中国股票策略 2025 年第三季度投资者持仓更新 - 外资本季度增持-China Equity Strategy 3Q25 investor positioning update - foreign funds added in the quarter

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the Chinese equity market and the positioning of foreign institutional investors in Chinese equities during 3Q25. Core Insights and Arguments 1. Increased Foreign Investment: International investors increased their positions in Chinese equities, reducing their underweight from -1.6% to -1.3% during the quarter, marking the least underweight since 4Q22 [2][3] 2. Sector Preferences: The most significant additions by international investors were in the healthcare, insurance, energy & materials, and internet sectors, while positions in auto and tech were reduced [2][5] 3. Stock Connect Activity: Southbound inflows reached US$56 billion, matching the record level from 1Q25, with net inflows across all sectors. The top sectors for southbound investment included consumer discretionary, financials, and healthcare [2][4] 4. Northbound Outflows: In contrast, northbound investments saw a net outflow of US$18 billion in 3Q25, with significant sell-offs in financials, staples, and utilities [4][5] 5. Active Fund Dynamics: Approximately 800 active foreign funds hold US$270 billion in Chinese stocks, with 145 funds (AUM US$212 billion) not holding any Chinese equities as of 3Q25, down from 167 funds in 2Q25 [3][9] 6. Crowding Observations: Active foreign institutional investors favored growth sectors like healthcare, insurance, and internet, while selling off auto and tech stocks. The crowding score for sectors like renewables and defensives increased, while banks, healthcare, and internet saw declines [5][39] Additional Important Insights 1. Top Bought Stocks: Notable stocks with significant foreign inflows included Alibaba Health Information Technology Ltd. (7.5% increase), Bilibili, Inc. (4.7%), and Zhongan Online P&C Insurance Co. (4.3%) [17] 2. Top Sold Stocks: Stocks with the most significant outflows included China Mengniu Dairy (-2.0%), Agile Group Holdings (-2.1%), and BYD Company (-4.4%) [18] 3. Risks Identified: Potential risks for Chinese equities include a hard landing in the property market, capital outflows due to currency depreciation, and slow structural reforms. Inadequate government policies could exacerbate these risks [48] 4. Valuation Methods: Various valuation approaches are employed, including DCF models, Gordon growth model analysis, and relative valuation using multiples like PE, EV/EBITDA, and P/BV [47] This summary encapsulates the key points from the conference call, highlighting the dynamics of foreign investment in the Chinese equity market, sector preferences, and potential risks facing the market.