Summary of Key Points from the Conference Call Industry Overview - The report focuses on the **Chinese equities market** and the flow of funds in **China/HK** equities, highlighting trends in both passive and active fund management strategies [1][10]. Core Insights and Arguments - **Equity Inflows**: Chinese equities experienced inflows of **US$2.7 billion** in July 2025, primarily driven by **US$3.9 billion** from passive funds, while active funds faced outflows of **US$1.2 billion** [1][10]. - **Southbound Flows**: Southbound stock connect inflows reached **US$17 billion** in July, totaling **US$110 billion** year-to-date (YTD), surpassing the full-year level of **US$103 billion** in 2024 [1][10]. - **Fund Underweights**: Global and Asia ex-Japan (AxJ) funds slightly reduced their underweights in China by **1.4 percentage points** and **0.3 percentage points**, respectively, while emerging market (EM) funds increased their underweight to **3.2 percentage points** [1][10]. - **Sector Performance**: Active fund managers increased their positions in **Media & Entertainment**, **Pharmaceuticals**, and **Insurance**, while reducing exposure in **Consumer Services** and **Consumer Durables & Apparel** [10]. - **Company-Specific Changes**: Notable increases in holdings were observed for **Tencent**, **Netease**, **Jiangsu Hengrui**, and **Wuxi AppTec**, while **Meituan** and **Xiaomi** saw reductions in their positions [10]. Additional Important Insights - **Domestic Fund Outflows**: Chinese domestic passive funds targeting A-shares recorded outflows of **US$6 billion** in July, up from **US$3 billion** in June [10]. - **Short Interest**: As of July 31, short positions in China/HK equities were predominantly added in **Consumer Staples**, **Financials**, and **Communication Services** [11]. - **Passive Fund Trends**: Cumulative foreign passive inflows reached **US$11 billion** YTD, exceeding the **US$7 billion** level in 2024, while cumulative foreign active outflows totaled **US$11 billion**, a decrease from **US$24 billion** in 2024 [10]. - **Fund Flow Dynamics**: The report indicates a significant correlation between foreign passive fund flows to the **CSI 300** and northbound net flows historically, suggesting a stable trend in foreign investment [12]. This summary encapsulates the key points from the conference call, providing a comprehensive overview of the current state of the Chinese equities market and fund flow dynamics.