According to Zhitong Finance APP, Guotai Haitong Securities released a research report indicating that A-share market trading activity has increased, margin trading balances continue to rise, retail investor fund activity has elevated, while foreign capital has turned to inflows, showing significant incremental capital entering the market. Capital allocation divergences are evident, with foreign funds notably flowing out of non-ferrous metals while margin financing primarily flows into electronics and machinery equipment. Southbound capital inflows have increased, and active foreign investors have resumed purchasing Chinese concept stocks.

**Market Pricing Conditions**: Current period shows marginal improvement in market trading heat with rising turnover rates. 1) Market Sentiment (Rising): Guotai Haitong's capital inflow intensity has marginally improved, market trading heat has risen, with average daily turnover of all A-shares increasing to RMB 2.1 trillion. Shanghai Composite Index turnover rate percentile rose to 93%, while CSI 300 turnover rate percentile increased to 91%. Average daily limit-up stocks rose to 74.4, maximum consecutive limit-ups reached 5, while sealing rate slightly declined to 71.2%. Dragon-Tiger List entries increased to 62 companies. 2) Profit Effect (Declining): Individual stock rising proportion decreased to 54.4%, with median weekly returns of all A-shares declining to 0.4%. 3) Trading Concentration (Rising): Guotai Haitong's sector rotation index marginally improved, with sector trading concentration increasing. Currently, 13 sectors have turnover rate historical percentiles above 90%, among which comprehensive finance and defense sectors exceed 95% percentile.

**A-Share Capital Flows**: Current period shows increased ETF outflows while foreign capital turns to inflows. 1) Public Funds: New equity fund issuance scale decreased to RMB 5.947 billion, with fund equity positions generally increasing. 2) Private Funds: August private fund confidence index slightly recovered with positions marginally declining. 3) Foreign Capital: Inflow of USD 270 million (as of 08/13), northbound capital trading proportion decreased to 11.0%. 4) Industrial Capital: Current period IPO initial fundraising totaled RMB 1.11 billion, additional issuance scale was RMB 590 million, with restricted share unlock scale approaching RMB 100 billion. 5) ETF: Passive capital outflow scale expanded with net outflow of RMB 27.93 billion, passive trading proportion significantly rose to 5.4%, sector trading concentration also increased. 6) Margin Financing: Net purchases of RMB 45.7 billion, trading amount proportion rose to 10.6%. 7) Retail Investors: Alternative indicators show marginal increase in retail investor activity.

**A-Share Sector Allocation**: Capital allocation divergences evident, with foreign funds notably flowing out of non-ferrous metals while margin financing mainly flows into electronics and machinery equipment. 1) Margin Financing: (as of 08/14) Electronics (+RMB 13.27 billion) and Machinery Equipment (+RMB 4.01 billion) led net inflows, while Coal (-RMB 230 million) and Textile & Apparel (-RMB 10 million) saw net outflows. 2) Foreign Capital: (as of 08/13) Foreign funds notably flowed out of home appliances and machinery equipment sectors while significantly flowing into non-ferrous metals. 3) ETF: Primary sector passive capital flows concentrated, with Food & Beverage (+RMB 590 million) and Coal (+RMB 460 million) leading net inflows. Among secondary sectors, liquor and coal mining led net inflows. Electronics (-RMB 18.06 billion) and Computer (-RMB 3.9 billion) led net outflows, with semiconductors and software development leading outflows in secondary sectors. Top increased ETFs included CSI 1000 ETF and SSE 50 ETF, while 30-year treasury bonds and robotics led margin financing net purchases. STAR 50 ETF and STAR Chip ETF led net redemptions, with STAR 50 and short-term financing ETFs leading margin financing net sales. 4) Dragon-Tiger List Funds: Top three listed sectors were machinery equipment, computer, and electronics.

**Hong Kong Stocks and Global Capital Flows**: Southbound capital inflows increased, with active foreign investors resuming Chinese concept stock purchases. Current period saw Hang Seng Index rise 1.7%, with major global markets generally advancing, led by Indonesia Composite Index (+4.8%). Capital Dimension: 1) Southbound capital weekly net purchases increased to RMB 38.12 billion, ranking at 92nd percentile since 2022. Current period (as of 08/13) saw foreign capital inflow of USD 370 million into Hong Kong stock market. 2) Current period (as of 08/13) developed market active/passive capital net flows were USD 6.85 billion/USD 20.76 billion, while emerging market active/passive capital net flows were -USD 630 million/-USD 810 million. From foreign capital perspective only, global foreign funds marginally flowed into developed markets, with US (+USD 5.28 billion) and UK (+USD 850 million) leading inflows. China (+USD 560 million) also received foreign capital inflows, with active foreign investors recording their first weekly inflow into Chinese concept stocks since October 2024. Looking at overall global capital flows including domestic funds from various countries, US and France led inflows.