Core Viewpoint - The low interest rate environment is creating a favorable condition for stable free cash flow, which is becoming the financial foundation for a long-term bull market in A-shares [1] Group 1: Economic Environment and Market Dynamics - The shift in economic operation models is driving a change in stock market pricing logic towards the accumulation of cash flow [1] - The potential return of strong physical re-inflation makes the growth attributes of free cash flow promising [1] Group 2: Investment Opportunities - Leading consumer companies are expected to benefit from increased concentration and possess stronger free cash flow generation capabilities than the industry average [1] - Cyclical resource products are likely to benefit from supply contraction and cash flow recovery due to anti-involution policies [1] - Free cash flow assets may become an important allocation direction in the second half of the market, supported by low interest rates and demand-stimulating policies [1] Group 3: Cash Flow ETF - The cash flow ETF (159399) tracks the FTSE China A-Share Free Cash Flow Focus Index (888888), which selects listed companies with high free cash flow yield across various industries [1] - The index aims to reflect the overall performance of listed companies in the Chinese market that have strong cash flow generation capabilities [1] - Investors without stock accounts can consider the Guotai FTSE China A-Share Free Cash Flow Focus ETF Initiated Link A (023919) and Link C (023920) [1]

Group 1 - The current macroeconomic environment is characterized by high uncertainty in global capital markets, prompting investors to seek stable and potential alternative assets, particularly those with free cash flow [1] - Free cash flow assets are highlighted for their defensive value and growth potential, as they can provide high dividend potential and support technological upgrades and industry consolidation during recovery cycles [1][2] - Companies that generate stable free cash flow typically exhibit three key characteristics: reliable profit quality, sustainable dividend capability, and solid innovation investment [2] Group 2 - The Guozheng Free Cash Flow Index, launched on December 31, 2012, focuses on "free cash flow rate" and includes 100 companies from various industries, excluding finance and real estate, to ensure a balanced distribution [3] - As of July 15, the Guozheng Free Cash Flow Index has increased by 368.76% since its inception and has shown positive growth for six consecutive years from 2019 to 2024, indicating strong resilience [3][4] - The index's latest PE (TTM) is 11.98 times, which is in the 34.04% percentile over the past decade, suggesting that free cash flow assets are becoming increasingly valuable in the current low-interest-rate environment [4] Group 3 - The demand for free cash flow assets is expected to grow as long-term capital is increasingly directed towards high-quality, sustainable dividend-paying equities, driven by the need for stable investments [4]