Core Viewpoint - The A-share market has shown a general upward trend, with major indices such as the ChiNext Index, SSE 50, and CSI 300 leading in gains, while the STAR 50 and CSI 500 experienced slight declines [3] Market Performance - The A-share market saw most major indices rise, with significant gains in large-cap growth and value stocks, while small-cap growth stocks slightly declined [3] - Since early April, small-cap indices have significantly outperformed large and mid-cap indices, with the performance of small-cap stocks being notably better during the recent market recovery [4][5] Reasons for Small-Cap Outperformance - The small-cap indices had larger declines during previous market downturns, leading to a stronger rebound as the market recovered [5] - Progress in high-level Sino-U.S. trade talks has improved market risk appetite, benefiting the more elastic small-cap indices [5] - The active state of thematic investments has also contributed to the better performance of small-cap indices [5] Future Market Trends - Historical patterns suggest that the divergence between small and large-cap stocks may converge in the future, as market conditions evolve [6] - Long-term capital inflows into the A-share market, supported by favorable policies, typically favor large-cap stocks [6] - The recent improvement in market risk appetite due to trade talks may be offset by ongoing U.S. restrictions in the tech sector, which could disproportionately affect small-cap stocks [6] - With the completion of Q1 earnings reports, market focus may shift towards fundamentals, where large-cap stocks currently show stronger profitability [6] - The trading congestion difference between large and small-cap indices is at a historical low, indicating a potential shift in market style [6] Investment Style Focus - The market may experience a rotation between defensive and growth styles, with defensive investments focusing on stable or high-dividend sectors, while growth investments target thematic growth and independent sectors [8] - Current policies are primarily stabilizing, and the likelihood of strong economic realities or expectations in the short term is relatively low, leading to fluctuations in market sentiment [8]

Group 1: Market Strategy - The divergence between large-cap and small-cap stocks has been notable since early April, with small-cap indices outperforming large-cap indices from April 8 to May 16 [3] - Historical patterns, incremental capital, risk factors, fundamentals, and trading indicators suggest that this divergence may converge in the future [3] Group 2: Fixed Income and REITs - From May 12 to May 16, the secondary market prices of publicly listed REITs in China showed a trend of oscillating upward, with the weighted REITs index closing at 137.87 and a weekly return of 1.7% [4] - The trading volume of public REITs for the week was 2.442 billion yuan, with warehouse logistics REITs leading in average daily turnover compared to other categories [4] Group 3: Banking Sector - In Q1 2025, commercial banks in China reported a net profit of 656.8 billion yuan, with a profit growth rate decline of 2.3% and an average capital return rate of 8.82% [5] - The non-performing loan ratio stood at 1.51%, slightly up by 1 basis point from the end of the previous year, indicating overall stability in asset quality [5] Group 4: Chemical and Transportation Industry - In Q1 2025, Jilin Chemical Fiber Group announced price adjustments for carbon fiber products, with increases of 5,000 yuan per ton for 3K/6K products and 3,000 yuan per ton for other grades [6] Group 5: Agriculture and Livestock - The sentiment in the pig farming sector is easing, with current inventory levels remaining relatively high, indicating a potential turning point in inventory levels that may lead to a long-term profit upcycle post-deinventory [7] Group 6: Coal Mining - As of May 16, coal inventories at ports in the Bohai Rim reached 32.533 million tons, down 1.57% week-on-week but up 33.72% year-on-year, indicating high inventory levels [8] - The price of thermal coal at Qinhuangdao port averaged 619 yuan per ton, down 19 yuan per ton (-3.05%) for the week, with seasonal demand expected to rise as summer electricity consumption peaks [8]

Group 1 - The report indicates that the A-share market has shown an upward trend, with major indices such as the ChiNext Index, SSE 50, and CSI 300 leading in gains, while the STAR 50 and CSI 500 experienced slight declines [1][15][17] - Since early April, there has been a significant outperformance of small-cap indices compared to large and mid-cap indices, with the CSI 2000 and Wind Micro-cap Index rising by 16.4% and 22.1% respectively from April 8 to May 16 [2][20][26] - The report highlights that the small-cap indices have benefited from a rebound after a prior decline, as well as from improved market sentiment following substantial progress in US-China trade talks [2][26][27] Group 2 - Historical patterns suggest that the divergence between small and large-cap stocks may converge in the future, as market sentiment shifts from riskier small-cap stocks to more stable large-cap stocks during prolonged market rallies [3][34][36] - The report emphasizes that mid to long-term capital inflows into the A-share market are likely to favor large-cap stocks, as these are typically preferred by institutional investors seeking stability and predictable performance [3][35] - The report also notes that the profitability of large-cap stocks is currently stronger, with the ROE (TTM) for the CSI 300 and CSI 500 at 9.8% and 6.0% respectively, compared to lower figures for small-cap indices [3][37] Group 3 - The report suggests a potential rotation between defensive and growth styles in the market, with defensive sectors focusing on stable or high-dividend industries, while growth sectors emphasize thematic growth and independent cyclical industries [4][58][59] - It identifies specific industries to watch under different market sentiment scenarios, with utilities, banks, and construction being favored in a declining sentiment environment, while media, defense, and technology sectors may perform better if sentiment improves [4][59][60] - The report provides a scoring framework for industry allocation, indicating that public utilities and banks score highly under current conditions, suggesting a preference for these sectors in the near term [4][65]