March Final Battle: The Shanghai Composite Index fluctuates around 3,900 points. Why is there a clear divergence between the yellow and white lines?

On the last trading day of March, A-shares still showed very strong resilience, briefly surging to 3,948 points. However, in the final week of the Qingming holiday, cautious sentiment prevailed; the Shanghai Composite Index traded in a range near 3,900 points. The divergence between the yellow and white lines was especially evident, showing that large-cap stocks were relatively stronger than mid- and small-cap stocks.

This is consistent with the market action: gains led by heavy-weight sectors such as home appliances, food and beverage, and banks. The 华夏 (510330.SH) CSI 300 ETF, which is heavily positioned in finance and consumption, saw an afternoon rebound.

With this round of conflict now in its first month, there are two points similar to the Russia-Ukraine conflict: (1) early in the war, the downside was limited; after about a month, sentiment was released in a concentrated way, and the decline broadened; (2) small-cap stocks fell more than large-cap stocks, and the basis widened by more than the large-cap level. At present, investors can focus on defending with the large-cap index first, then switch to small caps after observing a rebound in the small-cap index and once the basis stabilizes.

The investment department of 华夏 Fund recommends: Given factors such as the ongoing persistence of geopolitical conflicts, inflation being lifted, and international liquidity tightening at the margin, which may disturb the market; from the perspective of allocating to defensive broad-based funds, prioritize positioning in the CSI 300 at this time.

Amid an uncertain environment outside the region, capital tends to favor allocating to large-cap value sectors with strong liquidity, high earnings certainty, and relatively lower volatility. Once volatility reaches an extreme level and the market begins to rebound, mid- and small-cap stocks and the “dual innovation” segment are likely to show greater upside elasticity.

The top five industries by weight in the CSI 300 Index are: electronic 14.2%, banks 11.2%, non-bank financials 10.2%, power equipment 8.2%, and non-ferrous metals 7.1%. Covering the main board, the ChiNext board, and the STAR Market, it reflects a balanced framework of “finance + consumption + technology manufacturing.”

China Asset Management CSI 300 ETF 华夏 (510330.SH), with a management fee rate as low as 0.15% per year, along with the liquidity management capabilities of major equity ETF issuers, index tracking error control capabilities, and their ability to respond under extreme market conditions—these all have become key reasons why large capital chooses it during very unusual times.

Economic Daily News

（责任编辑：董萍萍 ）

     【Disclaimer】This article only represents the author’s personal views and is not related to Hexun.com. Hexun’s website remains neutral toward the statements, viewpoints, and judgments made in the text, and does not provide any express or implied guarantee regarding the accuracy, reliability, or completeness of the content. Readers should use this information only as a reference and bear all responsibility themselves. Email: news_center@staff.hexun.com