The Zhitong Finance App learned that since late September, China Merchants Securities released a research report saying that since late September, financing balances have continued to decline, leveraged funds have been cleared at an accelerated pace, and large net inflows of equity ETF funds have formed a hedge, compounded improvements on the demand side of capital and marginal improvements in market capital supply and demand, but the overall situation is still in a stock game. The current financing balance fell to the level of September 2025, and the financing balance in the TMT sector fell to the level of the end of November 2025. The pressure on financing outflows was released to a certain extent, and domestic market stabilization policies were intensively released, compounding the implementation of the US midterm election boots to push for a recovery in market risk appetite. The direction of the overfall in the early period is expected to usher in a rebound window.
The main views of China Merchants Securities are as follows:
The pressure from the two financial flows was released in stages, and policies to stabilize the market were released intensively. Since late September, the financing balance has continued to decline, and leveraged funds have been cleared at an accelerated pace. It has now dropped to around 2.3 trillion yuan, close to the level of early September 2025. Structurally, the TMT sector is the main direction for the removal of financing funds, indicating that the crowded technology positions in the financing sector have been clearly digested. Along with market adjustments and the accelerated outflow of financing funds, the financing guarantee ratio has declined markedly from a high point. The average guarantee ratio in the market fell from a high of about 300% to around 250% during the year. Recently, a series of market stabilization policies have been intensively introduced. The four dimensions of cross-market liquidity risk blocking, industrial capital incentives, index capital entry, and trading system support are working together to gradually break the negative feedback spiral in the early stages and help restore investors' risk appetite. ETF inflows accelerated further this week. Among them, the net inflow of 83,526 billion yuan on November 3 became an important incremental capital for the market, helping to cushion sales pressure during the market adjustment period.
Monetary policy and interest rates: The central bank invested 1211 billion yuan in the open market last week (10/26-10/30), and reverse repurchases of 1749 billion yuan will expire in the next week. Interest rates in the money market have risen, yields on short-term treasury bonds have declined, yields on long-term treasury bonds have risen, the scale of interbank deposit issuance has expanded, and interest rates for issuing have varied. As of October 30, R007 was up 5.9 bps, DR007 was up 6.9 bps, 1-year treasury yield was down 0.8 bps, 10-year treasury yield was up 1.0 bps, interbank deposit issuance increased by 147.05 billion yuan, 3M/6M interbank deposit interest rates were rising, and 1M interbank deposit interest rates were declining.
Capital supply and demand: The secondary market can track net inflows of capital. The financing balance declined, with net sales of 87.37 billion yuan of financing capital; net inflow of ETFs of 96.24 billion yuan; and the share of newly established partial equity public funds increased. Significant shareholders switched from a net reduction in their holdings to a net increase in their holdings, and the scale of the announced plan to reduce their holdings was expanded.
Market preferences: In terms of industry preferences, banks, food and beverage, and non-bank finance receive a high net inflow of various types of capital. Broad index ETF claims are mixed. Among them, the Shanghai and Shenzhen 300 ETF has more subscriptions and the China Securities 500 ETF has more redemptions; industry ETFs have mixed redemptions. Among them, financial real estate (excluding brokerage) ETFs have been purchased more, and there are many redemptions for information technology ETFs. The highest net purchase was the eFangda Shanghai and Shenzhen 300 ETF; the Southern China Securities 500 ETF had the highest net redemption.
Risk warning: Economic data and policies fell short of expectations, and overseas policies tightened beyond expectations.