Last Friday (December 5th), the A-shares finally performed well, with the main index rising by 0.70%. The insurance and precious metals sectors led the gains. Even more noteworthy, ETFs on the Shanghai Stock Exchange saw another net inflow—55.72 billion in a single day. This marks the fourth consecutive day of capital inflow, with increasing momentum each day.

**Broad-based ETFs: Who’s the favorite?**

The CSI A500 ETF had a net subscription of 2.515 billion, making it the clear winner in terms of popularity for the day. The CSI 500 and STAR 50 weren’t far behind, bringing in 1.332 billion and 1.196 billion respectively.

Old favorites like the CSI 300, CSI 1000, and SSE 50 also received over 500 million each—939 million, 820 million, and 600 million, respectively—showing a clear stance from investors. While CSI A50, SSE 180, and STAR 100 didn’t see large inflows, they still had small net increases.

Only the SSE Composite Index ETF and STAR & GEM 50 Index ETF experienced net redemptions, with outflows of 173 million and 105 million respectively.

**Thematic/sector ETFs: A mixed picture**

Technology stocks remained attractive. Semiconductor-related funds performed well: the Semiconductor Index ETF saw a 248 million inflow, and the STAR Chip Index ETF received 180 million.

Hong Kong tech stocks were even more popular—Southbound HKD Technology ETF, Southbound Internet Index ETF, and Hang Seng Southbound China Technology Index ETF each received 172 million, 145 million, and 140 million, respectively. Clearly, investors are confident in Hong Kong tech stocks.

Dividend strategies remained solid. S&P Southbound Low Volatility Dividend (108 million), Hang Seng Southbound China SOE Dividend (83 million), S&P China A Large Cap Low Volatility Dividend 50 (80 million), and China National Dividend ETF (74 million) all attracted capital. The STAR AI Index ETF also saw a net subscription of 77 million.

**But some sectors suffered**

Brokerages took the biggest hit—the Securities Company Index ETF saw a net redemption of 1.021 billion in a single day; it’s unclear what triggered this.

The defense sector collectively fell out of favor. CSI Defense (-516 million), Defense Industry Leaders (-178 million), Satellite Industry (-164 million), General Aviation (-69 million), and CSI National Defense (-59 million) were all in the red.

Other heavily sold ETFs included SSH Gold Stocks (-446 million), CSI Bank (-440 million), 300 Healthcare (-231 million), and CSI Coal (-100 million). The sell-off in gold stocks was a bit unexpected, especially since precious metals led the gains that day.

**What are the capital flows telling us?**

Looking at the net subscription trends over these four days, broad-based and tech ETFs are clearly the main battlegrounds. While dividend strategies aren’t as hot as before, demand for core holdings remains. On the other hand, previously hyped sectors like defense and brokerages have cooled off significantly.

Market style is shifting, and capital flows tell the most honest story.