With the establishment of a mechanism similar to a "stabilization fund", the downside risk of A-shares has significantly decreased.

CMSC released a research report this week stating that the Huijin Fund once again played a "stabilizing" role. Whenever important heavyweight indexes fell during trading hours, certain ETFs represented by the Shanghai and Shenzhen 300 ETF would see a rapid increase in trading volume towards the end of the session, ultimately leading to the Shanghai and Shenzhen 300 indexes recording a flat or slight increase. CMSC believes that with the introduction of a mechanism similar to a "stabilizing fund" in the A-share market, the downside risk has significantly decreased. With the index stable, the downside risk in A-shares is controllable, allowing for room for growth. This will greatly improve the expected return curve, resembling the characteristics of a "call option." The main points of CMSC's view are as follows: Unlike market perception, CMSC believes that under the influence of the "stabilizing" force, the downside risk in the current market is controllable. With a clear decline in market trading volume and the end of the earnings disclosure period approaching, there is a high probability of the index breaking through and trending upwards in a significant way. With improved first-quarter economic data and potential additional policy measures to counter external impacts, there is a high probability of total demand stabilizing and even increasing this year, leading to a stable increase in enterprise profitability. In terms of the stock market, the core index is once again showing a "stabilizing" trend, with multiple instances of large trading volumes towards the end of the session in broad-based index ETFs pushing the indexes up into positive territory. Looking ahead, with ETFs maintaining index stability, the downside risk in A-shares is controllable, allowing for room for growth. CMSC suggests focusing on three areas in the future: areas with local economic improvements (securities firms, large consumption companies, defense, artificial intelligence and data control, self-controlled semiconductor industries); high free cash flow; and low penetration rates but high growth potential in sectors such as artificial intelligence and robotics. This week, the overall performance of the A-share market was good, mainly due to: (1) China's GDP in the first quarter of 2025 reaching 31.88 trillion yuan, a 5.4% year-on-year increase; (2) Continued rebound from last week, but with a significant decrease in market turnover, a decrease in activity, and clear structural differentiation in the market; (3) Increased uncertainty in tariff policies, with the Federal Reserve in no rush to adjust policy rates; (4) Overall rebound in the Hong Kong stock market. The year-on-year growth rate of social retail sales and the production of smartphones turned positive in March. The monthly year-on-year growth rate of social consumer goods retail sales expanded, indicating the continued effect of expanding consumption policies. The areas showing improved economic indicators this week include: 1) Electronics with continued prosperity, smartphones seeing a positive year-on-year growth rate in production, and communication equipment retail sales seeing expanded growth; 2) In March, household appliances, jewelry, grains and edible oils, and tobacco sales all saw expanded year-on-year growth rates; 3) In March, the new area of housing construction, completed housing area, and accumulated sales of commercial housing showed a narrowing decline in year-on-year growth rate. Future focus should be on areas showing improved consumer confidence or high demand for white goods, dairy products, soft drinks, watches and jewelry, and consumer electronics. ETFs saw a continued net inflow and reduced financing outflow. Financing funds saw a net outflow of 45.7 billion yuan over the first four trading days, with newly established stock mutual funds declining by 68.8 billion shares compared to the previous period. ETFs saw net purchases, corresponding to a net inflow of 368.6 billion yuan. Financing funds saw a net buying position in electronics, automobiles, and basic chemicals, while there were more redemptions in brokerage ETFs and more purchases in pharmaceutical ETFs. The net increase in holdings by major shareholders has decreased, with planned reductions also decreasing. Research shows that the GPT-4.5 large model has passed the Turing test. Recently, research scholars from the University of California, San Diego provided empirical evidence for the first time that artificial systems (LLaMa-3.1-405B and GPT-4.5) have passed the standard three-party Turing test. 1) GPT-4.5 was judged to be human with a high accuracy rate of 73%, significantly higher than the rate of real human participants being selected. 2) LLaMa-3.1 was judged to be human with a rate of 56% under the same conditions, showing no significant difference from human participants. This week, the overall valuation level of A-shares fell, with the Wind Full A Index PE (TTM) at 14.6, up 0.2 from the previous week, placing it at the 44.8% percentile of historical valuations. Most indexes saw an increase in valuation this week, with steel, media, and environmental protection leading the way in increased valuations, while electronics, social services, and electrical equipment saw the biggest decreases in valuation. Risk warning: Economic data falling short of expectations, incomplete policy understanding, and overseas policy unexpectedly tightening.