Q1 2026 A-shares conclude: Volatile pullback hides opportunities, CSI A500 becomes a new target for allocation

As of March 31, the first quarter performance of A-shares in 2026 officially concluded. Affected by external factors such as overseas geopolitical conflicts, the market overall showed a trend of “rising sharply then pulling back, with structural differentiation,” with the three major indices all closing lower for the season, and market risk appetite somewhat declining. However, along with valuation returning to a reasonable range and the steady support of domestic economic fundamentals, clear investment opportunities have already emerged amid the market downturn. The broad-based indices, especially the CSI A500 Index, highlight their allocation value, and related quantitative enhanced funds have also been launched accordingly.

First quarter A-shares rose then fell, highlighting valuation advantages amid volatility

Looking back at the first quarter performance of A-shares, the market showed a clear “rise first, then decline” trend. In different phases, January saw a “good start” driven by policies and liquidity, with the Shanghai Composite Index once breaking through 4,100 points; February experienced increased volatility, with the market shifting from “broad rally” to “structural differentiation”; in March, affected by international geopolitical conflicts, market sentiment was under pressure, risk appetite declined, leading to a pullback in indices. According to statistics, total trading volume of A-shares in the first quarter exceeded 144 trillion yuan, far surpassing 87 trillion yuan in the same period of 2025, maintaining high trading activity.

Amidst the oscillation and correction, market valuations gradually returned to a reasonable range, and investment cost-effectiveness continued to improve. Wind data shows that as of March 31, the rolling P/E ratio of the CSI A500 Index fell to 16.84 times, and the P/B ratio dropped to 1.65 times, further highlighting valuation advantages. On the same day, the CSI A500 Index closed at 5,526.73 points, down 1.21% from the previous trading day. The overall first quarter showed oscillation and correction, but valuation remained at a relatively reasonable level.

Steady economic fundamentals and policy support strengthen the market foundation

Contrasting with ongoing external geopolitical disturbances, the certainty of domestic economic and policy conditions has become the core support for market stability. From economic data, the domestic economy remains resilient, with key indicators continuously recovering, unaffected significantly by external shocks.

According to the National Bureau of Statistics, from January to February 2026, profits of industrial enterprises above designated size reached 1,024.56 billion yuan, up 15.2% year-on-year, demonstrating strong corporate profitability. Data from the General Administration of Customs shows that during the same period, China’s total import and export value of goods was 7.73 trillion yuan, up 18.3% year-on-year, with exports totaling 4.73 trillion yuan, up 19.2%, maintaining strong trade momentum and reflecting China’s economic vitality amid global supply chain recovery.

The production side also performed well, with manufacturing PMI rebounding to 50.4 in March, returning above the expansion-contraction line, with new orders index reaching 51.6, indicating continued improvement in manufacturing demand. On policy, the “14th Five-Year Plan” outline was officially released on March 13, emphasizing technological innovation, modern finance, and expanding domestic demand as key topics, aiming to lead industrial upgrading through new productive forces, with measures such as “intelligent, green, and integrated” development to guide high-quality economic growth; on March 26, the People’s Bank of China Monetary Policy Committee held a quarterly meeting, explicitly proposing to continue implementing moderately easing monetary policy, maintaining ample market liquidity, and providing solid capital support for the capital markets.

CSI A500 anchors new productive forces, becoming a benchmark for broad-based allocation

Against the backdrop of intensified market style rotation and continued volatility, broad-based indices with extensive industry coverage and strong risk diversification have become preferred investment options. Among them, the CSI A500 Index, with its broad coverage of new productive forces, is gradually becoming a core asset allocation benchmark.

Compared with the CSI 300 Index, the CSI A500 Index has a lower allocation proportion in traditional sectors such as finance and consumption, and places more emphasis on core high-quality industries representing new productive forces, such as industrial and information technology sectors. Data shows that nearly 70% of the index weight is related to “new productive forces” industries, aligning with China’s high-quality development and new-old kinetic energy conversion trends, accurately fitting the “14th Five-Year Plan” development requirements, and aiming to capture the dividends of economic transformation.

Additionally, the CSI A500 Index industry coverage is balanced, including all 35 secondary industries and 89 tertiary industries of the CSI, with better coverage of leading companies in tertiary industries than other broad-based indices. It includes both traditional industry leaders and many high-growth potential niche leaders, balancing market capitalization representativeness and industry diversity. From the component stock structure, companies with a total market value below 50 billion yuan account for 17% of the weight and over 45% of the number of stocks, with the top 10 constituents accounting for only 20% of the total weight, helping to reduce individual stock risk exposure.

Long-term performance is also impressive. Wind data shows that from 2016 to 2025, the CSI A500 Index increased by 30.09% over the decade, with an annualized return of 2.74%, significantly outperforming the CSI 300, CSI 500, and CSI All Share indices, demonstrating excellent risk-return characteristics over the medium to long term.

（Data source: Wind, period from 2016/1/1 to 2025/12/31, with weekly calculation of annualized volatility and Sharpe ratio.）

Quantitative enhanced funds debut to help investors capture excess returns

As valuations of stocks return to a reasonable range and policies guide new productive forces, the attractiveness of core assets continues to rise. How to seize low-position allocation opportunities has become a focus for investors. Recently, China Europe Fund launched the China Europe CSI A500 Quantitative Enhanced Fund (A class: 026742 / C class: 026743), providing investors with a convenient tool to quickly allocate to the new generation of core assets.

It is reported that the fund will be managed by China Europe Fund’s mid-generation quantitative fund manager, Qian Yating. Public information shows that Qian Yating has 9 years of industry experience and 4 years of fund management experience, with rich quantitative investment expertise. Her management of the same tracking CSI A500 Index fund has shown outstanding performance, with the China Europe CSI A500 Index Enhanced A fund achieving a return of 29.82% in the past year, surpassing the benchmark by 8.52%; over the past six months, the return was 24.66%, exceeding the benchmark by 3.95%.

（Data source: Fund periodic reports, index data from Wind, as of 2025/12/31.）

Industry insiders believe that the first quarter of 2026’s A-share volatility provides a window for long-term deployment. The CSI A500 Index, with its industry balance, coverage of new productive forces, and reasonable valuation, offers significant long-term allocation value. The launch of China Europe CSI A500 Quantitative Enhanced Fund is expected to help investors better grasp market opportunities and capture long-term gains amid complex market environments.

（Fund performance data from fund periodic reports, index data from Wind, as of 2025/12/31. Past performance of the fund does not predict future results, and the performance of other funds managed by the fund manager does not guarantee the performance of this fund. Since inception, the China Europe CSI A500 Index Enhanced A has gained 29.11%, with a benchmark return of 19.58%. In 2025, the fund’s return was 29.82%, with the benchmark at 21.3%. Previous fund managers include Jin Xuwei (since September 19, 2015) and Qian Yating (since December 30, 2024). Data sources: Wind, National Bureau of Statistics, General Administration of Customs, fund periodic reports; the related information in the article is for product introduction only and does not constitute investment advice.)**

Funds carry risks; investment should be cautious. This view reflects the opinion at the time and may change in the future. It is for reference only and does not constitute any promotional material, investment advice, or guarantee, nor is it a legal document. Past performance does not predict future results, and the performance of other funds managed by the fund manager does not guarantee this fund’s performance. This product is issued and managed by China Europe Fund Management Co., Ltd., and distribution agencies do not bear investment or redemption responsibilities. The fund manager commits to managing and operating the fund assets with honesty, integrity, diligence, and responsibility but does not guarantee profits or minimum returns. Before making investment decisions, please carefully read the fund contract, prospectus, and product information document, fully understand the risk-return characteristics and features of the fund, consider all risk factors, and assess your own risk tolerance based on your investment goals, horizon, experience, and asset situation. Make rational and cautious investment decisions based on product information and sales suitability opinions. This fund is an equity index-enhanced fund, with risks and returns higher than hybrid, bond, and money market funds. It tracks the CSI A500 Index, and its risk-return profile is similar to that of the market portfolio represented by the index. The CSI series indices are compiled and calculated by CSI Index Co., Ltd. All copyrights of index values and constituent lists belong to CSI Index Co., Ltd. If investing in Hong Kong Stock Connect stocks, additional risks related to market environment, investment targets, market systems, and trading rules may apply. The sales fee structure for China Europe CSI A500 Quantitative Enhanced Fund: A class subscription/purchase fee, for amounts less than 5 million yuan, 0.3%; for amounts of 5 million yuan or more, 1,000 yuan per transaction; C class has no subscription/purchase fee; redemption fee for A/C classes, for individual investors holding less than 7 days, 1.50%; for holdings of 7 days or more, 0%; for other investors, less than 7 days, 1.50%; 7-30 days, 1.00%; 30-180 days, 0.50%; over 180 days, 0%; C class sales service fee is 0.20% per year. Applicable to investors holding C shares for less than one year through other sales channels, excluding pension clients subscribing directly through the fund manager’s sales center. The specific sales fee rates applicable to the product are subject to the fund manager’s official legal documents and sales rules available at www.zofund.com at the time.

MACD Golden Cross Signal Formed, These Stocks Are Showing Good Momentum!