CICC: Future Moves of Active Foreign Funds Worth Watching; Inflows Need More Policy, Upbeat Expectations to Drive

$BIDU-SW (09888.HK)$CICC has released a global capital flow monitoring report last Saturday (5th), in which the EPFR fund data tracked indicated a net inflow of overseas active funds for the first time after 65 consecutive weeks of outflows as of last Wednesday (2nd), and passive funds accelerating their significant inflow. Moreover, in terms of Stock Connect, the average daily scale of northbound transactions and southbound inflows expanded just on the market opening last Monday.
Hong Kong stocks surged last week. Based on comprehensive data, the broker found: Firstly, passive foreign capital accelerated inflow, but the stock scale proportion was not large. As of last Wednesday (September 26 to October 2), A-shares saw a passive foreign capital inflow of US$2.64 billion, while Hong Kong stocks and ADRs saw an inflow of US$2.87 billion, marking a scale 3-4 times that of the previous week and a new high since 2016.
CICC pointed out that the future moves of active foreign capital are worth watching, but its continuous inflow requires more policy and more optimistic expectations to drive. As of the end of August, global active funds allocated 5% to Chinese stocks (the peak at the beginning of 2021 was 14.6%), an underweight of 1 ppt.
If it shifts from underweight to standard weight, CICC estimated that it will correspond to nearly US$40 billion (around $310.4 billion) inflow, equivalent to the total outflow since March 2023.