Core Viewpoint - The A-share market experienced a significant rally, with the Shanghai Composite Index breaking through 4100 points, marking a 16-day consecutive rise, and total trading volume exceeding 3.1 trillion yuan, a notable increase from the previous trading day [1]. Market Performance - Major A-share indices all closed with "full-body bullish candles" this week: - Shanghai Shenzhen 300 Index rose by 2.8% - CSI A500 Index increased by 4.2% - ChiNext Index gained 3.9% - Shanghai Stock Exchange Sci-Tech Innovation Board 50 Index surged by 9.8% [1][3] - In contrast, the Hong Kong market showed mixed performance, with the Hang Seng China Enterprises Index declining by 1.3% [1]. Sector Performance - Leading sectors in the A-share market included brain-computer interfaces, commercial aerospace, storage chips, and semiconductors, which saw significant gains [1]. - Conversely, sectors such as Hainan, banking, and airport shipping experienced adjustments [1]. Index Details - The Shanghai Shenzhen 300 Index consists of 300 large-cap stocks with good liquidity, covering 11 first-level industries [4]. - The CSI A500 Index includes 500 securities from various industries, covering 89 out of 93 third-level industries [4]. - The ChiNext Index is composed of 100 large-cap stocks from the ChiNext board, with a high proportion in strategic emerging industries [4]. - The Shanghai Stock Exchange Sci-Tech Innovation Board 50 Index features 50 stocks with significant liquidity, prominently in "hard technology" sectors like semiconductors [4]. - The Hang Seng China Enterprises Index includes 50 large-cap stocks from mainland China listed in Hong Kong, covering a wide range of industries [4]. Valuation Metrics - As of January 9, 2026, the rolling price-to-earnings (P/E) ratios for major indices are as follows: - Shanghai Shenzhen 300 Index: 14.3 times - CSI A500 Index: 17.3 times - ChiNext Index: 42.2 times - Shanghai Stock Exchange Sci-Tech Innovation Board 50 Index: 173.1 times - Hang Seng China Enterprises Index: 10.5 times [3][5].

Market Performance - The Shanghai Composite Index increased by 0.4% this week, with overall market trading volume expanding compared to last week, including two trading days where turnover exceeded 2 trillion yuan [1] - The CSI 300 Index decreased by 0.1%, while the CSI A500 Index rose by 0.3%. The ChiNext Index saw a significant increase of 2.7%, and the STAR Market 50 Index rose by 1.7%. In contrast, the Hang Seng China Enterprises Index fell by 1.3% [1][3] Sector Performance - Sectors that performed well included controllable nuclear fusion, CPO, photolithography machines, commercial aerospace, and precious metals, while sectors such as phosphate chemicals, real estate, traditional Chinese medicine, and dairy experienced adjustments [1] - The ChiNext Index is composed of 100 stocks with high market capitalization and liquidity, with a significant focus on strategic emerging industries, particularly in power equipment, communications, and electronics, which together account for nearly 60% [4] - The STAR Market 50 Index consists of 50 stocks with large market capitalization and liquidity, prominently featuring "hard technology" leaders, with semiconductors making up over 50% and combined with medical devices and photovoltaic equipment, accounting for nearly 75% [4] Index Valuation - The rolling P/E ratio for the CSI 300 Index is 13.9 times, while the CSI A500 Index stands at 16.4 times. The ChiNext Index has a higher P/E ratio of 40.4 times, and the STAR Market 50 Index has an exceptionally high P/E ratio of 149.8 times. The Hang Seng China Enterprises Index has a P/E ratio of 10.4 times [3] - The rolling P/E ratio percentiles indicate that the CSI 300 Index is at the 60.7th percentile, the CSI A500 Index at the 68.6th percentile, the ChiNext Index at the 33.6th percentile, the STAR Market 50 Index at the 94.8th percentile, and the Hang Seng China Enterprises Index at the 63.3rd percentile [3][4]

Core Insights - The domestic index investment market has rapidly expanded, with the scale of public index products surpassing 5 trillion yuan in just five years, reaching nearly 8 trillion yuan by the end of Q3 2023, with E Fund leading the industry with over 1 trillion yuan in index product scale [1][4]. Group 1: Index Investment Growth - The first fully replicated index fund was launched in 2003, and it took 16 years for the public index product scale to exceed 1 trillion yuan. In contrast, it only took 5 years to cross the 5 trillion yuan mark by 2024 [1]. - As of Q3 2023, the total scale of non-monetary ETFs, ETF linked funds, and other off-market index funds is approaching 8 trillion yuan, with a year-on-year growth of 2.1 trillion yuan [1]. Group 2: Tracking Error Control - Precise control of tracking error is crucial for index investment, reflecting the fund company's professional capabilities. Tracking error mainly arises from stock position deviations and individual stock weight discrepancies [2]. - E Fund's A-share ETFs have a scale-weighted tracking error of 0.14% relative to the total return index, ranking among the top in the industry [2]. Group 3: Generating Excess Returns - Beyond tracking error control, creating excess returns through refined management is essential for enhancing investor experience. This involves optimizing various costs and implementing sustainable return enhancement strategies [3]. - Common strategies for enhancing returns include new stock subscriptions and liquidity compensation strategies, which can effectively lower overall holding costs and stabilize excess returns [3]. Group 4: Cost Reduction Initiatives - E Fund has led the industry in reducing management fees since 2015, with over 110 index products adopting the lowest management fee rate of 0.15% per year [4]. - The company has capitalized on liquidity compensation strategies, with the number of inquiry transfer events in the A-share market increasing nearly threefold compared to the previous year, providing diverse investment opportunities for stable excess returns [4]. Group 5: Full Lifecycle Management - The professionalism of index business is evident in its comprehensive lifecycle management, covering issuance, daily operations, risk monitoring, and emergency response [5]. - E Fund has established a standardized full-process management mechanism to enhance investment management efficiency and mitigate various risks [5]. Group 6: Platform Empowerment - A robust investment operation management system supports the professionalization of index business, enabling standardized processes and refined management [6]. - E Fund developed the first index investment management platform in 2012, which systematizes and toolizes management experiences for scalable and replicable operations [6]. Group 7: Collaborative Research and Development - The active research team at E Fund provides a solid research foundation for developing industry, thematic, and factor index products, enhancing the overall professional capability of the index team [7]. - The collaboration between the index team and the active equity investment team fosters continuous improvement in professional standards, crucial for maintaining a competitive edge in the evolving market [7].