Today, A-shares continued last week's upward trend, with all three major indices rising. The Shanghai Composite Index gained 0.69% to close at 3,917.36 points, while the Shenzhen Component Index rose 1.47% to 13,332.73 points. The combined turnover of the two markets approached 1.9 trillion yuan, showing further recovery from last week. The ChiNext and STAR 50 indices performed relatively well, advancing 2.23% and 2.04%, respectively. Market breadth was positive, with communication, electronics, and non-ferrous metals sectors leading the gains.
Supported by proactive macro policies and sustained capital inflows, the outlook for A-shares remains optimistic. As 2026 marks the beginning of the 15th Five-Year Plan, the market is poised for a strong start.
China is expected to maintain accommodative monetary policies and proactive fiscal measures in 2026, which may further boost aggregate demand. During this economic recovery phase, the A500 Index—with its overweight allocations in advanced manufacturing, information technology, communications, healthcare, and raw materials—is well-positioned to deliver relative returns. The index methodology excludes stocks with ESG ratings of C or below and prioritizes free-float market cap leaders across CSI Tier-3 industries. All constituents are also eligible for Stock Connect programs, making them attractive to long-term domestic and international investors. The A500 covers 90 out of 93 Tier-3 industries, significantly outperforming the coverage of the CSI 300 (61 industries) and CSI 500 (83 industries), thus offering a more comprehensive exposure to growth opportunities. Additionally, the A500 reduces weightings in financial sectors like banking and non-banking, aligning better with the development of new productive forces.
Compared to the CSI 300, the A500 emphasizes sector balance and niche leaders, featuring a more diversified style and higher growth exposure, making it a superior beta choice during industrial upgrading cycles. Since its inception, the A500 Total Return Index has delivered an annualized return of 9.11%, with annualized volatility of 21.41% and a Sharpe ratio of 0.459, outperforming the CSI 300 Total Return Index except during value-driven phases. Post-listing, the A500 ETF has seen both volume and price rise, reflecting strong recognition from passive and allocation-focused capital. Recent investor behavior indicates consistent net inflows into the A500 ETF, highlighting its appeal as a stable investment vehicle.
With the market shifting toward growth-oriented styles, investors may consider the CSI A500 ETF (159338) for its balance of safety and growth potential.
Short-term interest rates have declined rapidly, with overnight rates dropping to 1.27%. The yield on the active 2-year bond 250017 fell further to a new low of 1.3650%, signaling sustained liquidity ease. Long-term rates, however, showed volatility due to trading activity, with the 10-year yield edging up slightly to 1.8450%. Low funding rates reflect the central bank's supportive stance, and with the 10-year yield near the upper bound of the central bank's comfort zone at 1.85%, the bond market is expected to continue its moderate recovery.
Recent economic data suggests domestic demand remains weak, and inflationary pressures are not yet solid, providing marginal support for bonds. Widening term spreads hinder monetary policy transmission, but under loose liquidity conditions, lower short-term rates may eventually pull down long-term rates. Given manageable fiscal pressures next year and pending monetary easing tools, long-term bonds retain their appeal. Investors may watch the 10-Year Government Bond ETF (511260) for potential opportunities after short-term rate adjustments.
The gold sector shone today, with COMEX gold breaking above 4,440 to set a new high. The Gold Fund ETF (518800) rose 2.07%, while the Gold Stock ETF (517400) surged 3.7%.
Globally, U.S. November non-farm payrolls showed a slight rebound, but the unemployment rate unexpectedly climbed to 4.6%, the highest since September 2021, indicating continued labor market cooling. The Bank of Japan raised rates by 25bps to 0.75% as expected, maintaining a gradual tightening path. Geopolitical tensions persist, with Ukraine targeting Russian-linked oil tankers and Russia reporting drone attacks on its ports. Meanwhile, the U.S. announced a full blockade on Venezuela, seizing another oil tanker.
As earlier uncertainties dissipate, macro risks and safe-haven demand may support gold prices to resume their upward trend after consolidation. Medium-to-long-term factors like the Fed's rate-cut cycle, rising global uncertainties, and de-dollarization trends continue to underpin gold. Investors may monitor the Gold Fund ETF (518800) and Gold Stock ETF (517400) for opportunities.
The Communication ETF surged 4.72% today. Google's release of the Gemini 3 Flash model—faster and more efficient than its predecessors—has driven higher market expectations for 2026 computing power. Beyond GPUs, ASICs are emerging as a key growth driver for upstream chips, potentially accelerating demand for components like optical modules.
Cloud providers' capital expenditures and computing infrastructure expansions remain robust, improving order and price outlooks. According to Zhongyuan Securities, Q3 2025 capex for North America's top four cloud firms (Google, Microsoft, Meta, Amazon) rose 67% YoY, while China's top three internet giants (Alibaba, Baidu, Tencent) saw a 32% increase.
Looking ahead, computing power remains one of the most promising tech sectors. Google's full-stack AI ecosystem and decades of expertise could accelerate industry progress, keeping chip demand on an upward trajectory. A-share optical module and server suppliers, as key enablers, stand to benefit. Since 2023, cloud providers' earnings have shown strong momentum, likely sustaining capex. Optical modules, essential for data centers, may double in market size by 2026 and maintain high growth post-2027.
Given AI's vast potential, the Communication ETF (515880)—with over 76% exposure to overseas computing leaders in optical modules, servers, fiber optics, and copper connections—is worth watching for its representation of global computing fundamentals.
Risk Disclosure: Investors should understand the differences between systematic investment plans and savings methods like lump-sum deposits. While systematic investing promotes long-term cost averaging, it does not eliminate inherent fund risks or guarantee returns. Equity ETFs/LOFs/structured funds carry higher risk-return profiles than hybrid, bond, or money market funds. Investments in STAR Market or ChiNext stocks involve unique risks due to differing rules and targets. Short-term performance data is for reference only and does not constitute recommendations or guarantees. Views expressed are not investment advice. Investors should assess risk tolerance and suitability before investing. Funds carry risks; invest cautiously.
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