Recently, the Chinese A-share market has shown signs of a significant style shiftSmall and micro-cap stocks have faced corrections, while mid and large-cap stocks have demonstrated comparatively better performanceFor instance, on December 17, the CSI 2000 index dropped by 4.42%, with intraday losses reaching as much as 5.88%. In contrast, sectors like dividends and liquor have surged, effectively supporting the mid to large-cap indicesThis divergence has led the market to speculate that a transition from small-cap to large-cap stocks may be underway.

Analysts from various institutions argue that such shifts in market capitalization style toward the end of the year are uncommon, typically influenced by policy changes, external events, liquidity, and profit expectationsAmong these, policy direction and liquidity are viewed as crucial determinants.

In terms of policy, a significant recent development reported by foreign media indicates that China is considering raising its fiscal deficit target to 4% of GDP for the coming year, a historic high

At the same time, the government aims to maintain an economic growth target of around 5%. This additional percentage in GDP spending corresponds to approximately 1.3 trillion yuan, with more stimulus measures expected to be funded through the issuance of special bonds outside the budgetIf this rumor proves accurate, it could provide crucial support for the A-share market.

Shenwan Hongyuan has suggested that the current market phase corresponds to the early stages of a bull market, which they believe will unfold in two wavesThe first wave is anticipated to last through the end of 2024, beginning as a result of policy shifts and concluding with relative power dynamics between domestic and international policiesThe second wave, expected to begin no later than the second half of 2025, will likely reflect an increase in A-share profitability and could mark the onset of significant upward movement in the market.

The CSI A500 index, as a representative of the new generation of broad-based indices, showcases multiple outstanding characteristics

In terms of industry distribution, it exhibits strong market representation, achieving balanced and comprehensive allocationNotably, this index undertakes a sample adjustment every six months to further optimize its industry layout and timely capture market dynamicsFrom an industry composition perspective, the CSI A500 index judiciously balances robust blue-chip stocks with industries that represent future economic development directions, making it both offensive and defensive.

Among the funds tracking the CSI A500 index, the A500 Index ETF (560610) is the first fund product in the Shanghai Stock Exchange to exceed 10 billion yuan in scale, maintaining a strong standing with its current circulating sharesThis ETF features low fees, with management costs as low as 0.15% and custody fees of merely 0.05%, reducing the holding costs for investorsAdditionally, this ETF has introduced a quarterly excess return dividend policy, with a distribution ratio of no less than 80%, opening additional revenue streams and cash flow optimization opportunities for investors.