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The ups and downs of 2015 are about to come to an end. Looking forward to the market in 2016, how much capital will flow in is the focus of the market.

Looking back over the past three years, it can be seen that the rise and fall of the market and the flow of funds are mutually reinforcing. The stock market has gone from the game of existing funds in 2013 to the entry of incremental funds into the market in 2014, and then to the crazy entry of OTC funds into the market in the first half of 2015, accompanied by different performances of stock prices.

Looking forward to 2016, against the backdrop of declining interest rates, institutional investors' asset allocation will shift to the stock market unchanged, and funds will continue to flow into the stock market at a milder rate than in 2015. The market is expected to move from passion to warmth.

1. Different capital flows, different stock markets. The rise and fall of the stock market and capital flows are mutually reinforcing.

The rise and fall of the stock market is accompanied by the inflow and outflow of funds, and it is important to analyze the supply and demand of funds.

From the perspective of investor structure, capital inflows can be classified into four aspects: retail funds (bank-securities transfers), leveraged funds (financing balance), institutional funds (funds, insurance, etc.), and overseas funds (Shanghai-Hong Kong Stock Connect, etc.).

Capital outflows can be tracked in three aspects: stock market financing (IPO and refinancing), transaction fees (stamp duties and transaction commissions), and net reduction of industrial capital.

Let's briefly review the market's rise and fall and capital inflows and outflows over the past three years.

In 2013, the overall supply and demand of funds were balanced, and it was a game market for existing funds.

The scale of capital inflows and outflows in 2013 was both small. The annual capital inflow was 378.4 billion. The main inflows were bank-securities transfers of 204.8 billion and an increase in financing balances of 257.8 billion. The capital outflows were 550.4 billion. The main outflows were refinancing of 391 billion.

Net inflow was -172.1 billion, capital supply and demand were relatively balanced, with slight outflows.

In a market where existing funds compete, investors tend to sell blue chips and buy small tickets. During the same period, the Composite Index fell 6.8%, the Shanghai Composite 50 fell 15.2%, and the GEM Index rose 82.7%. In the second half of 2014, incremental funds began to enter the market.

The market is bullish.

In 2014, the capital inflow of the stock market was RMB 1.884 billion, which was about five times the scale of capital inflow in 2013. The capital inflow mainly came from the increase in bank-securities transfers and financing balances.

Affected by the expansion of refinancing and the increase and decrease of industrial capital holdings, capital outflows also expanded to 997.7 billion.

The net inflow of funds was 886.3 billion, with a net inflow of 125.4 billion in the first half of the year and a net inflow of 760.9 billion in the second half of the year. Incremental capital entry mainly occurred in the second half of the year. In July, stimulated by rising reform expectations and Shanghai-Hong Kong Stock Connect, the game of existing funds evolved into incremental entry.

, especially after the interest rate cut on November 21, capital entry into the market accelerated. The Shanghai Composite Index rose by 52.9% throughout the year, and the GEM Index rose by 12.8%.

In 2015, funds poured into the market like crazy.

In the first half of 2015, the market rose and funds entered the market, forming a positive cycle. The largest bank-securities transfer reached 4.69 trillion yuan, and the financing balance hit a record 2.3 trillion yuan. Public funds issued a maximum of 249.1 billion yuan a month, and the Shanghai Composite Index and GEM Index had the highest

The increases were 60.1% and 174.5% respectively.

The stock market crash caused by the June 15 deleveraging and the second wave of sharp decline caused by the exchange rate depreciation in mid-August once caused funds to continuously flow out of the market, and the balance of on-site financing dropped to as low as 904 billion. After the central bank's "double reduction" at the end of August, market sentiment gradually changed

, financing balances began to stop falling and rebounded in September, bank-securities transfers began to level off in October and rebounded in November, and fund issuance slowly resumed.

So far, net capital inflows have been 4,401.6 billion, with the Shanghai Composite Index up 6.9% and the GEM Index up 80.4%.

2. Looking forward to 2016: There will still be more money and capital inflows 1: Bank capital allocation demand, estimated to be 2 trillion.

There are two departments of banks that have allocation needs for stocks: bank financial management and private banking.

As of September this year, the scale of bank wealth management products was RMB 20 trillion, an increase of RMB 5 trillion from RMB 15 trillion at the end of 2014, with an average increase of RMB 560 billion per month.

According to this estimate, bank wealth management at the end of 2015 was 21.7 trillion, and it is expected to reach 28.4 trillion by the end of 2016.

At present, the stock allocation ratio of bank wealth management products is only 6%. If it is increased to 10% next year (refer to the insurance allocation ratio of 13%, because bank financial management funds pay more attention to safety, calculated based on 10%), the future incremental funds are expected to reach 15,400

100 million.

Private banks manage the assets of high-net-worth customers. In 2015, 10 banks disclosed the scale of private bank assets in their interim reports, totaling RMB 4.5 trillion, an increase of approximately 25% from the end of 2014.

The total assets of these 10 banks are 76.4 trillion, accounting for 40.5% of the total assets of the entire banking industry. Based on this, the asset size of private banks is estimated to be 10 trillion, which is expected to reach 14 trillion in 2016. Referring to the equity allocation ratio of 13% of insurance funds,

It can bring in incremental funds of RMB 500 billion.

Capital inflow 2: allocation demand for insurance, social security, and pensions, estimated at 630 billion.

The current balance of insurance funds is 10.4 trillion, with a year-on-year increase of 19% in 2015 and a year-on-year increase of 21% in 2014. Assuming that the growth rate of insurance funds in 2016 is 20% and the current equity allocation ratio of 13% is maintained, the incremental funds will be approximately 2,700

100 million.

The total assets of the social security fund were 1.54 trillion at the end of 2014 and 1.24 trillion at the end of 2013. The compound growth rate in the past three years was 20%. It is conservatively estimated that the social security fund will reach 2 trillion by the end of 2016.

The upper limit of social security fund investment in stocks is 40%, which is currently about 20%. To maintain this ratio, 60 billion new funds will be added to the market.