2025-03-07 07:47Investment Rating - The report indicates a moderate inflow of foreign funds into Chinese equities, with a total inflow of US$3.8 billion in February 2025, following three months of outflows [7]. Core Insights - The inflow was primarily driven by passive funds, which contributed US$5.0 billion, while active funds experienced an outflow of US$1.2 billion, although this was a slowdown from the US$1.7 billion outflow in January [7]. - The recent rally from January 13 to February 28 saw a more moderate passive fund inflow compared to the previous year's rally, with US$5 billion versus US$15 billion, indicating a shift in focus towards AI and tech-related sectors [7]. - Cumulative foreign passive inflows since October 2022 have returned to early October 2024 levels, while cumulative foreign active flows have reached a historical low since late 2022 [7]. - Underweights in China have remained stable across global funds, AxJ funds, and EM funds, with underweights of 1.1 percentage points, 1.6 percentage points, and 3.1 percentage points respectively [7]. Fund Flow Summary - Active fund managers have increased their positions in Consumer Services and Media & Entertainment sectors, while reducing their holdings in Consumer Durables & Apparel and Food Beverage & Tobacco [7]. - Notable additions to active fund positions include Meituan, CCB, Trip.com, and PICC P&C, while Kweichow Moutai and Midea Group saw the most reductions [7]. - Chinese domestic passive funds targeting A-shares experienced a significant net outflow of US$17 billion in February 2025, marking a shift after eight months of inflow [7]. - The Southbound Stock Connect program maintained strong momentum with a net inflow of US$19.6 billion in February 2025, contributing to a total of US$35 billion in the first two months of 2025 [7].