A-share market rebounds, bottom-fishing funds increase holdings in broad-based ETFs

On March 24, the A-shares rebounded across the board, with ETFs generally closing in the green. Gold stock ETFs, which had experienced significant adjustments the previous trading day, led the gains, with several gold ETFs rising over 5%. Additionally, some Hong Kong-listed ETFs focused on innovative drugs, shipping, engineering machinery, and non-ferrous metals also increased by more than 4%.

Recently, oil prices have experienced wide fluctuations. The China Construction Bank Energy and Chemical ETF saw a surge in trading volume and a decline of over 3%, with a transaction volume exceeding 13.8 billion yuan, hitting a record high; the S&P Oil & Gas ETF, managed by Harvest, initially rose sharply but then fell back with significant volume. After trading hours, the managers of the S&P Oil & Gas ETF, Harvest, and the Oil Fund LOF collectively issued risk warning notices about premium risks, advising investors to pay attention to the potential premium risks in secondary market trading prices, as blind investments could lead to substantial losses.

It is noteworthy that despite the sharp adjustment of A-shares on the 23rd, bottom-fishing funds actively entered the market via ETFs, with net inflows of over 16 billion yuan into stock ETFs. Among them, the Huatai-PineBridge CSI 300 ETF saw a net inflow of over 3.7 billion yuan, hitting a single-day high this year; the Guojin Index ETF and the Huaxia SSE 50 ETF each experienced net inflows exceeding 1.5 billion yuan.

Gold stock ETFs lead the rally

On March 24, A-shares showed a clear upward trend in the late trading session. Gold stock ETFs, which had experienced significant adjustments the previous day, generally rose over 5%. Notably, Laopu Gold surged over 16%. After the market close on the 23rd, Laopu Gold announced its 2025 annual performance forecast, showing a net profit of 4.868 billion yuan, a year-on-year increase of 230.45%. Additionally, against the backdrop of rising gold prices, the Shanghai Gold ETF and other gold ETFs increased by more than 3% on the 24th.

China Asset Management stated that the short-term trading logic for gold has shifted from geopolitical safe-haven to a transmission pathway of “energy shocks—inflation rise—interest rate cuts delayed.” Recently, capital outflows from gold-themed ETFs and a slowdown in global central banks’ gold purchases have led some allocation funds to shift to a wait-and-see stance at high levels. In the short term, gold is transitioning from a “safe asset” to a “high-volatility asset” pricing.

China Asset Management believes that if there is no significant easing of geopolitical tensions in the short term, with oil prices remaining high and inflation expectations continuing to rise, gold may face phased pressure due to the Federal Reserve’s delay in interest rate cuts. In the long run, the overall downward trend of the US dollar’s creditworthiness remains unchanged. If the global economic cycle shifts toward stagflation, gold is still expected to benefit.

On March 24, sectors such as innovative drugs, building materials, and non-ferrous metals also rebounded significantly, with many Hong Kong-listed ETFs focused on innovative drugs, shipping, engineering machinery, and non-ferrous metals rising over 4%.

Several broad-based ETFs that traded at a premium the previous day experienced a collective pullback. The premium rates of the CSI 500 ETF, China Life, and the Hu-Shen 300 ETF Fangzheng Fubon on the 23rd were all above 6%, and the premium rate of the SSE 180 ETF YinHua exceeded 5%. On the 24th, these three broad-based ETFs all fell more than 3%, with premiums dropping below 2%.

Caution on high premium risks in oil and gas funds

Affected by the wide fluctuations in international oil prices, the China Construction Bank Energy and Chemical ETF declined by over 3% with increased trading volume, exceeding 13.8 billion yuan, setting a new record. The popular S&P Oil & Gas ETF, managed by Harvest, initially rose sharply but then fell back with significant volume.

Currently, most on-market oil and gas-themed funds remain at high premiums. On March 24, the premiums of two S&P Oil & Gas ETFs were around 20%, and the premiums of the E-Fund Oil LOF, Harvest Oil LOF, and Oil Fund LOF were also relatively high.

After trading hours on March 24, the managers of the S&P Oil & Gas ETF, Harvest, and the Oil Fund LOF collectively issued risk warning notices about premium risks, advising investors to be cautious of the risks associated with secondary market trading prices. Blind investments could result in significant losses. To protect the interests of fund unit holders, these ETFs will be suspended from trading from the market open on March 25 until 10:30 AM on the same day.

Industry insiders warn that the current market is driven by capital. Once buying momentum weakens or supply increases, premiums may narrow or even disappear, and early entrants could suffer losses. The risk of premium decline is high, and investors holding related products are advised to take profits promptly and secure gains.

Everbright Securities believes that in the context of high oil prices, the oil and gas industry chain will benefit from the high central value of oil prices. Price increase expectations will favor oil services, oil exploration, and petrochemical sectors. Substitutes for crude oil are expected to continue their boom, including coal, hydropower, nuclear power, and photovoltaics.

Bottom-fishing funds increase holdings in broad-based ETFs

It is noteworthy that despite the sharp market correction on the 23rd, bottom-fishing funds actively entered via ETFs, with net inflows of over 16 billion yuan into stock ETFs.

Among them, the Hu-Shen 300 thematic ETF saw a net inflow of nearly 6 billion yuan; the Huatai-PineBridge CSI 300 ETF net inflow exceeded 3.7 billion yuan, setting a single-day high this year. Additionally, the Guojin Index ETF and the Huaxia SSE 50 ETF each experienced net inflows exceeding 1.5 billion yuan.

Over the past week, broad-based ETFs have become a key direction for on-market capital accumulation, with the Hu-Shen 300 ETF managed by Huatai-PineBridge net inflows exceeding 7.5 billion yuan; the Guojin Index ETF, Huaxia SSE 50 ETF, China Securities 500 ETF, and the ChiNext 50 ETF each net inflow over 3 billion yuan. Funds have exited from themes such as chemicals, non-ferrous metals, gold, and oil, with the China Southern Chemical ETF, Huaxia Non-Ferrous Metals ETF, and Yongying Gold ETF each net outflows exceeding 1.5 billion yuan.

Fuguo Fund stated that after recent adjustments, the market’s selling pressure has been somewhat alleviated. In the context of normalized geopolitical conflicts, safe and stable Chinese assets are expected to gain valuation premiums and safety margins, demonstrating relative resilience. Industry allocation can focus on energy security sectors such as coal, hydropower, new energy, and chemicals, as well as advantageous industries with export potential like electrical equipment and machinery.

Huitianfu Fund indicated that future focus should be on sectors with clear growth prospects: first, North American computing power chains with strong performance certainty and solid growth logic; second, energy substitution and price transmission benefiting from rising oil price midpoints, including new energy, coal, utilities, and agricultural products; third, defensive sectors such as banking, food and beverages, and home appliances.