China's Short-Term Surge Defies Its 3-Month Slide

The biggest money flow story this week is a sharp reversal in China. Over 3 months, China ETFs bled $17.9B. This week alone, they pulled in $24.8B net — a flow_imbalance of 81, signalling strong buying pressure. That is one of the most dramatic short-term reversals in the data.

Geography Flows

The U.S. remains the dominant destination. It drew $33.3B net in the past week. China grabbed $24.8B — flipping from a $17.9B net outflow over 3 months. South Korea added $6.3B and Taiwan $4.3B. Both carry high flow imbalances above 79, showing near-one-sided buying.

Japan tells the opposite story. It was the second-largest geography by 3-month inflows, pulling in $159.5B net. This week it slipped to a $2.8B net outflow. That is a notable reversal. Europe continues to underperform. Germany posted outflows over both periods. Developed Europe was negative over 3 months at -$3.5B, though it edged positive this week.

Sector Rotation

Financials led all sectors this week with $2.3B net inflow. Health Care added $435M. Every other sector was either flat or in outflow. Energy dropped $945M net this week. Industrials lost $739M.

Over 3 months, the story is almost the reverse. Technology dominated with $177.9B net over 3 months — dwarfing every other sector. Real Estate and Industrials each added over $5.7B. Energy was the biggest 3-month loser at -$4.8B. The sharp weekly underperformance in Industrials and the switch to Financials suggests rotation is underway at the sector level.

Asset Class and Strategy

Equities remain the clear favourite. They took in $78.4B net this week. Fixed Income added $26.5B — a healthy secondary bid. Over 3 months, Fixed Income drew $215.9B, showing consistent demand. Commodities flipped negative over 3 months at -$30.3B, despite a small +$1.6B this week. Currency ETFs are also net negative over 3 months, losing $5.9B.

On strategy, passive Vanilla funds dominated both timeframes. This week they added $69.5B net. Active funds took in $7.1B — their 3-month total of $230.7B shows a sustained institutional shift toward active management. Growth strategies pulled in $3.5B this week and a massive $324B over 3 months. Dividends are a clear divergence: positive $884M this week but deeply negative at -$17B over 3 months. ESG also reversed — positive $7.9B over 3 months but marginally in outflow this week.

The overall tone is risk-on. Equities lead, growth beats value, and the China reversal suggests fresh appetite for emerging-market exposure even as Japan cools.