The recent resurgence of the A-share market has captured both the attention of local investors and international observersFollowing a significant net inflow exceeding 170 billion yuan in September, the market saw an astounding entry of capital on the first trading day after the National Day holiday, with over 110 billion yuan flowing into stock ETFs (exchange-traded funds) on October 8. This surge that analysts are labeling as robust bodes well for the future outlook of the market.

On the same trading day, investors ported an enormous amount of equity into the ChiNext Index, a platform for innovative and growth-oriented smaller firmsNotably, the Everbright Fund's ChiNext ETF garnered a staggering net inflow of 26.6 billion yuan, significantly outpacing its competitorsIn addition, the Huaxia Fund's Shanghai 50 ETF and the Shanghai-Shenzhen 300 ETF also reached new record sizes, each exceeding 170 billion yuan—a testament to investor confidence in these segments.

Market activity data from Wind shows that by October 8, there were approximately 922 stock ETFs in the marketplace, totaling around 3.47 trillion yuan in assets under managementThe major indices posted collective gains, with the Shanghai Composite Index rising by 4.59%, the Shenzhen Component Index by 9.17%, and the ChiNext Index soaring by 17.25%. Trading volumes during the day reached nearly 3.5 trillion yuan, setting a new historical peak.

Sector performance revealed that aside from coal, all other sectors closed in the positive territory, especially the technology, media, and telecommunications (TMT) sectors, alongside strong results in power equipment and renewable energyBrokerage shares also showed resurgence, suggesting a broader recovery in investor sentiment.

The influx of capital into ETFs on that trading day was substantial; the number of fund shares rose sharply by over 828 billion, which when calculated by the average transaction price implies a net capital inflow of around 111.4 billion yuan

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On October 8, 112 products recorded net inflows exceeding 100 million yuan, marked by the top 20 products pulling in more than 1 billion yuan each.

The leading ETFs on that day, such as the Everbright ChiNext ETF, stood out with the most significant net inflow of 26.6 billion yuan, elevating its total size to about 132.6 billion yuanFollowing closely were the Huatai-PB Shanghai-Shenzhen 300 ETF and the Hua'an 50 ChiNext ETF, which attracted net inflows of 9.64 billion yuan and 8.99 billion yuan, respectivelyThis pattern underscores the investor preference trend toward sizeable funds that offer diverse sector exposure.

According to Huaxia Fund’s estimates, the broad-based ETFs continued to lead in net inflows, reaching 93.96 billion yuanSector ETFs, Hong Kong stock ETFs, and thematic ETFs also saw healthy inflows of 7.98 billion yuan, 4.97 billion yuan, and 2.69 billion yuan, respectivelyInterestingly, there was no major ETF category showing signs of capital outflow, indicating sustained investor interest across various segments.

Examining net inflow by index, the ChiNext Index saw the highest single-day net inflow of 30.12 billion yuanThe Shanghai-Shenzhen 300 Index, ChiNext 50, and Sci-Tech 50 Index each similarly attracted approximately 14 billion yuan in net capitalWithin just five days leading up to this spike, the Shanghai-Shenzhen 300 Index alone had accumulated over 53 billion yuan in inflow, while the ChiNext and CSI 1000 indices garnered more than 30 billion yuan within the same timeframe.

The trend of substantial net inflows into ETFs managed by top fund companies is expected to continueData shows that on October 8, the Everbright Fund’s ETFs collectively attracted a remarkable net inflow of 38.47 billion yuanIn addition to the previously mentioned ChiNext ETF, the Sci-Tech 50 ETF also witnessed an inflow of 8.63 billion yuan, while their Shanghai-Shenzhen 300 ETFs surpassed 1 billion yuan in new investments.

On Huaxia Fund's side, the Sci-Tech 50 ETF and the Shanghai 50 ETF welcomed net inflows of 2.25 billion yuan and 2.03 billion yuan, respectively, bringing their sizes to 110.42 billion yuan and 172.72 billion yuan

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The Shanghai 50 ETF and the Shanghai-Shenzhen 300 ETF reached new peaks in size again, crossing the 170 billion yuan mark, highlighting growing support for these trading vehicles.

However, not all ETFs were in favorThe CSI 500 ETF posted a major net outflow of 2.29 billion yuan, indicating varying levels of investor sentiment across different market segmentsAdditionally, multiple dividend strategy products also experienced significant net outflow, suggesting the need for strategic adjustment in investment portfolios from risk-averse investors.

Looking ahead, several fund managers anticipate a possible recovery driven by policy support within the marketThe Industrial Bank of China’s trust fund believes that there are short-term opportunities arising from risk appetite repairs leading to valuation recoveriesThey suggest monitoring domestic consumption sectors over foreign demand, favoring cyclical stocks over stability-oriented choicesStrategic opportunities may arise particularly in the real estate chain and food and beverage sectors given their prior substantial declinesInvestments in upstream resource products may also be compelling if the recovery in sentiment continues.

Manulife Investment's analysis points to potential sustained momentum in the market driven by forthcoming policy decisionsWhile the anticipated valuation corrections may be promising, they also caution investors about the potential for increased volatilitySpecific measures involving interest rate cuts, reserve requirement ratios, and focused initiatives in real estate and capital markets are likely to benefit cyclical industries particularly affected by recent downturns, such as financials, property chains, consumer goods, and select technology sectors.

Nordea Fund’s strategist Guo Jiting suggests paying close attention to three categories of industries: first, those benefiting from policy support with future improvements likely within the non-bank finance and real estate sectors; second, technology sectors—including computer, electronic components, and power equipment—that are catalyzed by technological advancements; and third, industries with substantial prior declines and reasonable valuations poised for growth, such as consumer goods and pharmaceuticals

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