China Equity Flow Monitor_December 17, 2024

Key Points 1. Stock Connect Holdings and Flows: * Stock Connect holdings have increased significantly over the years, reaching $466.73 billion since inception. * Southbound weekly flows have been relatively stable, averaging $2.73 billion over the past year. * Cumulative southbound flows have been strong, reaching $95.95 billion year-to-date. 2. Sector Analysis: * Communication Services and Consumer Discretionary sectors have seen significant inflows, with weekly flows of $1.1 billion and $0.5 billion, respectively. * Financials and Health Care sectors have also seen notable inflows, with weekly flows of $0.8 billion and $0.2 billion, respectively. * Industrials and Materials sectors have seen moderate inflows, with weekly flows of $0.3 billion and $0.1 billion, respectively. 3. Top Holdings: * Tencent Holdings Ltd remains the largest holding, with a market cap of $459 billion and a 43% stake. * China Mobile Ltd is the second-largest holding, with a market cap of $258 billion and a 99% stake. * Alibaba Group Holding Ltd is the third-largest holding, with a market cap of $140 billion and a 58% stake. 4. ETFs and Warrants: * ETFs have seen significant inflows, with the top 10 ETFs having a total AUM of $319 billion. * Warrants have seen moderate inflows, with the total warrant market activity reaching $0.7 billion. 5. Market Cap and Performance: * Large cap stocks have outperformed, with the CSI 300 index returning 16% year-to-date. * Mid cap stocks have returned 15%, while small cap stocks have returned 10%. * Cyclical stocks have outperformed defensive stocks, with the cyclical sector returning 23% year-to-date compared to 6% for the defensive sector. 6. Margin Trading and Short Selling: * Margin trading has seen significant growth, with the total margin balance outstanding reaching $1.9 trillion. * Short selling has also seen growth, with the total short selling turnover reaching $0.4 billion. 7. Index Performance: * The HSI index has returned 16% year-to-date. * The HSCEI index has returned 18% year-to-date. * The A50 index has returned 19% year-to-date. 8. Valuation: * The PE ratio of the HSCEI index is at 11.5x, which is at the 67th percentile compared to the 10-year average of 11.1x. 9. Future Outlook: * The outlook for the Chinese equity market remains positive, with strong fundamentals and supportive macroeconomic conditions. * The market is expected to continue to see strong inflows from both domestic and international investors.