Group 1 - The report analyzes the current factors influencing the rotation between large-cap and small-cap stocks in the A-share market, suggesting that the market may be transitioning from a liquidity expansion phase to a stage where large-cap stocks could gradually outperform [1][2][30] - The report identifies a four-stage liquidity cycle that affects the performance of large-cap and small-cap stocks, with distinct characteristics for each stage: contraction phase favors large-caps, phase one expansion favors small-caps, phase two expansion favors large-caps, and phase three expansion sees small-caps regain strength [6][24][30] - The report constructs a mixed-frequency rotation and timing system based on liquidity indicators, which has shown excellent strategy returns, with annualized excess returns of 12.43% for the large-cap and small-cap rotation strategy since 2014 [6][10][30] Group 2 - The report highlights that the A-share market has experienced two main cycles of large-cap and small-cap rotation since 2004, with small-caps outperforming from 2004 to 2015 and large-caps dominating from 2016 to 2024 [25][30] - The report discusses the impact of macroeconomic factors on the performance of small-cap stocks, noting that the decline in speculative attributes and merger values has shifted the focus to liquidity as the primary driver of relative performance [14][30] - The report emphasizes that the current high valuation premium of small-cap stocks in the A-share market is likely to persist due to systemic factors, suggesting that valuation metrics may serve more as synchronous indicators rather than predictive signals [34][40][42]