Core Viewpoint - The article discusses the current state of the Chinese stock market, highlighting a decrease in trading activity and concentration, while noting an increase in foreign capital inflow into A-shares and Hong Kong stocks [3][4]. Market Pricing Status - Market sentiment has declined, with average daily trading volume dropping to 2 trillion yuan and the average number of daily limit-up stocks decreasing to 68.4 [3] - The proportion of stocks that increased in value has risen to 54.77%, with the median weekly return for all A-shares increasing to 0.6% [3] - Industry trading concentration has decreased, with only one industry (electric power equipment and new energy) having a turnover rate above 95% [3] A-Share Fund Flow - The issuance of new equity funds has decreased to 21.84 billion yuan, with overall stock positions slightly reduced [4] - The private equity confidence index has slightly declined, but positions are nearing the highest levels of the year [4] - Foreign capital inflow reached 800 million USD, with northbound trading accounting for 27.4% of total trading volume [4] - The IPO fundraising for the period was 3.59 billion yuan, with a future lock-up release scale of 24.73 billion yuan [4] - Net buying in margin trading has decreased to 11.63 billion yuan, accounting for 10.8% of total trading volume [4] A-Share Industry Allocation - Foreign capital primarily flowed into the electronics sector, with a net inflow of 6.32 million USD, while the power equipment sector saw a net inflow of 6.83 billion yuan [5] - The non-bank financial sector and pharmaceutical sector saw significant net inflows in ETFs, while the electronics and power equipment sectors experienced net outflows [5] Hong Kong and Global Fund Flow - Southbound capital inflow increased to 38.68 billion yuan, reaching the 89th percentile since 2022 [6] - Global capital flows showed a net outflow from developed markets and a net inflow into emerging markets, with significant inflows into Asian stock markets, particularly in Japan and China [6]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The trading enthusiasm in the market declined this period. In terms of funds, the issuance of equity - oriented funds increased marginally, the inflow of margin trading funds accelerated, while foreign funds had a slight outflow from A - shares and Hong Kong stocks [1][5]. 3. Summary by Related Catalogs 3.1 Market Pricing Status: The trading enthusiasm declined marginally - **Market sentiment**: The trading turnover rate decreased, the average daily trading volume of the entire A - shares dropped to 1.8 trillion, the average daily number of limit - up stocks rose to 73.2, the maximum consecutive limit - up number was 7, the limit - up board rate rose to 78.6%, and the number of stocks on the Dragon and Tiger List decreased to 59 [5]. - **Profit - making effect**: The proportion of rising stocks increased to 81.2%, and the median weekly return of all A - share stocks rose to 3.1% [5]. - **Trading concentration**: The trading concentration of industries declined. There were 4 industries with the historical percentile of industry turnover rate above 90%, among which the turnover rates of the coal and petroleum and petrochemical industries were above 95% [5]. 3.2 A - share Capital Flow - **Public funds**: The newly - issued scale of equity - oriented funds rose to 12.15 billion, and various public funds reduced their stock positions compared with the previous period [5]. - **Private funds**: In October, the confidence index of private funds decreased slightly, and the positions continued to approach the highest level of the year (as of October 17) [5]. - **Foreign capital**: There was a slight outflow of 120 million US dollars, among which active foreign capital inflowed 16 million US dollars (as of October 22), and the historical percentile of the trading proportion of north - bound funds rose to 38.7% [5]. - **Industrial capital**: The initial public offering (IPO) raised 2.54 billion yuan this period, the private placement scale was 21.151 billion yuan, and the restricted - share lifting scale was 48.76 billion yuan [5]. - **ETF**: Passive funds suddenly turned to net outflow, with a net outflow of 14.7 billion yuan. The passive trading proportion decreased to 6.9% month - on - month, and the premium/discount rate of stock ETFs decreased [5]. - **Margin trading**: The net purchase this period was 21.09 billion yuan, and the trading volume proportion decreased to 11% [5]. - **Retail investors**: Alternative indicators showed that the activity of retail investors increased marginally [5]. 3.3 A - share Industry Allocation - **Foreign capital**: (As of October 22) Non - ferrous metals (+47.3 million US dollars) and electronics (+29.0 million US dollars) had the highest net inflows, while food and beverages (-15.3 million US dollars) and transportation (-13.2 million US dollars) had net outflows [5]. - **Margin trading**: (As of October 23) Electronics (+8.23 billion yuan) and communication (+3.42 billion yuan) had the highest net inflows, while non - ferrous metals (-1.43 billion yuan) had a net outflow [5]. - **ETF**: The passive capital flow behavior of primary industries was concentrated. The non - banking sector (+770 million yuan) had the highest net inflow; among secondary industries, securities and traditional Chinese medicine had net inflows. Power equipment (-4.52 billion yuan) and electronics (-3.24 billion yuan) had the highest net outflows, and among secondary industries, batteries and semiconductors had net outflows. The ETFs with the highest increase this period included securities ETFs and STAR Market 50 ETFs, etc. The 7 - 10 - year China Bond ETF and 0 - 3 - year China Bond ETF had the highest margin trading net purchases; the ChiNext ETF and CSI 300 ETF had the highest net redemptions, and the CSI Overseas Internet ETF and Hang Seng Technology ETF had margin trading net sales [5]. - **Dragon and Tiger List funds**: Machinery, electronics, and power equipment were the top three industries on the Dragon and Tiger List [5]. 3.4 Hong Kong Stocks and Global Capital Flow - **South - bound capital**: The net purchase of south - bound capital per week rose to 17.28 billion yuan, at the 59th percentile since 2022 (MA5) [5]. - **Global capital flow**: This period (as of October 22), the net flow of active/passive funds in developed markets was -6.53 billion/21.88 billion US dollars, and the net flow of active/passive funds in emerging markets was -610 million/-660 million US dollars. From the perspective of foreign capital only, global foreign capital marginally flowed into non - US developed markets this period, with the UK (+1.01 billion US dollars) and France (+550 million US dollars) having the highest inflows, while the US (-132 million US dollars) continued to have an outflow. From the perspective of the overall global flow including domestic capital of each country, the US had the highest inflow, while China and the UK had outflows. North American funds had a large net subscription, and US technology/industrial funds had the highest net subscriptions [5].

1. Report Industry Investment Rating - No industry investment rating information is provided in the report. 2. Core Viewpoints of the Report - The report focuses on the performance of the ETF fund market from October 13th to October 17th, summarizing the performance and fund flows of the overall ETF market, different popular segmented ETF funds, and innovative theme and segmented industry ETF funds for investors' reference [1]. - During this period, most stock ETFs declined. Commodity ETFs had the largest increase, with an average gain of 9.05% for funds above a certain scale. Conversely, Hong Kong TMT ETFs, A-share TMT ETFs, and Hong Kong mid - stream manufacturing ETFs had significant drops, with average declines of 7.71%, 6.93%, and 6.93% respectively for funds above a certain scale [2][5]. - Funds flowed significantly into commodity ETFs and Hong Kong TMT ETFs, with net inflows of 20.745 billion yuan and 16.662 billion yuan respectively for the whole week. In contrast, bond ETFs and A-share large - cap ETFs had significant outflows, with net outflows of 13.897 billion yuan and 10.668 billion yuan respectively for the whole week [3][7]. 3. Summaries According to Relevant Catalogs 3.1 ETF Market Overall Performance - **Market Performance**: Most stock ETFs declined. Commodity ETFs led the increase, while Hong Kong TMT ETFs, A-share TMT ETFs, and Hong Kong mid - stream manufacturing ETFs had large drops [2][5]. - **Fund Flows**: Commodity ETFs and Hong Kong TMT ETFs saw large inflows, while bond ETFs and A-share large - cap ETFs had large outflows [3][7]. 3.2 Different Popular Segmented Type ETF Fund Market Performance - **A - share ETFs**: Include various types such as broad - based index (full - market, large - cap/super large - cap, small - and medium - cap, science and technology/growth enterprise board), industry (TMT, new energy, consumption, medicine, cycle, finance and real estate), SmartBeta (value, growth, dividend, free cash flow), and theme ETFs. Each type has different performance in terms of fund scale, weekly fund flow, weekly return, recent one - month return, and year - to - date return [15][16][17]. - **Hong Kong ETFs**: Comprise broad - based index, industry (TMT, mid - stream manufacturing, consumption, medicine, finance and real estate), SmartBeta (dividend), and theme ETFs, with different performance indicators [30][31][32]. - **Shanghai - Hong Kong - Shenzhen ETFs**: Include industry and theme ETFs, showing different performance [38][39]. - **US Stock ETFs**: Divided into broad - based index and industry ETFs, with corresponding performance [40][41]. - **Other QDII - ETFs (excluding Hong Kong/US stocks)**: Have different performance in terms of fund scale, weekly fund flow, etc. [42]. - **Bond ETFs**: Show different performance in terms of fund scale, weekly fund flow, and return [43]. - **Commodity ETFs**: Generally performed well, with significant inflows and high returns [44]. 3.3 Innovative Theme and Segmented Industry ETF Fund Market Performance - **TMT Innovative Themes**: Include themes such as animation and games, film and television, fintech, etc., with different weekly and year - to - date returns [46]. - **Consumption Segmented Industries**: Such as liquor, food and beverage, household appliances, etc., have different performance [47]. - **Medicine Segmented Industries**: Include vaccine biotechnology, traditional Chinese medicine, innovative drugs, etc., with different returns [48]. - **New Energy Themes**: Such as power utilities, green power, photovoltaic industry, etc., have different performance [49]. - **Central and State - owned Enterprise Themes**: Include various central and state - owned enterprise - related themes, with different weekly and year - to - date returns [50][51]. - **Stable Growth Themes**: Such as coal, real estate, non - ferrous metals, etc., have different performance [52]. - **Shanghai - Hong Kong - Shenzhen/Hong Kong Stock Connect Segmented Industries**: Include internet, securities, medicine, etc., with different returns [53]. - **Dividend/Dividend Low - Volatility Index Families**: Different dividend - related indexes have different performance [54]. - **Growth Enterprise Board Index Families**: Different growth enterprise board - related indexes have different performance [55].

Investment Rating - The report indicates a positive outlook for the market, suggesting that trading will continue to rise from now on, despite some potential short-term challenges [1]. Core Insights - The report highlights that despite technical setups not showing an "unrestricted" green light, there are supportive factors for continued upward movement in the market [1]. - Historical data shows that after the Federal Reserve maintains interest rates for six months or longer, stock fund inflows typically increase by 6% over the following 12 months, supporting a moderate market rise expectation [2]. - Investor sentiment has rebounded, with the latest AAII bull-bear reading at 0.98, indicating a stronger bullish sentiment compared to earlier in the year [4]. - The report notes that despite high stock prices, investor positioning sentiment indicators remain low, suggesting room for growth [7]. - There is a significant net inflow into global equities, particularly from domestic investors into U.S. stocks, indicating strong demand [15]. Summary by Sections 1. Fund Flows - The report states that stock fund inflows have been robust, with a notable increase of $68 billion in the past week, contrasting with a $10 billion outflow the previous week [15]. 2. Sentiment - The sentiment indicators show a rebound, with institutional investors finding reasons to increase their positions in the U.S. stock market [4][7]. 3. Asset Management Positioning - CFTC data indicates that asset managers' net positions are significantly below levels seen a year ago, suggesting potential for growth in this area [12]. 4. Hedge Fund Positioning - Hedge funds have seen an increase in overall leverage, reaching 287.5%, indicating a bullish stance in the market [14]. 5. Retail Activity - Retail purchases have shown impressive growth, with no signs of slowing down, contributing positively to the S&P 500 performance [22]. 6. Liquidity - The report notes that liquidity levels are currently high, with the S&P liquidity at $20.42 million, significantly above the two-year average [27]. 7. Market Challenges - The report mentions upcoming challenges, such as the anticipated $22 billion in stock sales by U.S. pension funds at the end of the month, which could pose a technical obstacle [29].

Core Viewpoint - Global markets experienced mixed performance last week, with increased trading activity and heightened market observation. There are indications from multiple Federal Reserve officials suggesting a potential interest rate cut in September, with market expectations of approximately two rate cuts within the year. Additionally, economic forecasts for both the US and China have been marginally revised upwards, while earnings expectations for US tech stocks in 2026 continue to be upgraded, and those for Hong Kong stocks have been slightly downgraded [1]. Market Performance - Global markets showed mixed results last week, with MSCI Global down by 0.4%, MSCI Developed down by 0.4%, and MSCI Emerging down by 0.6%. In the bond market, French 10Y government bond yields saw a significant increase. In commodities, silver prices led the gains. Currency-wise, the US dollar strengthened, the British pound depreciated, the Japanese yen remained stable, and the Chinese yuan appreciated. Sector-wise, the materials sector in Hong Kong led the gains, while the energy sector in the US showed relative strength [2]. Trading Sentiment - Overall trading sentiment in global stock markets improved last week, with increased trading volumes in indices such as the Hang Seng Index, S&P 500, European Stoxx 50, and Nikkei 225, while the Korean Kospi 200 saw a decline in trading volume. Investor sentiment in Hong Kong and the US decreased but remained at historically high levels. Volatility increased in Hong Kong, US, and European markets, while it decreased in Japan. Valuations for both developed and emerging markets saw a decline compared to the previous week [2]. Earnings Expectations - Earnings expectations for Hong Kong's consumer discretionary sector were downgraded last week. Comparatively, US earnings expectations for 2025 showed the best performance, followed by European and Hong Kong markets, with Japan lagging. Specifically, Hong Kong's Hang Seng Index 2025 EPS forecast was revised down from 2190 to 2140. The S&P 500's 2025 EPS forecast was adjusted from 268 to 269, while the Eurozone STOXX 50's 2025 EPS forecast was slightly increased from 335 to 336 [3]. Economic Expectations - Economic forecasts for both the US and China were revised upwards last week. The Citigroup US Economic Surprise Index increased, benefiting from expectations of Federal Reserve rate cuts and strong earnings reports from tech leaders like Nvidia. Conversely, the European Economic Surprise Index declined, likely due to a drop in the Eurozone Economic Sentiment Index in August. China's Economic Surprise Index rose, attributed to policy expectations, increased retail participation, and structural highlights in earnings reports [3]. Capital Flows - Global macro liquidity showed a slight easing last week. Recent comments from several Federal Reserve officials indicated a potential rate cut in September. As of August 29, futures market implied rates suggested expectations of approximately 2.2 rate cuts by the Federal Reserve this year, an increase from the previous week. Last week, US dollar liquidity tightened marginally. In terms of micro liquidity, July saw capital inflows primarily into India, Europe, Hong Kong, and South Korea, with flexible foreign capital and net inflows into Hong Kong stocks last week [4].

Deposit Trends - In July, household deposits decreased by 1100 billion (1.1 trillion) RMB, a year-on-year increase of 780 billion (0.78 trillion) RMB [1][2] - Corporate deposits decreased by 1500 billion (1.5 trillion) RMB in July, a year-on-year decrease of 320.9 billion RMB [1] - Non-bank deposits increased by 2100 billion (2.1 trillion) RMB in July, a year-on-year increase of 1400 billion (1.4 trillion) RMB [1][2] - Government deposits increased by 861.7 billion RMB in July, a year-on-year increase of 358.2 billion RMB [1] - The shift of deposits from residents to non-bank institutions is evident [1][2] Market Implications - Historically, a surge in non-bank deposits often reflects a trend of residents moving savings into the stock market [1] - Increased non-bank deposits are associated with residents directly entering the market via bank-securities transfers and indirectly via investments in equity funds and wealth management products [1][2] - Historically, significant year-on-year increases in non-bank deposits have corresponded with surges in new account openings and rising margin loan balances, often accompanied by positive stock market performance [1] Monetary Environment - The growth of social financing (TSF) in July was supported by government bonds, with the rolling year-on-year growth rate of new TSF continuing to rise [2] - The structure of social financing is relatively weak, with slight declines in short-term and medium-to-long-term loans to both residents and enterprises, indicating relatively sluggish demand for real economy credit [2] - With limited economic activity, resident deposits continue to be activated, with M1 growth continuing to rise in July while the M2-M1 spread continues to narrow [2] - As deposit rates continue to fall this year, coupled with continued improvement in stock market profitability, resident deposits are gradually flowing into the capital market to seek higher returns, and resident investment behavior is showing a gradual trend of becoming more active [2]

Market Performance - Global markets rebounded last week, with MSCI Global up by 2.3%, MSCI Developed up by 2.4%, and MSCI Emerging up by 1.8% [1] - The Hong Kong cyclical sector led the gains, while US tech and consumer discretionary sectors performed well, and European financials and real estate showed strong performance [1] - US 10Y Treasury yields increased, and oil prices saw significant gains [1] Trading Sentiment - Trading volume increased in US and European markets, while Japanese and Korean markets saw a decrease [1] - Investor sentiment in Hong Kong decreased but remained at historical highs, while US investor sentiment increased and also reached historical highs [1] - Volatility decreased in Hong Kong, US, and European markets, while Japanese market volatility increased [1] - Overall valuations in developed and emerging markets improved compared to the previous week [1] Earnings Expectations - Earnings expectations were revised upward across major markets, with Japanese stocks showing the best performance in 2025 EPS expectations [2] - Hong Kong's Hang Seng Index 2025 EPS expectation was revised from 2192 to 2194 [2] - US S&P 500 Index 2025 EPS expectation was revised from 267 to 268 [2] - European STOXX 50 Index 2025 EPS expectation remained unchanged at 335 [2] Economic Expectations - China's economic expectations were marginally revised upward, influenced by positive policy sentiments and overseas technology developments [2] - The US and European economic surprise indices declined, affected by various geopolitical and economic factors [2] Capital Flows - Global macro liquidity expectations remained stable, with a slight increase in expectations for US Federal Reserve rate cuts following the non-farm payroll data [3] - As of August 8, market expectations indicated a 2.3 rate cut by the Federal Reserve this year, a decrease from the previous week [3] - There was a net inflow into Hong Kong stocks from the southbound trading, while foreign capital outflow from Hong Kong stocks was noted [3]

Capital Flow - Eurozone bond market saw nearly €100 billion (approximately $116 billion) of foreign capital inflows in May [1] - This indicates a shift of funds from the US market to Eurozone assets [1]

Market Overview - The trading heat continues to rise, with new issuance of equity funds and accelerated inflow of financing funds, while retail investor activity increases and foreign capital turns to outflow [1][2] - The average daily trading volume exceeds 1.5 trillion, indicating a marginal increase in market sentiment [1] Market Sentiment - Market sentiment is on the rise, with the average daily trading volume of the entire A-share market exceeding 1.5 trillion, and the turnover rate of the Shanghai Composite Index falling to 88% [1] - The number of daily limit-up stocks has decreased to 59, with the maximum consecutive limit-up stocks being 8, and the sealing rate dropping to 70.2% [1] Fund Flows - New issuance of public equity funds has increased to 12.6 billion, with an ordinary stock position rising by 0.1% [2] - Foreign capital has seen a net outflow of 1.4 million USD, with the northbound capital transaction proportion dropping to 11.6% [2] - The net inflow of financing reached 28.57 billion, with the transaction proportion rising to 9.7% [2] Industry Allocation - There is a notable divergence in funding within the electronics sector, with financing and ETF allocations increasing while foreign capital allocation decreases [3] - The net inflow in financing for the computer sector is 4.42 billion and for the electronics sector is 3.07 billion [3] - The non-bank financial sector and media sectors saw net inflows of 0.71 billion and 0.57 billion respectively in ETFs [3] Hong Kong and Global Fund Flows - The southbound capital inflow has decreased to 21.46 billion, representing the 76th percentile since 2022 [4] - Global foreign capital primarily flows into developed markets, with the US and Japan seeing inflows of 3.02 billion and 1.16 billion respectively [4]

Group 1 - The Hong Kong Stock Exchange raised 107 billion HKD in the first half of the year, with 42 IPOs and an average daily trading volume of 40 billion HKD for 210 ETP products, indicating a vibrant fundraising environment [2][4] - Retail investors feel disconnected from the market's success, often missing out on opportunities despite the overall market growth, as exemplified by the experience of a retail investor who failed to secure shares in a popular IPO [4][2] - The disparity between market movements and retail investor experiences highlights the challenges of navigating the financial landscape, where significant capital flows often go unnoticed by individual investors [2][4] Group 2 - Historical data suggests that market movements are often driven by concentrated capital behaviors, with key periods accounting for a significant portion of annual returns [5][7] - A comparison between traditional K-line charts and quantitative systems reveals the underlying dynamics of capital flow, showcasing the difference between surface-level analysis and deeper insights into market behavior [7][10] - The importance of understanding the "language of trading" is emphasized, where announcements may not have the expected impact if not accompanied by corresponding capital movements [8][10] Group 3 - The influx of 107 billion HKD into the market leaves traces that can be analyzed, such as changes in stock weightings or shifts in derivatives market positions, which can provide insights into institutional trading strategies [11][13] - The phenomenon of "shakeout behavior" often indicates that large funds are accumulating shares, leading to confusion among retail investors about stagnant stock prices despite strong fundamentals [13][11] - The increasing complexity of the financial market creates greater information asymmetry, making it essential for investors to utilize quantitative tools to gain insights into capital flows and identify potential investment opportunities [14][11]