In-depth Analysis of the Impact of 22.09 Trillion Yuan Private Fund Scale on A-share Market Liquidity and Investment Structure

According to the data as of the end of November 2025 released by the Asset Management Association of China, the private fund industry in China presents the following characteristics:

• Overall Scale
  : The scale of managed funds reaches 22.09 trillion yuan, demonstrating the important position of private funds in China’s capital market
• Number of Institutions
  : There are 19,314 active private fund managers, managing 138,055 funds
• Structural Distribution
  : There are 7,568 private securities investment fund managers and 11,567 private equity and venture capital fund managers

This scale indicates that private funds have become an important participant in China’s capital market, exerting a profound impact on the liquidity supply and investment structure of the A-share market.

The 22.09 trillion yuan private fund scale has brought important incremental liquidity to the A-share market. Especially beyond traditional institutional investors such as public funds and insurance funds, the diversified investment strategies of private funds provide more flexible and timely liquidity supply to the market [1].

Private funds usually adopt more flexible investment strategies, including long-short strategies and quantitative trading. These strategies can provide liquidity in different market environments, helping to smooth extreme market fluctuations. From recent market performance, although the global liquidity environment has tightened [1], the volatility of the A-share market is relatively moderate, partly due to the liquidity supply function of private funds.

The active participation of private funds promotes the price discovery mechanism of the A-share market. Through in-depth research and investment in companies of different industries and sizes, private funds help the market better reflect the intrinsic value of enterprises.

The 22.09 trillion yuan private fund scale means that the proportion of institutional investors in the A-share market has further increased. According to the latest data, in the trading of major A-shares such as Ping An Bank [0], Kweichow Moutai [0], and CATL [0], the proportion of institutional investors has increased significantly.

The development of private funds has promoted the professionalization of investment philosophy in the A-share market:

• Deepening of Value Investment
  : Private funds pay more attention to fundamental analysis and long-term value investment
• Refinement of Risk Management
  : Adopt more scientific risk control systems and asset allocation strategies
• Diversification of Investment Strategies
  : Expand from traditional long-only stock strategies to multiple strategies such as quantitative, hedging, and arbitrage

The rapid development of private funds has promoted the optimization of the A-share market structure:

• Improvement of Listed Company Governance
  : The active shareholder role of private funds promotes the improvement of corporate governance of listed companies
• Enhanced Support for Innovative Enterprises
  : Private equity funds provide important capital support for technology innovation enterprises
• Deepening of Industrial Chain Investment
  : Private funds are better at exploring industrial chain investment opportunities, promoting industrial upgrading

With the rapid growth of private fund scale, liquidity management has become an important challenge:

• Concentrated Redemption Pressure
  : May face concentrated redemption pressure when market volatility increases
• Difficulty in Asset Allocation
  : Large-scale funds need to find high-quality investment targets, increasing allocation difficulty
• Liquidity Mismatch Risk
  : Some private funds may face maturity mismatch risks

The rapid growth of private fund scale may lead to investment strategy convergence:

• Enhanced Herd Effect
  : May appear over-concentration in hot sector investments
• Decline in Market Efficiency
  : Convergent trading strategies may affect market efficiency
• Accelerated Volatility Transmission
  : Risk transmission speed between different strategies accelerates

With the expansion of private fund scale, regulatory requirements are also increasing:

• Rising Compliance Costs
  : Costs to meet regulatory requirements increase
• Information Disclosure Requirements
  : Investors’ requirements for transparency continue to increase
• Cross-border Regulatory Coordination
  : Global investment needs to face regulatory requirements from different jurisdictions

Based on the current scale of 22.09 trillion yuan, the future development of private funds will show the following trends:

• Further Improvement of Professionalization
  : Investment strategies will be more segmented and professional
• Accelerated Technology Empowerment
  : Technologies such as artificial intelligence and big data will play a greater role in investment decision-making
• Rise of ESG Investment
  : Environmental, social, and governance (ESG) factors will occupy a more important position in investment decisions
• Increased Internationalization
  : More private funds will participate in global asset allocation

To promote the healthy development of private funds and the stability of the A-share market:

1. Improve Regulatory Framework
   : Establish and improve a regulatory system suitable for the characteristics of private funds
2. Strengthen Investor Protection
   : Improve investor suitability management and risk disclosure mechanisms
3. Promote Market Innovation
   : Support product innovation and strategy innovation of private funds
4. Enhance Market Efficiency
   : Improve market infrastructure and reduce transaction costs
5. Strengthen Risk Prevention and Control
   : Establish and improve systematic risk monitoring and early warning mechanisms

The 22.09 trillion yuan private fund scale marks that China’s private fund industry has entered a new stage of development, exerting a profound impact on the liquidity and investment structure of the A-share market:

• Significantly enhanced market liquidity supply
• Optimized investor structure and improved market professionalism
• Promoted price discovery and resource allocation efficiency
• Supported the real economy, especially the development of technology innovation enterprises

• New challenges in liquidity management and risk control
• Investment strategy convergence may bring systemic risks
• Regulatory framework needs to be improved with the times

Overall, the rapid growth of private fund scale is an important symbol of the maturity of China’s capital market. In the future, it will play a more important role in improving market efficiency, supporting the real economy, and promoting financial innovation. The key lies in finding a balance between promoting industry development and preventing systemic risks to achieve benign interaction and common development between private funds and the A-share market.

[1] Yahoo Hong Kong Finance - “Hong Kong Stock Market Has Recently Continued to Underperform Mainland A-shares, Hit by Double Blow of Global Liquidity Tightening and China’s Fundamental Slowdown” (https://hk.finance.yahoo.com/news/香港股市近期持續跑輸內地a股-受全球流動性和中國基本面放緩雙重夾擊-030032154.html)
[0] Jinling API Data