CITIC Construction Investment: Northbound capital is expected to open the “4.0 era”, and global capital strategically allocates Chinese assets

The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that in the second quarter of 2026, the net capital inflow to the north was about 158 billion yuan, setting a new high net inflow scale in a single quarter in the past two years, a marked improvement compared to the period between 2022 and 2025. The industry configuration focuses on technology and manufacturing. Electronics has become the largest heavy warehouse industry, and the communications, new energy, and machinery industries are clearly overallocated. In the long run, the global G2 pattern deepens, China and the US go hand in hand, and the industry competes fiercely. The restoration of the liquidity environment is compounded by industrial advantages. Northbound capital is expected to open the “4.0 era”, and global capital strategically allocates Chinese assets.

CITIC Construction Investment's main views are as follows:

The net inflow of capital to the north hit a two-year high in the second quarter

In the second quarter of 2026, according to estimates, the net inflow of northbound capital in a single quarter was about 158 billion yuan, the third highest level since opening, after the first quarter of 2023 and the fourth quarter of 2019, setting a new high net inflow in a single quarter in the past two years.

In the first half of 2026, the net capital inflow to the north was about 141.8 billion yuan, which is a significant improvement compared with the period from 2022 to 2025.

The industry configuration focuses on technology and manufacturing sectors

In the first quarter, there was a large flow of northbound capital into the communications and power equipment industries, exceeding 19 billion yuan respectively, and outflows from the non-ferrous metals, automobile, and non-banking financial industries all exceeding 10 billion yuan. Allocation to the power equipment industry continued to increase in the second quarter, with capital inflows exceeding 80 billion yuan. At the same time, the electronics, mechanical equipment, and automobile industries each received more than 20 billion yuan in capital inflows, while the communications industry carried out partial surplus cash operations.

Currently, electronics has become the largest heavy warehouse industry, with an allocation ratio of about 25%, while the communications industry is overequipped; the manufacturing sector, especially the power equipment and mechanical equipment industry, is clearly overallocated; the consumer sector's allocation ratio has continued to decline in recent years, and has now dropped to close to standard equipment.

The “4.0 era” is expected to start in the long run

Fiscal sustainability concerns are compounded by policy uncertainty, and the dollar's credit is being eroded. In a weak dollar cycle, emerging markets are expected to benefit, and the appreciation of the RMB will increase the attractiveness of Chinese assets.

Although there was no large-scale capital entry or exit in the 3.0 era (2022 - 2025), structural changes have begun to be prepared, and the industry allocation continues to lean towards the manufacturing and technology sectors. As the game between China and the US deepens comprehensively, particularly in the field of science and technology, future industries, and key resources, the bipolar pattern of the global “G2” will become more and more clear in the future. In the new wave of the global revolution in general technology, China and the US go hand in hand, and the industry competes fiercely. The restoration of the liquidity environment is compounded by industrial advantages. Northbound capital is expected to open the “4.0 era”, and global capital strategically allocates Chinese assets.

Risk warning:

There is a risk of macroeconomic and policy fluctuations. There is uncertainty about the pace of global economic recovery. If inflation rebounds beyond expectations or deflationary pressure intensifies, it may cause countries to relax policy adjustments, equity asset valuations and profit repairs or fall short of expectations. If the strength and pace of domestic countercyclical adjustment policies falls short of market expectations, it may affect market capital risk appetite and market entry pace;

The risk of uncertainty in the external environment, the Federal Reserve's policy adjustments exceeding expectations, increased fluctuations in the US dollar exchange rate, or the escalation of global geopolitical conflicts may have an impact on capital liquidity and risk appetite at home and abroad, impacting the stability of RMB assets and the trend of A-shares;

There is a risk of incomplete data. Some institutional investor trends do not represent the overall financial situation of the market. There are certain limitations in the disclosure of institutional investor data, information may be delayed or not updated in a timely manner, and there are certain statistical errors in data calculation;

Historical experience and predictive model failure risk. Based on the summary and outlook of historical review, there is a risk of historical experience failure. Quantitative models may have applicability limitations, and historical data and fit do not represent future model prediction results.