Global financial flows
In this issue: In the past month, the rally in China's stock market caused by the rebalancing of funds has attracted widespread attention in the market, and we discuss the proportion and underweight of active overseas investors in global allocation funds to China's stock market. The allocation ratio is of little significance to the Chinese stock market, and it is in the same direction as the market. However, the degree of underweight is a reference for the trend of China's stock market, and it has a certain negative correlation with the trend of China's stock market. Since April this year, with the rebound of China's stock market, the allocation of active allocation foreign capital has been reduced. In the future, pay attention to the change in the degree of underweighting, if it returns to the low, it may mean the end of the upward market.
In April 2024, there was a significant outflow of funds into the money market. In terms of stock markets, among developed stock markets, there was a net outflow of funds from the United States in April, an increase in inflows from Japan from the previous month, and inflows from many European countries in the first half of the year. Among emerging stock markets, capital inflows from Taiwan increased sharply in April, while the mainland turned into net outflows, and funds continued to flow into India. In terms of bond markets, among the developed bond markets, only Japan and Singapore saw net outflows in April. From the perspective of emerging bond markets, funds flowed into Chinese bonds sharply in April, and many bond markets in Southeast Asia, Central Europe, the Middle East and South America also turned into net inflows.
In terms of categories, in terms of the stock market, the inflow of the technology sector was flat month-on-month in April, the energy and financial sectors turned into inflows, and the industrial sector continued to inflow. In terms of the bond market, the inflow of treasury bonds in April was flat month-on-month, the inflow of corporate bonds fell significantly, the outflow of high-yield bonds turned into outflows, and the outflow of inflation-hedging bonds converged significantly month-on-month. All three maturities continued to maintain net inflows, of which the inflows of medium and short duration rebounded month-on-month, and the long-term inflows fell slightly month-on-month. Bonds denominated in emerging market currencies such as the US dollar, euro and yen turned into inflows.
In April 2024, there was a large net outflow of US dollar-denominated assets, with net purchases of euro-denominated assets falling slightly and net purchases of GBP-denominated assets rebounding slightly. The outflow of RMB-denominated assets expanded month-on-month, falling below the 10th percentile again, and the net inflow of yen-denominated assets fell month-on-month.
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