Core Viewpoint - The Chinese automotive market is experiencing a downturn in early 2026, with significant declines in sales and a shift in market dynamics, particularly affecting new energy vehicle (NEV) companies and traditional automakers [4][5][8]. Group 1: Market Performance - In January 2026, the automotive sector saw a decline in stock prices across both Hong Kong and A-shares, with NEV companies experiencing larger drops of 4%-7%, while traditional automakers faced smaller declines of 1%-4% [4]. - The primary reason for the market downturn is attributed to disappointing sales figures in January, which fell short of expectations, alongside a significant drop in international gold prices impacting resource stocks [5][8]. - The overall sales of domestic passenger vehicles decreased by 18.1% year-on-year, while exports surged by 50.5%, providing some support to the market [7]. Group 2: Sales Rankings and Trends - The sales rankings among new energy vehicle manufacturers have shifted, with Xiaomi leading in January 2026, followed by Li Auto and NIO, while traditional automakers like Geely and BYD also showed significant sales figures [10][13][15]. - Geely's sales reached 270,200 units in January, marking a strong performance with both year-on-year and month-on-month growth, while BYD's sales dropped by 30% year-on-year and 50% month-on-month, indicating a significant slowdown [15][17]. - Traditional automakers are showing resilience, with GAC's sales growing by 18.47% year-on-year, highlighting the continued market presence of fuel vehicles amidst the NEV price wars [20]. Group 3: Future Outlook - The automotive industry is predicted to enter a "zero growth" phase in 2026, with expectations of a 20.4% month-on-month decline in January sales and only a slight year-on-year increase of 0.3% [30][31]. - Experts suggest that the market will shift from stimulus-driven growth to a more structured approach, with reduced incentives for low-priced NEVs, leading to a more competitive landscape [32]. - The focus on international expansion is expected to become a critical strategy for automakers, as the market adapts to changing consumer demands and competitive pressures [34].

Core Viewpoint - The report highlights the performance and investment strategy of the Southern CSI All-Share Automotive Index Fund for the second quarter of 2025, emphasizing the challenges faced in the automotive sector and the fund's efforts to manage tracking error effectively while adhering to risk management protocols [1][3]. Fund Overview - The fund is a passive index fund that aims to closely track the CSI All-Share Automotive Index, utilizing a full replication method to construct its investment portfolio [1]. - The fund's total share at the end of the reporting period was 21,166,011.26 shares, with a management focus on achieving returns similar to its performance benchmark [1]. Financial Performance - For the reporting period from April 1, 2025, to June 30, 2025, the A share net value was 1.2968 RMB, with a net value growth rate of -2.75%, while the C share net value was 1.2958 RMB, with a growth rate of -2.77% [2][3]. - The performance benchmark for the same period recorded a growth rate of -3.47%, indicating that the fund outperformed its benchmark [3]. Investment Strategy - The fund employs various investment strategies, including asset allocation, stock investment, and financial derivatives, to better track the underlying index and achieve its investment objectives [1]. - The report indicates a focus on structural investment opportunities within the automotive sector, driven by technological innovation and international expansion [3]. Portfolio Composition - As of the end of the reporting period, the fund's total assets included approximately 90.41% in stocks, amounting to 26,062,823.40 RMB, and 2.09% in bonds [3]. - The manufacturing sector constituted 94.99% of the fund's net asset value, highlighting a concentrated investment in this industry [3]. Management Report - The fund manager, with over seven years of experience, has implemented strict compliance with regulations and risk management practices to ensure the fund's operations are legal and beneficial to investors [2][3]. - The fund management has not engaged in any abnormal trading activities during the reporting period, maintaining a focus on fair trading practices [2].