Group 1 - The A-share market has shown a steady upward trend since the "924" policy, with the Shanghai Composite Index recently surpassing the 4000-point mark, reaching a ten-year high [5] - The A500 ETF managed by E Fund has outperformed major indices, with the CSI A500 index rising over 32% since its low in April [5] - The market is expected to continue its upward trajectory, with potential new opportunities emerging [5] Group 2 - The "924" policy, which included wide credit measures for small and medium enterprises, has broken the negative spiral in market expectations, initiating the current rally [6] - Historical trends indicate that each cycle of wide credit and monetary policy is typically accompanied by sustained stock market growth, with the current fiscal policies increasing the likelihood of economic recovery [6] - The implementation of anti-involution policies is expected to shift the economy from a deflationary to an inflationary cycle, which is crucial for the A-share market's narrative in the latter half of the year [6] Group 3 - The market is currently in the "economic verification" phase, with previous high-performing sectors facing adjustments, and a potential shift towards undervalued assets with expected performance improvements [9] - The financing balance in the A-share market has increased significantly, from 1.8 trillion yuan to nearly 2.5 trillion yuan since June, indicating strong inflows of leveraged funds [7][9] - Despite the Shanghai Composite Index being at a ten-year high, overall valuation levels remain moderate, with the price-to-earnings ratios of major indices at their historical median [10] Group 4 - The A-share market is entering a new phase characterized by resource stocks, particularly copper and aluminum, as key drivers of the current market trend [17] - Copper prices have reached historical highs, leading to a significant rally in global copper mining stocks, with major Chinese companies like Zijin Mining and Jiangxi Copper seeing substantial gains [18] - The aluminum sector is expected to experience a supply-demand imbalance starting in 2026, which could lead to rising aluminum prices and stable returns for aluminum companies [19] Group 5 - Oil and chemical sectors are also gaining attention, with leading companies in these industries beginning to recover in valuation despite ongoing challenges in the commodities market [19] - China National Offshore Oil Corporation (CNOOC) is positioned to benefit significantly due to its low production costs and focus on offshore exploration, making it one of the most profitable among the state-owned oil companies [20] - The overall dividend yield for major oil companies in China is competitive, with CNOOC, China Petroleum, and Sinopec offering attractive returns to investors [20]

Core Viewpoint - The article emphasizes that 2025 will be a pivotal year for the A-share ETF market, particularly focusing on "free cash flow" ETFs, which are expected to gain significant traction and popularity among investors [3][4]. Group 1: Free Cash Flow ETFs - The launch of the E Fund's free cash flow ETF (code: 159222) on March 24, 2025, marks the beginning of a new investment trend, with management fees set at a competitive 0.15% plus 0.05% for custody [3]. - Historical performance of free cash flow ETFs shows a remarkable annualized return of over 20% from 2022 to 2024, significantly outperforming the broader market, which had returns of less than 8% [7]. - The National Index of Free Cash Flow (code: 980092) has unique compilation rules that exclude financial and real estate sectors, focusing on companies with sustainable operational capabilities [9]. Group 2: Index Compilation Rules - The index requires companies to have positive operating cash flow for the past three years, ensuring financial sustainability and avoiding companies with inflated profits [11]. - A stability assessment is conducted based on the past 12 quarters of ROE, eliminating the most volatile 10% of companies to enhance long-term stability [11]. - The final index is composed of the top 100 companies ranked by free cash flow rate, combining both quantity and quality of cash flow [11]. Group 3: Market Context and Comparisons - The article draws parallels between the A-share market and the U.S. market, noting that free cash flow is a relatively new concept in both, with the first cash flow ETF in the U.S. launched in 2016 [15]. - The free cash flow factor is positioned as a valuable selection criterion, supported by academic research indicating its ability to generate excess returns, especially during market downturns [18]. - The industry distribution of the National Index of Free Cash Flow shows significant overweights in sectors like automotive, non-ferrous metals, and household appliances compared to other indices [20][22]. Group 4: Investment Strategy and Outlook - The article suggests that while the National Index of Free Cash Flow may perform well in the long term, it could underperform the overall A-share market in the short term, requiring a mindset geared towards gradual wealth accumulation [27][31]. - The index is viewed as a stabilizing component in a diversified investment portfolio, akin to high-dividend indices, providing lower volatility and superior long-term returns [31].