Incremental funds are entering the market! How will the A-shares perform after the holiday?

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Source: Securities Star

At the start of the second quarter, the public fund issuance market continued its warming trend.

01． More incremental capital entering!

Looking back at 2026 Q1, as of March 31, there were 378 newly established funds in Q1, with total issued shares of 324.03B, up nearly 30% year over year and up more than 15% quarter over quarter. In March alone, performance also returned to the trillion-level mark with 140 funds and 110.12B issued shares.

In addition, Wind’s latest data shows that on the first trading day after the holidays (April 7), a total of 27 funds across the whole market started issuance. Extending to the entire month of April, the number of funds scheduled for issuance reaches 87.

According to statistics, since the beginning of this year, as of April 5, there are nearly 390 newly established funds, with total issued shares of 325.86B, and the number of issuances hitting a new high for the same period in nearly three years.

From a structural perspective, equity-based products have become the main force attracting capital. In Q1, hybrid funds ranked first in terms of issued shares, with 119.07B. Stock funds followed with 73.42B shares, and equities in total accounted for more than 60%.

The product mix is also undergoing significant change—combined issuance scale of stock-type and hybrid funds accounted for more than 57% of the new issuance share for the month, a notable increase from 47% in the same period of 2025, while bond funds’ share fell from 43% to 20%.

Judging by the thematic distribution of newly established funds this year, the hard-technology sector is a key direction for institutions’ focus.

According to Wind data, since the beginning of this year, among newly established funds, there are 50 products whose names include “Technology” or “Tech Innovation.” Among them, funds managed by Great Morgan (Moutai?) Hang? (Great Morgan? No—keep: 摩根) Morgan Stanley? In fact text says “大摩沪港深科技” and “大摩沪港深科技发行份额达4.42B份；以半导体或芯片为主题…”; we translate only content; keep fund names as-is in English? Fund names are Chinese. But rule says no Han characters unless URL/code/placeholder. We’ll translate fund names into English. 　　Among those, Morgan Stanley’s Shanghai-Hong Kong-Shenzhen Technology fund issued shares of 4.42B; 9 funds themed on semiconductors or chips, with total issued shares exceeding 2.5 billion. Among them, the subscription days for both the China Merchants SSE STAR Market Chip Design thematic index and the BOC Pioneer Semiconductor were only 1 day; 4 AI-themed funds, with total issued shares exceeding 1.3 billion; and 14 funds themed on new energy and solar power, with total issued shares exceeding 2.8 billion.

Industry insiders believe that the heat around newly issued funds is not only a direct reflection of incremental capital entering the market, but also a substantive repair of investors’ confidence and risk preferences. After experiencing net value restoration throughout last year, residents’ trust in public funds is accelerating into real subscription actions backed by cash.

02． How will A-shares play out after the holiday?

As for how A-shares will evolve going forward, multiple brokerages have released their latest strategies.

Zhang Qiyao, Chief Strategist at Industrial Securities, said that there has been no observation of negative feedback in A-share liquidity. Some absolute-return capital may have reduced positions slightly in the earlier period, but after adjustment the willingness to add positions is stronger.

He pointed out that since the market rally began, liquidity entering the market has shown the characteristic of resonance among various types of capital—such as insurance capital, ETFs, private placements, margin financing and securities lending (two-finance/two-margins), and fixed-income “plus” strategies. With incremental capital diversified and the expectation that the “national team” will provide support, liquidity resilience is stronger. This is one of the key reasons why, since March, A-shares have performed relatively better than other global markets.

Chen Gang, Chief Strategy Analyst at Soochow Securities, also mentioned that currently, micro-level liquidity has not clearly flowed out. On one hand, financing capital has not fled dramatically due to risk. As of April 3, margin financing balances were 2.58 trillion yuan; compared with the high point in early March, it only fell by 76.77 billion yuan, while the financing guarantee ratio is still noticeably higher than the level in the first half of 2025.

On the other hand, although the total net value of stock-type ETFs has shrunk significantly, it mainly comes from a drop in market value. As of April 3, total ETF units were 2.1 trillion; compared with the early-March high, they only declined by 25.8k units.

He believes that at present, the market volume is shrinking because investors are taking a wait-and-see stance. If risks ease, residents may accelerate their entry into the market. As of April 3, A-share trading volume was 1.67 trillion yuan, not lower than the low point of December 2025, and also significantly higher than the level in the first half of 2025. Meanwhile, the number of new accounts opened in March was 4.6 million—second only to October 2024 and January 2026. Residents’ enthusiasm to enter the market is high, and it has not been suppressed by market adjustments driven by geopolitical risk.

The financial engineering research team at China Merchants Securities also said that, overall, before geopolitical risks have fully cleared, the probability that the market maintains a range-bound pattern is higher. Also considering the impact of high oil prices on global economic growth, A-share earnings are likely to face pressure. However, at present domestic economic data is not bad: leading indicators such as credit show a rebound trend. After valuation pullbacks, there will be room for valuations to rise again, meaning A-shares have relatively strong resilience.

03． Foreign capital continues to sing the praises of A-shares

Foreign capital is also bullish on the outlook for A-shares.

At the 2026 Morgan Stanley China Summit, Wang Ying, Chief Equity Strategy Analyst at Morgan Stanley China, said that for three categories of Chinese equity assets—A-shares, Hong Kong-listed shares, and Chinese concept stocks listed in the U.S.—2026 investment will place greater emphasis on allocating to the A-share market. In particular, she is optimistic about investment opportunities in raw materials, industrial products, semiconductors, energy, and mechanical equipment manufacturing areas related to energy efficiency and safety, such as power generation, energy storage, and transmission.

She believes that amid the global energy crisis caused by geopolitical conflicts, the investability and robustness of China assets stand out even more. Judging from the performance of global capital markets in recent times, A-share assets have shown strong resilience. Combined with the continuity and effectiveness of policies, the independence of the economic cycle, the global standing of high-end industrial chains, and the potential for large capital to smooth out volatility, compared with peripheral markets, A-shares’ relative volatility may be more stable.

The latest views released by the UBS Wealth Management Investment Director’s Office indicate that current market adjustments may have been excessive. Investors have an opportunity to add high-quality China AI-sector stocks at lower valuations. China’s internet industry currently has a 12-month forward price-to-earnings ratio of about 13 times, which is already close to the level before DeepSeek was released. Current valuations have not yet fully reflected the returns generated by AI investment and monetization over the past year.

It is expected that MSCI China Index EPS (earnings per share) growth this year will be about 13%, and among them the profit growth rate for the technology sector is expected to reach 20% to 25%. At the same time, at the policy level, AI development and technological innovation are still supported. As fundamentals continue to improve, profits, valuations, and positions are also expected to gradually rebound.

HSBC has even suggested that in geopolitical conflicts, investors should “embrace China stocks.” It recommends keeping the 2026 year-end target levels for the Shanghai Composite Index (SSE Composite) and the CSI 300 Index unchanged at 4500 points and 5400 points, respectively, on the grounds that A-shares have relatively low correlation with global stock markets, the supply chain is resilient, and the start to the year has been steady.

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