China Equity Strategy-Positions of Active Long-only Managers in ChinaHK

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the China Equity Strategy and the performance of A-shares in the context of foreign fund flows and market liquidity in China and Hong Kong [1][12][13]. Core Insights and Arguments - Foreign Inflows: Foreign inflows into Chinese equities moderated to US$2.2 billion in October, down from US$4.6 billion in September. This was influenced by US$3.2 billion inflows from passive funds and US$1.0 billion outflows from active funds [1][12]. - Year-to-Date Performance: As of October 31, cumulative foreign long-only fund inflows improved to US$8 billion, a significant recovery from the US$17 billion outflow recorded in 2024. Passive inflows reached US$21 billion, surpassing the US$7 billion in 2024, while active outflows totaled US$13 billion, down from US$24 billion in 2024 [12]. - Market Sentiment: The report indicates a weakening retail participation in A-shares, with declines in new account openings and net inflows from small orders. Onshore mutual fund AUM growth for equity and hybrid funds sharply slowed, while money market fund AUM remained stable [12][21]. - Sector and Company Adjustments: Active fund managers increased their overweight positions in Capital Goods, Insurance, and Materials, while trimming positions in Media & Entertainment and Consumer Services. Notably, CCB and Ping An Insurance were added to portfolios, while Alibaba and Tencent saw reductions [12]. Additional Important Insights - Retail Investor Activity: Retail investor activity in A-shares weakened in October, with new SSE account openings dropping to 2.3 million from 2.9 million in September. The daily average net inflow of small A-share orders decreased to Rmb29 billion from Rmb34 billion in September [21][24]. - Private Fund Growth: Onshore private fund AUM growth normalized after a surge in July, with total AUM reaching Rmb6.0 trillion. The growth rate slowed to Rmb36 billion in September from Rmb325 billion in July [25][27]. - Foreign Passive Fund Flows: There was a notable outflow from foreign passive funds tracking the CSI 300 in October, reflecting ongoing uncertainties in US-China relations [33][12]. This summary encapsulates the key points from the conference call, highlighting the current state of the Chinese equity market, fund flows, and investor behavior.