As 2025 unfolds, the global financial landscape has been characterized by significant volatility, reminiscent of a high-stakes game where each player seeks to outdo the other in terms of market fluctuations.
The U.SDollar Index has surged to heights not seen since 2022, with U.STreasury yields breaking the 4.7% barrier, indicating a steep rise in borrowing costsMeanwhile, U.Sequities have been experiencing considerable turbulence, compounded by market adjustments in both the A-share and Hong Kong marketsInterestingly, the yield on 10-year Treasury bonds has plummeted to historic lows, while the Japanese Yen has fallen back to levels that prompted large-scale government interventions last year.
Despite the chaos in U.S
markets, the fervor for cross-border exchange-traded funds (ETFs) in the Chinese A-shares market appears insatiable, with trading volumes skyrocketing to a staggering swap rate of 1829% and a premium rate of 51%.
1
Stratospheric Cross-Border ETF Trading
On this day, the total trading volume of 984 equity ETFs in the market was 126.818 billion yuanOf this, the trading volume from 32 cross-border ETFs, excluding Hong Kong and U.S.-listed ETFs, was 27.554 billion yuanThis suggests that a mere 3% share of cross-border ETFs accounted for a whopping 21% of total equity trading volume today.
Specifically, the Invesco Great Wall S&P Consumer ETF and the Southern Saudi ETF both hit their upper limits by the end of trading, with recent premium-to-net-asset value ratios aligning at 51.82% and 20.32%, respectively
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Their trading volumes exhibited a velocity of 902.09% and 1193.32%. Similarly, the Southern Asia-Pacific Select ETF and the Harvest Germany ETF approached their upper limits as well, with the latter recording an astonishing turnover rate of 1829.91%.
Goldman Sachs has predicted a 10% return for the S&P 500 in 2025; however, A-share market's U.Sstock ETFs are showing premiums of 20% or more, marking a heavy divergence from expectations and calculations.
With a 50% premium and turnover rates exceeding a thousand, the logic behind such phenomena eludes explanationIt's widely understood that participants are playing a dangerous game, yet each remains resolute in their belief that they won't get hurt in the process.
Today's equity ETF trading volume has decreased by 36.793 billion yuan, but within this decline, the ETFs that saw volume spikes were predominantly the cross-border counterparts, such as the Southern Asia-Pacific Select ETF, Harvest Germany ETF, and Huaan Germany ETF, which noted increases in turnover compared to the previous day.
However, focusing on the variations in equity ETF trading volumes on January 7 and 8 might shed light on some new developments.
2
Is Mysterious Capital Making Moves?
On the previous day, a sudden upward swing in A-shares at around 2 PM led to an increment in equity ETF trading volume by 10.868 billion yuan
However, upon scrutinizing specific ETF trading numbers, no singular ETF exhibited a volatile outburst in trading activity.
Looking at the trading volume rankings for equity ETFs on January 8, aside from the cross-border ETFs, familiar large-market ETFs dominated the listsThe Huatai-PineBridge CSI 300 ETF, the China Asset SH50 ETF, E Fund ChiNext ETF, and the Huatai-PineBridge ETF all recorded increases in trading volumes of 1.699 billion yuan, 1.487 billion yuan, 1.122 billion yuan, and 788 million yuan, respectively, while others like Southern CSI 1000 ETF and Harvest CSI 300 ETF saw similar patterns
Additionally, several new high-volume ETFs emerged, including multiple CSI A500 ETFs such as the Huaxia A500 ETF Fund, Guotai CSI 500 ETF, Penghua A500 index ETF, and Huatai PineBridge CSI 500 ETF, which reportedly increased in volume by 630 million yuan, 558 million yuan, 554 million yuan, 527 million yuan and 323 million yuan.
From the perspective of ETF funding on January 8, equity ETFs experienced a net influx of 3.196 billion yuan, with the broad-based ETFs attracting the most attention
The Penghua A500 index ETF, Huashang CSI 300 ETF, Harvest CSI 300 ETF, and E Fund ChiNext ETF enjoyed net inflows of 960 million yuan, 920 million yuan, 446 million yuan and 278 million yuan, respectively.
With the new "nine national policies" emphasizing a foundational support system for long-term investments, broad-based ETFs are timely instruments in this phase, benefiting from lower fees, diversified risks, and stable styles, making them particularly favored investments among large institutions.
3
Will the Fed Hold Interest Rates in January?
Recently, the long-term anchor for global asset pricing—the 10-year U.S
Treasury yield—has been climbing steadily, causing substantial pressure on global risk assets, with yesterday's yield surpassing 4.7%.
On January 8, the Federal Reserve released minutes from its December meeting, which revealed a hawkish approach to interest rates that took the world by surprise.
The minutes noted: "Almost all participants believed that the risk of rising inflation in the U.Shas increasedRecent inflation data exceeded expectations, and potential changes in trade and immigration policies could impact inflation trends."
Amidst this uncertainty, central bank officials are preparing to slow down the pace of interest rate reductions in 2025. Notoriously, Nick from the “New Federal Reserve News Agency” stated that the Fed is unlikely to cut rates further at this time.
Currently, the market is hardly discussing the possibility of a U.S