Market Overview - Recent market sentiment is positive, with major indices reaching new highs, particularly the Shanghai Composite Index surpassing 3674.40, a peak not seen since December 2021 [1] - The rise in indices is primarily driven by ample liquidity, a systemic decline in domestic risk-free interest rates, and an influx of overseas dollar liquidity, alongside policies promoting "de-involution" and large-scale infrastructure projects [1][2] - Despite the overall index performance, there is significant divergence at the individual stock level, with 2733 stocks rising and 2458 falling on August 13, indicating a mixed market experience for investors [1] Structural Market Dynamics - A structured market environment has emerged, characterized by rapid rotation and the need for investors to identify sustainable sectors for long-term gains [2] - The current bull market presents challenges for ordinary investors, as rapid sector rotations make it difficult to capitalize on opportunities [3] Investment Strategy - To achieve favorable returns in the current A-share market, establishing a clear investment direction is crucial [3] - The China Securities A500 Index is suggested as a viable option for investors seeking a balance between the stability of large-cap indices and the growth potential of mid- and small-cap stocks [3] Index Characteristics - The China Securities A500 Index is designed to ensure industry balance, covering all secondary and most tertiary industries, making it inclusive of both traditional and emerging sectors [4] - The index focuses on new productive forces, incorporating leading companies in emerging fields such as electric equipment, pharmaceuticals, electronics, and computing [6] - Compared to the CSI 300, the A500 Index has reduced weight in non-bank financials and food & beverage sectors, redistributing approximately 12.51% of its weight to emerging industries, enhancing its representativeness [7] Performance Metrics - The A500 Index includes leading companies across various industries, covering 91% of the industry leaders in the CSI tertiary sectors, compared to 65% for the CSI 300 [8] - Historical data indicates that the A500 Index has outperformed the CSI 300 in growth stock environments, with an average excess return of 4.94% from 2020 to 2021 [8] - Long-term holding of the A500 Index has shown superior returns, with a cumulative increase of 363.05% since its inception, compared to 293.61% for the CSI 300 and 326.30% for the CSI 800 [10] Conclusion - Given the complexities of the current bull market, it may be more beneficial for investors to track a well-performing index like the China Securities A500 ETF rather than attempting to select individual stocks [12]

Core Viewpoint - The A-share market has shown a significant increase in risk appetite, with the CSI A500 Index rising over 6% in the past month, leading to a recovery in the net asset values of most related ETFs above 1 yuan [1][3]. Market Performance - The CSI A500 Index has rebounded strongly since June 23, with a 6.25% increase, outperforming the broader market, which has resulted in 35 out of 38 ETFs tracking the index seeing their net asset values rise above 1 yuan as of July 18 [3][4]. - The recent performance is attributed to a recovery in investor sentiment and market conditions, with sectors like finance, real estate, new energy, innovative pharmaceuticals, and steel contributing to the upward trend [3][4]. Investment Strategy - Industry experts suggest that investors should consider their short-term cash needs and long-term asset appreciation when deciding whether to take profits or continue holding [1][6]. - The CSI A500 Index is viewed as a long-term investment opportunity due to its representation of various industries and its focus on larger, more liquid securities [6][7]. Valuation and Growth Potential - The CSI A500 Index's rolling 12-month price-to-earnings ratio is near its five-year average, indicating a relatively high margin of safety, while its expected profit growth rate of 12% over the next two years is higher than the 10% expected for the CSI 300 Index [7][8]. - The regulatory environment is also improving, with a focus on enhancing dividend policies, which is positively impacting the dividend ecosystem in the A-share market [7].