The ETF markets in China and Hong Kong moved in opposite directions during the first quarter of 2026. China’s market was rocked by a record quarterlyThe ETF markets in China and Hong Kong moved in opposite directions during the first quarter of 2026. China’s market was rocked by a record quarterly outflow of RMB 805.3 billion, largely driven by massive, state-led redemptions from broad-based equity ETFs. In stark contrast, Hong Kong’s ETF market saw accelerated inflows of HKD 62.2 billion, fueled by strong demand for technology sector ETFs and a growing appetite for non-traditional products like leveraged and inverse ETPs and covered call ETFs.
China: State-Led Redemptions Drive Historic Outflows
After several years of explosive growth, the China ETF market suffered its largest quarterly outflow on record in Q1 2026, totaling RMB 805.3 billion (Exhibit 1). This sharp reversal was primarily driven by massive redemptions from broad-based ETFs by state-owned entity Central Huijin, causing total market assets to plunge to RMB 4.8 trillion from RMB 5.9 trillion at the end of 2025. Equity ETFs bore the brunt of these withdrawals, recording net outflows of RMB 787.5 billion. However, investor interest in ETFs spanning a range of niche industries persisted. Sector and thematic equity ETFs, particularly those tracking grid equipment and nonferrous metals, attracted dominant inflows (Exhibit 2). QDII funds, which invest in overseas assets, also saw sustained demand, with Hang Seng Tech Index trackers alone gathering over RMB 44 billion. outflow of RMB 805.3 billion, largely driven by massive, state-led redemptions from broad-based equity ETFs. In stark contrast, Hong Kong’s ETF market saw accelerated inflows of HKD 62.2 billion, fueled by strong demand for technology sector ETFs and a growing appetite for non-traditional products like leveraged and inverse ETPs and covered call ETFs.
China: State-Led Redemptions Drive Historic Outflows
After several years of explosive growth, the China ETF market suffered its largest quarterly outflow on record in Q1 2026, totaling RMB 805.3 billion (Exhibit 1). This sharp reversal was primarily driven by massive redemptions from broad-based ETFs by state-owned entity Central Huijin, causing total market assets to plunge to RMB 4.8 trillion from RMB 5.9 trillion at the end of 2025. Equity ETFs bore the brunt of these withdrawals, recording net outflows of RMB 787.5 billion. However, investor interest in ETFs spanning a range of niche industries persisted. Sector and thematic equity ETFs, particularly those tracking grid equipment and nonferrous metals, attracted dominant inflows (Exhibit 2). QDII funds, which invest in overseas assets, also saw sustained demand, with Hang Seng Tech Index trackers alone gathering over RMB 44 billion.
Exhibit 1: Flows by Broad Asset Class for the China ETF Market (RMB Billion)
Exhibit 2: China-Listed Equity ETF Quarterly Net Flows by Category (RMB Billion)
Hong Kong: Tech ETFs and Structured Products Attract Strong Inflows
The Hong Kong ETF market accelerated in the first quarter of 2026, attracting HKD 62.2 billion in net inflows (Exhibit 3) and pushing total market AUM to a new high of HKD 618.0 billion. Equity ETFs accounted for half of all inflows, with tech sector ETFs leading the charge (Exhibit 4). The CSOP Hang Seng Tech Index ETF was the standout, gathering HKD 25.0 billion alone, fueled by its first-mover advantage and dominance within the Southbound ETF Connect program. Non-traditional products also saw robust demand. Leveraged and inverse products were a notable driver of flows, registering HKD 19.8 billion in net new assets. Covered-call ETFs, predominantly in the options trading category, attracted HKD 13.7 billion. As a result of these trends, CSOP Asset Management overtook Hang Seng Investment Management to become the largest ETF provider in Hong Kong during the quarter.
Exhibit 3: Flows by Broad Asset Class for the Hong Kong ETF Market (HKD Billion)
Exhibit 4: Hong Kong-Listed ETF Quarterly Net Flows by Category (HKD Billion)
To read more about ETF flows in China and Hong Kong, please visit China and Hong Kong ETF Flows: Q1 2026 Review to access the full report.
