CICC: Who's buying, who's selling?

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Source: CICC Point of View

Trading sentiment in the market has clearly improved, with trading volume hitting historical highs one after another. Since the second half of last year, the A-share market has risen in a choppy upward trend. Since mid-December, the market has strengthened noticeably, and the Shanghai Composite Index has achieved 17 consecutive positive sessions to reach a new high in nearly ten years. During this period, market activity has continued to improve. Since the beginning of the year, average daily trading value has exceeded 3 trillion yuan, with an average turnover rate of 5.7%, placing it at the most active period for liquidity since 2015. Among them, on January 14, the total trading value of the A-share market was 3.99 trillion yuan, setting a new historical high. The turnover rate, calculated using free-float market value, reached 7.4%, the highest level since October 2024. Recently, after excessively fast gains, regulators stated “to prevent big ups and downs” [1]. Trading value for both markets has seen a modest decline in volume, but it remains at a high level.

The characteristic of liquidity driving the market upward is fairly obvious—focus on changes in A-share liquidity and what they imply for the market. In our “Five Major Changes in A-Share Liquidity and Their Market Implications,” published in July 2025, we proposed that it is necessary to understand market changes from the perspective of liquidity. Since the second half of last year, major A-share indices have performed well overall, and different types of capital have resonated and entered the market, highlighting the feature that liquidity drives stock-market performance. Combining recent liquidity performance, two standout features are: the financing balance continues to set new historical highs, and volatility in stock-type ETFs. In addition, foreign capital returning and medium- to long-term funds accelerating into the market have also become important factors driving market performance. Specifically, by category of investors:

► Margin financing & securities lending (Two Financing) funds & private funds: high-risk-preference capital leads the way, with financing balances and private placements’ positions rising noticeably. For Two Financing funds, the financing balance is usually positively correlated with market performance. Since the “924” period in 2024, the A-share market’s Two Financing scale has experienced three relatively fast upswings: from “924” to October 2024, from June to October 2025, and from December 2025 to now. Over the same period, market performance also saw clear improvement. Recently, after Two Financing balances broke through historical highs in September 2025, they have continued to rise, surpassing 2.7 trillion yuan and setting a new historical high again. Net inflows since this rally has started are nearly 240 billion yuan, making it one of the important drivers of recent market performance. However, judging by relative proportions, it is still at a reasonable level. 1) By market value: as of January 30, Two Financing balances accounted for 5.06% of the A-share market’s free-float market value, slightly higher than the average of 4.76% since 2014. 2) By trading: since 2026, Two Financing trading value has averaged 10.5% of the A-share market’s total trading value, still clearly below the peak around 20% in 2015. For private funds, the securities investment scale of private funds in 4Q25 rose significantly to an average of 0.70 trillion yuan per month (vs. 0.593 trillion yuan in 3Q25). As for positioning, according to data on relevant custody products disclosed by China Resources Trust, the average stock allocation in 4Q25 was 63.2%. In December, the allocation increased by 3.1 percentage points quarter-over-quarter to 64.4%, showing a fairly clear improvement, reflecting better risk appetite in the market, though it remains slightly below the historical average of 66%.

► Individual investors: growth in residents’ savings combined with an “asset shortage,” leading individual investors to keep entering the market. China is still in a relatively typical “asset shortage” environment. High-yield assets have gradually decreased over the past three years, increasing the relative appeal of the stock market. Since the “924” in 2024, the rally quickly boosted sentiment and brought individual investors into the market. Since the second half of last year, with the market’s choppy upward trend, the number of new A-share accounts has continued to improve, and in 4Q25 the average number of new accounts per month was 2.43 million. Looking at the specific sources of incremental funds, the additional capital mainly concentrates in leveraged funds and private funds with high-risk preferences, or may reflect high-net-worth groups entering the market. In the future, as the market’s ability to make money improves further, we believe that an increase in residents’ savings being allocated to equity markets could become a structural trend, and the number of new accounts may rise further.

► Stock-type ETFs: momentum shifts. From October last year to January this year, the net monthly capital changes for stock-type ETFs were 50.5/11.3/87.0/-792.2 billion yuan. During this period, two main features emerged: 1) Growth momentum switched, with industry-themed ETFs attracting capital favor since January. From mid-December to late December last year, the A500 ETF received dense inflows, with net inflows of 92.6 billion yuan, contributing the bulk of the net inflows for stock-type ETFs during that period. After that, as the market’s structural rally unfolded, industry and theme ETFs saw clear inflows. From the start of the year to now, net inflows reached 211.7 billion yuan, with nonferrous metals, aerospace, satellites, chemicals, and other areas as the main allocation directions. 2) Recent ETF net outflows help temper market sentiment. In the earlier period, market sentiment became temporarily overheated; regulators emphasized “preventing big ups and downs.” From January 15 to January 29, net outflow scales of key broad-based ETFs such as the CSI 300 and SSE 50 expanded, and some discounting appeared as well.

► Northbound funds: under the new currency order, RMB-denominated assets are relatively benefited as foreign capital gradually returns to the A-share market. In a report titled “Asset Shifts Under the Restructuring of the Monetary Order” published by Dr. Yan Liang from CICC Research Department in June last year, it points out that under the new monetary order, the U.S. dollar enters a downward cycle, and the “anchor” effect of U.S. Treasury yields on pricing the non-U.S. markets declines, so the suppressive effect on RMB-denominated assets may also weaken. In addition, RMB-denominated assets are expected to benefit from the dual dividends of accelerated fragmentation and diversification of the global monetary system. Fragmentation could accelerate the return of overseas capital to China, while diversification will drive global capital rebalancing and promote some capital returning to China’s asset markets. Based on the latest data, the global monetary system has shown signs of partial fragmentation and diversification. Meanwhile, RMB exchange rate stabilization and repair will also drive the return of foreign capital to the A-share market. From the perspective of northbound funds: as of December 31, 2025, the value of northbound holdings was 2.59 trillion yuan. Based on the number of shares held by northbound funds disclosed by the exchanges for December 31 and estimated average values during the period, in 4Q northbound funds recorded a modest net inflow of 11.7 billion yuan. From higher-frequency EPFR data, since mid to late December, along with the strengthening performance of the A-share market, overseas passive funds have continued to flow in. Active funds have also shifted to net inflows. In the future, foreign investors’ willingness to allocate to the A-share market is expected to further rebound.

► Insurance funds: medium- to long-term funds accelerate into the market, improving the resilience of market rallies. In early last year, a joint notice issued by six departments including the Central Financial Commission Office and CSRC clearly mentioned, in “Implementation Plan for Promoting Medium- and Long-Term Funds to Enter the Market,” the guidance to “encourage major state-owned insurance companies to increase the investment scale and actual proportion in A-shares (including equity-type funds)” [2]. By 3Q25, the insurance holdings of stocks and securities investment scale grew to 5.6 trillion yuan, a new high since the publication of 2013 data. The position increased by 1.9 percentage points quarter-over-quarter to 14.9%. The “opening red” performance of insurance capital at the start of the year was impressive; top insurance companies’ premium income achieved strong growth, supporting premiums entering the market. Going forward, combined with policy encouragement for medium- and long-term funds to enter the market and overseas mature market experience, we believe insurance institutions’ equity allocation still has room for further improvement, and the resilience of the rally is likely to increase.

► Active funds: active funds regain excess returns, and new fund launches and subscriptions/redemptions move in a positive direction. From December 17 to now, the index of equity-mixed funds has achieved a return of 11.6%. Compared with the CSI 300, it outperformed by about 7 percentage points. An increase in signs of improving fundamentals is the main support. As active funds’ performance improves, new fund launches and subscriptions/redemptions have also seen positive changes in sync. In terms of new issuance, in 4Q25 the average monthly/January new issuance of equity-oriented funds was 61.8/101.2 billion shares, showing a clear improvement since the start of the year. In terms of subscriptions/redemptions, based on fund share data and interval net value data, we estimate that in 4Q, net subscriptions/redemptions (net redemptions) for active equity-oriented funds decreased from the previous quarter to 165.8 billion yuan, staying at a relatively low level in recent years.

► Industrial capital: the scale of net selling by industrial capital has increased somewhat, but listed companies’ buyback enthusiasm remains relatively high. For industrial capital, as the market rises, listed companies’ marginal net selling scale increases. From 4Q25 to January this year, net changes were -131.8/-50.5 billion yuan respectively, but the intensity of net selling is still below the historical average. Since the beginning of the year, electronic information, communications, and pharmaceuticals have been the main directions for net selling; transportation, banks, power, and utilities have been the main directions for net buying. For buybacks, listed companies’ buyback enthusiasm overall remains high. The cumulative buyback scale for 2025 was 143.2 billion yuan. However, recently buyback scale has slightly fallen back. In 4Q25 (monthly average) and from January to now, buybacks were 10.1/6.4 billion yuan (vs. 12.6 billion yuan as the monthly average in 3Q25).

Regarding structural allocation, recent institutional attention in the A-share market has been raised again, and both public funds and foreign capital have generally increased holdings in sectors such as nonferrous metals and communications. Institutional portfolio allocations in 4Q have the following characteristics: 1) A-share allocation ratio increases somewhat. In recent years, with the stock allocation of active equity-oriented funds staying relatively stable, public funds increased their allocation to Hong Kong stocks quickly in 2Q24. As of 2Q25, the A-share/Hong Kong stock allocation proportions were 70.6%/16.9%, setting a new historical high. Afterwards, as the A-share market outperformed Hong Kong stocks, the A-share allocation ratio edged up. As of 4Q25, the A-share position ratio increased to 72.8%, though it still remains at a relatively low level over the past decade. Private fund A-share allocation rising and Hong Kong stock allocation falling are also relatively evident. In the stock assets of funds in the CREFI index constituents, the allocation to Hong Kong stocks fell from last mid-year’s peak of around 40%. As of December last year, the A-share/Hong Kong stock allocation proportions were 66%/34% respectively. 2) By industry: in 4Q, active equity-oriented funds mainly added to nonferrous metals, communications, and non-bank financial industries, while reducing positions in industries such as electronics and pharmaceutical bio. The strong fundamentals driving emerging industries improve upstream demand; multiple factors such as overseas liquidity staying loose and the demand side continuing to improve have supported nonferrous metal prices to remain strong. Industry sentiment and fundamentals support are relatively solid. Nonferrous metals saw the biggest increase in 4Q, with the position rising by 2.3 percentage points; AI computing-power related equipment maintained high momentum, and communications were increased by 2 percentage points. For industries reduced, electronics—where the biggest additions occurred last quarter—saw reductions of 1.8 ppt this quarter, and pharmaceutical bio was also reduced by 1.7 ppt. For northbound funds in 4Q, major adds were made to nonferrous metals, communications, and basic chemicals, with position increases of 2.0/0.7/0.3 percentage points respectively; major reductions were made to pharmaceutical bio, consumer staples, and automobiles, with position declines of 1.6/0.9/0.5 percentage points respectively. Comparing the two, active public funds and northbound funds were consistent in adding to nonferrous metals and communications, and reducing positions in pharmaceutical bio and consumer staples.

Market trading sentiment is expected to remain at a relatively active level, and incremental capital is still to be expected. With the shift in macro paradigms and the advancement of capital market institutional reforms, we believe A-share’s underlying environment has moved from quantitative change to qualitative change. Compared with before, it is more conducive to forming a “slow bull” market. Over the medium to long term, the “steady and progressive” trend is expected to continue. In the short term, considering that turnover rates rose rapidly in the earlier period and external uncertainty has increased, attention should still be paid to the possibility of phased volatility. From the liquidity perspective, market trading sentiment is expected to remain relatively active. The low-interest-rate environment, an “asset shortage,” and residents’ excess savings provide favorable funding conditions for the stock market. Residents’ deposits still have potential for further “moving” into equities. For institutional investors, currently some domestic institutions still have room to increase their A-share positions. Under the background of policy support and deeper reform, medium- and long-term funds are expected to accelerate into the market, providing long-term stable funding. For foreign investors, benefiting from the global reshuffling of capital caused by the restructuring of the international monetary order, they have room to increase allocations. The A-share market is expected to receive sustained inflows of incremental capital.

For allocation, recent recommendations focus on the following areas: 1) Prosperous growth: The AI technology sector has gone through three years of rapid development. In 2026, it is expected to gradually enter the stage where industrial applications are realized. There are still opportunities in areas such as optical modules and cloud computing infrastructure, though it may be more oriented toward domestically produced solutions. On the application side, focus on robots, consumer electronics, intelligent driving, and more. In addition, innovation drugs, energy storage, solid-state batteries, and other directions are also entering a period of strong momentum. 2) Breakthrough in external demand: Going overseas remains one of the relatively certain growth opportunities today. Combining overseas trends with exposure to the U.S., it is recommended to focus on home appliances, construction machinery, commercial buses, power grid equipment, and games, as well as global priced resources such as nonferrous metals. 3) Cyclical reversal: Based on where the capacity cycle stands, it is recommended to focus on areas where supply and demand are close to improving turning points or where policy support is available, and focus on chemicals, breeding, new energy, and similar themes. 4) High-quality, high dividend yield: The entry of medium- and long-term funds into the market is a long-term trend. Starting from high-quality cash flows, volatility, and dividend certainty, take a structural approach to allocate to high-dividend “dragon head” companies. 5) Year-end report performance highlights: for example, the gold sector, the TMT sector benefiting from high AI momentum, and non-bank financial industries.

Table 1: The A-share market’s liquidity conditions have turned into the most active stage since 2015, with total trading value exceeding 3 trillion yuan from the beginning of the year to date

Note: Data as of January 30, 2026. Sources: Wind, CICC Research Department

Table 2: Since the beginning of the year, liquidity in the stock market has seen increased fluctuations, with Two Financing funds and stock-type ETFs as the main influencing factors

Note: 1) Fund flows are the sum of the first 6 items; 2) Data as of January 30, 2026. Sources: Wind, CICC Research Department

Table 3: Financing balance breaks through 2.7 trillion yuan in stages, continuing to set a new historical high

Note: Data as of January 30, 2026. Sources: Wind, CICC Research Department

Table 4: Since the beginning of the year, Two Financing trading value as a share of the A-share market’s total trading value averages 10.5%, still clearly below the 2015 peak level

Note: Data as of January 30, 2026. Sources: Wind, CICC Research Department

Table 5: With the market rising, the sample private fund positions increased to 64.4% in December, but still slightly below the historical average

Note: Data as of December 31, 2025
　 　　Sources: China Resources Trust, CICC Research Department

Table 6: Investors’ willingness to enter the market is relatively positive; in 4Q25, the average number of new accounts added in a single month was 2.43 million

Sources: Wind, CICC Research Department

Table 7: The sources of net inflows for stock-type ETFs have switched; in January, industry theme ETFs received strong capital interest

Note: Data as of January 30, 2026
　 　　Sources: Wind, CICC Research Department

Table 8: Since mid to late December, as the A-share market’s performance improved, both overseas passive and active funds turned to net inflows

Sources: EPFR, CICC Research Department

Table 9: As of 3Q25, the insurance sector’s stock and securities investment scale was 5.6 trillion yuan, a new high since 2013 data publication

Sources: National Financial Regulatory Administration, CICC Research Department

Table 10: In January, the number of shares of newly established equity-biased funds quickly grew to 101.2 billion shares

Note: Data as of January 30, 2026

Sources: Wind, CICC Research Department

Table 11: Industrial capital continues to net sell; the intensity of net selling is still below the historical average

Note: Data as of January 30, 2026. Sources: Wind, CICC Research Department

Table 12: Cumulative buyback scale of 6.4 billion yuan from the beginning of the year to date

Note: Data as of January 30, 2026
　 　　Sources: Wind, CICC Research Department

Table 13: The A-share allocation ratio of active equity-biased funds has improved somewhat

Note: As of January 30, 2026. Sources: Wind, CICC Research Department

Table 14: In 4Q, public funds mainly increased holdings in communications equipment, industrial metals, and insurance; mainly reduced holdings in consumer electronics, batteries, and chemical pharmaceutical

Sources: Wind, CICC Research Department

Table 15: In 4Q, northbound funds’ portfolio allocation shares recovered for industries such as industrial metals, communications equipment, and insurance

Sources: Wind, CICC Research Department

[1]https：//tv.cctv.com/2026/01/17/VIDE2TRUiAtYp4cCCEQghX1q260117.shtml

[2]https：//www.gov.cn/lianbo/bumen/202501/content_7000515.htm

This article is excerpted from: “Capital Flow Panorama: Who Is Buying and Who Is Selling?” published on February 1, 2026

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