Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **China/HK equity market** and the flows and positioning of funds as of January 2026, highlighting trends in foreign-domiciled mutual funds and A-share market liquidity [1][11]. Core Insights - **Foreign Fund Flows**: In January 2026, US and EU mutual fund inflows to China reached **US$9 billion**, the highest since October 2024. This marks the first net inflow for active funds since early 2023, with passive funds contributing **US$7.4 billion** and active funds **US$1.2 billion** [11]. - **National Team Selling**: The national team sold approximately **US$83 billion** since mid-January 2026, reversing all post-2024 inflows and leaving only **US$16 billion** since 2020. This suggests that selling pressure may ease moving forward [11][39]. - **Retail Activity**: A-share retail activity improved significantly in January, with new account registrations reaching **4.9 million**, surpassing the previous peak of **3.1 million** in March 2025, although still below the **6.8 million** high from October 2024 [48][43]. - **Small Order Inflows**: The daily average net inflow of small A-share orders surged to **Rmb37 billion**, exceeding the previous peak of **Rmb34 billion** in February 2025, but still below the **Rmb48 billion** high from October 2024 [48][49]. Fund Positioning - **Active Weights**: Active fund managers increased their positions in sectors such as Consumer Discretionary, Semiconductors, and Pharmaceuticals, while reducing exposure in Media & Entertainment, Consumer Services, and Tech Hardware [25]. - **Company-Specific Changes**: Notable increases in positions were seen in companies like Alibaba (BABA), Montage, and AIA, while Tencent, PDD, and Meituan saw reductions [25]. Market Liquidity - **A-share Liquidity**: The report indicates a notable improvement in A-share liquidity, with retail investor activity showing signs of recovery, although still below previous highs [39][43]. - **ETF Flows**: The national team's selling has led to significant outflows from ETFs, particularly large-cap index ETFs, which have seen cumulative outflows of around **US$83 billion** since mid-January 2026 [37][38]. Additional Insights - **Private Fund AUM**: Private fund assets under management (AUM) increased slightly in December 2025, totaling **Rmb1.9 trillion** for the year, indicating a re-engagement of high-net-worth individuals in the stock market [52]. - **Onshore Mutual Funds**: Onshore equity and hybrid mutual funds experienced a notable decline in AUM by **Rmb498 billion** in January 2026, primarily due to national team selling [56]. Conclusion - The report highlights a complex landscape for the China/HK equity market, with signs of recovery in retail participation and foreign fund inflows, but also significant selling pressure from national teams and a decline in onshore mutual fund AUM. The overall sentiment suggests cautious optimism as selling pressures may ease and retail activity improves [11][39][56].