ETF Monthly Review (March 2026): Oil and gas lead the rally, while funds start to exit the bottom-fishing of Hong Kong stocks

In March 2026, the performance of the A-share market was divergent, with the Shanghai Composite Index experiencing volatility in the first half of the month and falling below 4,000 points in the second half, resulting in a total decline of 6.51% for the month. The ChiNext Board performed relatively resiliently, with a total decrease of 3.79% for the month.

From the industry performance perspective, March showed significant structural differentiation in the market: the power sector performed remarkably well, while the pharmaceutical and computing industries also exhibited active trends; international oil prices continued to rise amid shipping disruptions in the Strait of Hormuz, driving the overall upward movement of the chemical sector.

Oil and gas energy stands out, banks show slight recovery

Against the backdrop of geopolitical conflicts, the oil and gas sector became the best-performing asset in March 2026. According to ETF monthly gain rankings, the S&P Oil & Gas ETF (Harvest) surged 36.28% this month, leading the entire market. The energy and chemical ETF (CITIC) followed closely with a monthly increase of 34.59%. Similarly, the S&P Oil & Gas ETF (Fidelity) tracking the S&P Petroleum and Natural Gas Index also gained over 31% for the month.

In stark contrast, other sectors underperformed significantly, with all-month gains not exceeding 4%.

Specifically, bank-themed ETFs showed a rebound after bottoming out, with Tianhong Bank ETF, Hu’an Bank ETF, and Fuguo Bank ETF all increasing by more than 3.7% in March; additionally, products like Huaxia Moutai ETF, Harvest 300 Dividend Low Volatility ETF, and Huatai Bairui Hang Seng Innovation Drug ETF each gained over 2.3 percentage points.

Guotai Securities’ research report suggests that in the short term, considering the domestic cycle position and external demand recovery, the transmission of cost shocks to downstream will be stronger than previous crude oil price shocks. It is expected that oil prices will accelerate nominal price increases in the second quarter, although liquidity conditions may become temporarily tighter. While banks remain relatively defensive, during the upward phase of long-term interest rates, absolute returns should not be expected, and high-financing stocks should be avoided. In the medium term, demand is likely to continue expanding, with increasing trends in non-bank financials, financialization, and disintermediation, favoring large settlement-oriented banks.

Capital flows: continuation of risk-averse style, divergence in market views

In March, the ETF market saw a total net inflow of 2.11B yuan. By category, after a net outflow of 20.45B yuan in February, stock ETFs further saw an outflow in March, with a total net outflow exceeding 60 billion yuan; bond ETFs, commodity ETFs, and cross-border ETFs received net inflows of 31.53B yuan, 11.39B yuan, and 14.6B yuan, respectively.

The fund flow of individual funds further reflects this trend.

In March 2026, ETF market capital flows continued the previous risk-averse style, with funds continuing to pour into fixed income products. The Huafu Tong Short-term Bond ETF led with a net inflow of 13.56 billion yuan, followed by the CSI Innovation Bond ETF (Harvest) and the Huafu Tong Urban Investment Bond ETF, which saw net inflows of 9.14B yuan and 8.67B yuan respectively. These three attracted over 31.3 billion yuan in total, indicating market preference for low-risk assets remains strong.

Meanwhile, some funds still chose to enter the market for bottom-fishing. Compared to February’s purchase of Hengke, in March, despite a 6.74% decline, the Huaxia Power Grid Equipment ETF saw a net inflow of nearly 9 billion yuan. The Hu’an Gold ETF, despite a monthly retracement of over 11%, attracted 4.4 billion yuan for bottom-fishing. Additionally, the Huaxia Sci-Tech 50 ETF recorded a net inflow of 3.7 billion yuan amid a decline of over 15%.

Contrasting with inflows, in March, large-scale withdrawals occurred from core broad-based indices and some previously popular sectors. The Huaxia A-500 ETF experienced a net outflow of over 8.3 billion yuan, while the E Fund ChiNext ETF and the Southern CSI 500 ETF saw net outflows of 7.61B yuan and 7.52B yuan, respectively.

Hong Kong stocks also faced sell-offs, with the Net Outflow of the GF Hong Kong Internet ETF (through Stock Connect) exceeding 7.4 billion yuan, and the GF Non-bank ETF experiencing a net outflow of over 4.2 billion yuan. In February, despite a sharp decline in the Hong Kong market, many funds still began bottom-fishing related assets.

Additionally, previously popular ETFs such as the Penghua Chemical ETF, Southern Non-ferrous Metals ETF, and GF Media ETF also appeared among the top outflows, with net outflows of 5.96B yuan, 5.54B yuan, and 3.63B yuan respectively. These products experienced significant declines in March, prompting many funds to exit amid ongoing sector adjustments.

Scale changes: Short-term Bond ETF (Huafu Tong) continues to attract over 10 billion yuan for the second consecutive month

From the scale growth perspective, fixed income products have become the core safe haven for funds. The Huafu Tong Short-term Bond ETF’s scale surged by 13.68B yuan in March, marking the second consecutive month of over 10 billion yuan in inflows; the CSI Innovation Bond ETF (Harvest) and the Huafu Tong Urban Investment Bond ETF grew by 9.21B yuan and 8.78B yuan respectively; the Yinhua Rili ETF also expanded by 5.1B yuan in a single month.

Among industry-themed ETFs, the Huaxia Power Grid Equipment ETF increased its scale by 6.44B yuan despite a 6.74% decline in the month. The Huaxia Free Cash Flow ETF grew by 3.65B yuan, while the E Fund Energy Storage Battery ETF, GF Power ETF, and Guotai Power Grid ETF each expanded by over 2 billion yuan. Funds still maintain a defensive stance but remain eager to position in specific booming sectors.

On the scale reduction side, core broad-based indices in A-shares experienced significant sell-offs. The Southern CSI 500 ETF shrank by 17.55B yuan in scale, while the Huatai Bairui CSI 300 ETF and E Fund CSI 300 ETF decreased by 15.43B yuan and 9.23B yuan respectively. The Huaxia A-500 ETF and E Fund ChiNext ETF also declined by 10.796 billion yuan and 9.551 billion yuan. Additionally, the scale of funds allocated to Hong Kong tech and some cyclical sectors also shrank notably due to market declines.