CICC: Increasing divergence in north-south fund flows
Changes in global liquidity this week include: Overseas funds continue to flow out of A-shares and Hong Kong stocks, but the outflow has slowed down; Southbound funds are flowing in at an accelerated pace; Stocks, bonds, and currency markets continue to see inflows; US stocks have turned into outflows, while Japan and developed Europe continue to see outflows. In terms of domestic liquidity, overseas funds continue to flow out of the Chinese market but the scale is narrowing. Globally, active foreign funds are flowing out of Japanese stocks, flowing into US stocks, and accelerating inflows into India
According to the information from the Wise Finance app, CICC released a research report stating that the noteworthy changes in global liquidity this week are as follows: 1) EPFR fund data tracked by the institution shows that as of Wednesday (June 12th), overseas funds continued to flow out of A-shares and Hong Kong stocks, with the outflow slowing compared to the previous week; 2) Regarding the Shanghai-Hong Kong Stock Connect, northbound funds saw a significant outflow, while southbound funds accelerated inflow; 3) Globally, stocks, bonds, and currency markets all maintained inflows; 4) US stocks turned into outflows, while Japan and developed Europe continued to see outflows.
On the domestic liquidity front, overseas funds continued to flow out of the Chinese market but the scale narrowed. From Wednesday to Wednesday (June 6th to June 12th), active funds flowed out of A-shares and Hong Kong stocks totaling $180 million, a slowdown from the $280 million outflow last week, while passive funds also flowed out $280 million, a slowdown from the $360 million outflow last week. After experiencing a rapid recovery in the previous period, A-shares and Hong Kong stocks have fallen back since late May, with the Shanghai Composite Index falling to around 3,000 points and the Hang Seng Index even briefly dropping below the 18,000 point mark, in line with the recent weakening liquidity. The market performance since the end of April has also confirmed CICC's judgment that this round of fund inflows is mainly driven by trading and regional allocation rebalancing ("The driving force and space of this round of rebound").
On the global liquidity front, active foreign funds flowed out of Japanese stocks, turned into inflows for US stocks, and accelerated inflows into India. From Wednesday to Wednesday (June 6th to June 12th), this week saw an acceleration of active foreign fund inflows into the Indian market, with a total inflow of $540 million into the Indian stock market (compared to $260 million inflow last week); as for Japanese stocks, active foreign funds continued to flow out $140 million this week, a narrowing from the $400 million outflow last week. At the same time, active foreign funds turned into outflows for US stocks, with an outflow of $67.53 million