The capital of the north corresponds to the capital of the south. The north and south here is not what we usually call the north and south, but refers to Hong Kong. Northbound capital refers to the entry of Hong Kong and international capital into the A-share market, while southbound capital refers to the capital operated by China mainland in Hong Kong stocks. Both fund names were formed after the opening of Shanghai-Shenzhen Port and Shenzhen-Hong Kong Stock Connect (the difference between Shanghai-Hong Kong Stock Connect and Hong Kong Stock Connect).
The A-share market does not allow foreign direct participation, and the capital market in this market is controlled and cannot circulate freely. China's Hong Kong stock market is an international financial center, and many overseas funds can invest in Hong Kong stocks. However, the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect opened in China on 20 14 and 20 16, respectively, which opened the mutual flow of funds in the A-share market and the Hong Kong stock market, because the mainland is in the north of Hong Kong, forming the saying that funds are going north.
In the actual trend, when there is a crazy sweep of goods by funds from the north, A shares usually fluctuate, and the amplitude of the day is relatively large, which tends to open lower and go higher. This is usually an opportunity for northbound funds to rebound from the bottom. For example, nearly 2 billion yuan of additional funds enter A shares every day, and the overall transaction volume is still expanding. However, the overall investors in China stock market are mainly retail investors, and it is the investment behavior of retail investors that can completely affect the running trend of the stock market. These northbound funds can not really affect the A-share market, but will only cause market instability.