Northbound Flows Explained

You will see "northbound net buy" quoted whenever foreign appetite for Chinese stocks is in the news. It sounds like a secret signal — but it is a specific, narrow metric. Here is what it measures and what you should actually do with it.

Northbound vs southbound, in one table

"Northbound" therefore means money travelling north into the mainland. The combined daily net-buy number is what gets quoted in headlines.

What the daily number actually is

Each trading day, the Stock Connect programmes report the value of buy orders minus sell orders from the foreign/HK side. The result is the net buy (positive = more buying than selling). It is a flow, not a stock: it tells you about that day's positioning, not the total foreign ownership of A-shares.

• Reported in RMB. Headlines may convert to USD, so the same figure can look different depending on the FX rate used.
• Two channels. Shanghai–Hong Kong and Shenzhen–Hong Kong are reported separately and also combined.
• Quota is now effectively generous. Daily limits exist but are rarely the binding constraint; the net-buy figure is what traders watch.

Why it is a gauge, not a signal

A single day's net-buy can swing on index rebalances, quarter-end flows and market-making activity — none of which say anything about whether A-shares are cheap. Where it becomes useful is as context:

• Trend over weeks, not days: persistent inflows or outflows show shifting foreign positioning.
• Cross-check with news: do flows line up with a policy shift, an earnings season, or a valuation extreme?
• Don't trade the headline: by the time a big net-buy day is reported, the move is already in the price.

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