Guosen: With the progress of residents' funds entering the market, it is expected that the incremental funds entering the market in 2026 will exceed 2 trillion yuan.

Guosen released a research report stating that the characteristics of incremental funds in the A-share market in 2025 are evident. Leveraged funds, private equity funds, and other active funds have become the main forces entering the market, and insurance funds also have a significant market volume. Overall, active equity mutual funds have shown net redemptions. The current funds entering the market may mainly come from high net worth individuals. As most residents' risk appetite gradually recovers from a low point, it is expected that in 2026, ordinary residents' funds will become the main funds entering the market. The macro and micro backgrounds in 2025 have certain similarities to those in 2020, but there are differences in the structure of incremental funds. Drawing on history, with the progress of residents' funds entering the market, it is expected that the total incremental funds in 2026 will reach 2 trillion yuan. Guosen's main points are as follows: - In 2025, the main source of incremental funds in the A-share market comes from active funds. - Behind the impressive market performance in 2025 lies ample financial support. The influx of funds into the market in 2025 can be divided into two stages: in the first half of the year, the market fluctuated and recovered, and various funds flourished under policy support and industry catalysts. In the first half of the year, on the one hand, funds from individual investors flowed into the market through bank and securities transfers, totaling 240 billion yuan, and foreign capital also saw a phased return of around 100 billion yuan. On the other hand, insurance funds seeking long-term investments saw a significant inflow of around 420 billion yuan, and ETF funds also flowed in around 80 billion yuan. In terms of industries, the main influx of funds in the first half of the year was in the technology and dividend sectors. Since the third quarter, the market has seen a significant volume increase, with the main influx of funds coming from private equity and margin trading. On one hand, leveraged funds entered the market significantly, with around 700 billion yuan entering the market since July, and on the other hand, it is estimated that around 400 billion yuan of private equity funds flowed into the market in Q3. In terms of industries, the main influx of funds since Q3 has been in the non-ferrous metals, electronics, and new energy sectors. In summary, since 2025, A shares have exhibited distinct characteristics of incremental funds, with more active funds entering the market such as private equity funds and leveraged funds. Insurance funds also have a significant volume entering the market, and foreign capital saw a phase return in the first half of the year. There is a certain divergence in the funds of public mutual funds, with active equity mutual funds showing net redemptions while passive funds and fixed income funds seeing small inflows. The process of residents' funds entering the market in China is still in the early stages From a perspective of the entire year of 2025, leveraged funds and private equity funds have become the main forces entering the A-share market. It can be seen that with the return of market profitability, there has been a visible increase in the willingness of funds with higher risk appetite to enter the market, sparking discussions on the process of residents' funds entering the market. Various signs indicate that some residents' funds are leading the way into the market, mainly coming from high net worth individuals. In the bull market atmosphere since 2025, overall risk appetite among residents has continued to recover, with signs indicating that residents' risk appetite is increasing. For example, the level of activation of resident savings continues to rise. However, the funds entering the market from residents may still be localized or mainly come from high net worth individuals, such as the incremental funds in the A-share market since 2025 mainly concentrated in active funds such as private equity and leveraged funds, channels which have certain investment thresholds for resident investors. However, the reality may be that the current funds entering the market mainly come from some high net worth individuals with higher risk appetite, as there is no clear signal of widespread entry of resident funds, unlike in Q3 with the media hype of stocks not matching the previous bull market trends. Most residents still have low expectations for income and housing prices, with risk appetite running low, which may be the main factor hindering the widespread entry of residents' funds into the market in 2025. Micro funds in 2026 expect a net inflow of 20 trillion yuan The overall inflow of funds in 2025 is similar to that of 2020, but there have been new changes in the structure of incremental funds. The macro environment and market characteristics in 2025 are relatively similar to those of 2020. However, the structures of incremental funds in 2020 and 2025 differ significantly. Looking ahead to 2026, with the progress of residents' funds entering the market, it is estimated that total incremental funds for the whole year will reach 2 trillion yuan. From the perspective of funds inflow projects, individual active funds are expected to further enter the market, while insurance funds and dividends could see continued high growth, and public and foreign funds may see improvement. First, from the perspective of funds from residents, the combined inflow from margin financing and bank and securities transfers into the market could reach a total of 1 trillion yuan. Secondly, from the institutional side, insurance funds are expected to see an inflow of 700 billion yuan for the whole year of 2026, while active equity, passive equity, and "fixed income+" funds could see an inflow of around 700 billion yuan, with foreign capital inflow of around 100 billion yuan. Finally, in April 2024, the new "Nine Regulations" further strengthened the supervision of cash dividends of listed companies, while in November 2024, the China Securities Regulatory Commission issued a document encouraging "increasing the frequency of dividends, optimizing the pace of dividends, and reasonably increasing the dividend rate". Under policy guidance, the willingness of A-share listed companies to distribute dividends has been on the rise in recent years, with the overall dividend ratio of the A-share market in 2025 reaching close to 50%. With the overall moderate recovery of corporate profits in 2026, the total dividends of the A-share market for the whole year may continue to grow significantly, with an estimated inflow of around 950 billion yuan. From the perspective of funds outflow projects, as market sentiment improves, the scale of margin financing and reductions may increase significantly. Risk warning: The data on the fund side are mostly approximate estimates and may differ from the actual situation; Some data predictions are based on general judgment views, which may change due to changes in future market conditions.