nominal/real interest rates of 10-year US treasuries remained unchanged/fell, and inflation expectations rose. Offshore US dollar liquidity slightly loosened, while domestic interbank liquidity remained relatively loose, and the term spread (10Y-1Y) narrowed. Trading activity, volatility, and liquidity: Market trading activity declined, and the volatility of various major indices also decreased. In terms of industries, the trading activity of sectors such as real estate, textiles and apparel, construction, electricity and utilities, banks, and coal were above the 80th percentile, while the volatility of sectors such as communications and electronics were above the 80th percentile historically. Institutional research: Research activity for sectors such as electronics, pharmaceuticals, non-ferrous metals, communications, and machinery was leading, while the research activity for sectors such as consumer services, light industry, chemicals, steel, and non-ferrous metals continued to rise. Analyst forecasts: Net profit forecasts for 2025/2026 for the entire A-share market continued to be revised upward. In terms of industries, net profit forecasts for sectors such as finance, non-ferrous metals, machinery, coal, and new energy for 2025/2026 were revised upward. For indices, net profit forecasts for 2025/2026 for the Shanghai 50, CSI 300, and ChiNext were revised upward, while the CSI 500 was revised downward/upward. In terms of styles, net profit forecasts for 2025/2026 for large-cap/mid-cap growth/value were revised upward, while those for small-cap growth were revised downward, and those for small-cap value were revised downward/upward. Northbound activity declined, with continued net selling overall In terms of pace, the northbound trading experienced a process of "net buying-net selling-net buying". Based on the top 10 active stocks, the ratio of buying and selling total amounts for sectors such as communications, non-ferrous metals, and banks increased, while for sectors such as automobiles, non-bank financials, and electronics, the ratio decreased. Based on holdings of less than 30 million shares by northbound investors: net buying was mainly in pharmaceuticals, non-ferrous metals, and new energy sectors, while net selling was in electronics, communications, and food and beverage sectors. Overall, northbound investors were likely to be net buyers in sectors such as non-ferrous metals, while net sellers in sectors such as electronics and non-bank financials. Margin trading activity slightly increased Margin trading had a net inflow of 27 billion yuan last week. In terms of industries, there was a net inflow mainly in sectors such as electronics, communications, and non-bank financials, while net outflows were mainly in sectors such as automobiles, non-ferrous metals, and machinery. The proportion of financing buy-ins in sectors such as communications, home appliances, and non-bank financials increased significantly. In terms of styles, there was only a net outflow in large-cap value sectors. Dragon and Tiger rankings trading activity continued to decline The total trading volume in the Dragon and Tiger rankings continued to decline last week, while the ratio of the total trading volume in the Dragon and Tiger rankings to the total trading volume of the entire A-share market slightly increased. At the industry level, sectors such as coal, building materials, and petroleum and petrochemicals had relatively high ratios of trading volume in the Dragon and Tiger rankings and were still rising. Actively managed equity fund positions slightly decreased, while ETFs were overall net redemptions According to the secondary optimization method, after excluding price changes, actively managed equity funds mainly increased their positions in sectors such as communications, electronics, and computers, while reducing their positions in sectors such as home appliances, banks, and food and beverage. In terms of styles, the correlation between actively managed equity funds and large-cap/mid-cap growth/value increased. The scale of newly established equity funds increased last week, with the scale of actively managed/passively managed newly established funds decreasing/increasing. ETFs were net redemptions last week, primarily individual ETFs. In terms of the indices tracked by ETFs, ETFs related to brokerage firms, CSI 50, and dividends were mainly net purchases, while ETFs related to ChiNext, CSI 300, and CSI 500 were mainly net redemptions. In terms of ETF split industries, ETFs mainly had net purchases in sectors such as agriculture, forestry, animal husbandry, fisheries, coal, and construction, while having net sales in sectors such as TMT, new energy, and non-ferrous metals. It is worth noting that, on the one hand, margin trading activity slightly increased and saw a net inflow again, accordingly, trading activity in the Dragon and Tiger rankings continued to decline, ETFs had net redemptions mainly in individual ETFs, based on Sinolink's calculations, actively managed equity fund positions slightly decreased, and northbound trading continued to be net sellers overall, albeit with noticeable fluctuations in pace. On the other hand, the consensus for buying ETFs and northbound trading, as well as the buying consensus for margin trading and the Dragon and Tiger rankings continued to decline. This means that margin trading has become the main source of incremental funds in the market, while the fluctuations of northbound funds are still one of the main sources of market volatility, and the market may still face disturbances in trading. Risk warning: Calculation errors.