The culture of dragon boats has long been a cherished part of the traditions in the Lingnan region of China, resonating with its people for over a millennium. Among the elements that embody this culture, the dragon head stands out as a symbol of craftsmanship and a representation of the nation’s spirit—courageous and determined. The dragon head, adorned with flowing whiskers and fierce eyes, not only showcases the artisan's extraordinary skills but also embodies the indomitable character of the Chinese people who strive to excel.

In the realm of the A-share market, similar “dragon heads” can be found. These leading companies continuously engage in reform and innovation, blending advanced manufacturing technologies with new production factors, thereby honing their core competitiveness in a practical setting. They act much like aircraft carriers for industrial upgrades, propelling entire sectors forward and epitomizing the “new quality productivity” that explores the frontiers of corporate innovation.

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The China Securities A500 Index, which represents the forefront of various sectors, has gained significant attention in the market due to its unique compilation method and comprehensive representation. As reported by the Xizheng Strategy, by November 21, the A500 ETF had seen ongoing net inflows for 28 consecutive trading days, accumulating a remarkable net buy of 129.8 billion yuan, contributing significantly to recent market growth.

On a detailed product level, as of November 25, among the listed A500 ETFs, nine exceeded a scale of one billion yuan, leading all index categories in terms of ETFs of this size. Notably, the leading A500 ETF (563800) achieved the remarkable feat of surpassing one billion yuan in just six trading days, reaching a total share of 11.165 billion and a latest scale of 10.463 billion yuan, making it one of the fastest A500 ETFs to break this milestone.

In the world of finance, it has often been observed that those who strive for excellence lead the race, akin to boats that glide ahead in a fierce competition. The leading A-share companies exhibit outstanding performance, not only steering the course of industry development but also representing the backbone of the A-share market. The A500 Index, which covers various emerging sectors and focuses on industry leaders, has emerged as a new benchmark for China’s core assets.

Recent data indicates that from November 18 to November 25, there was a cumulative net purchase of 37.742 billion yuan in A500-related ETFs, with the latest A500 scale exceeding 168.4 billion yuan. This influx of capital has further propelled new billion-scale ETFs within the A500 index.

According to the latest disclosures from exchanges, by the close of November 25, the leading A500 ETF reported a total share of 11.165 billion, marking its first milestone of surpassing one billion yuan. Since its launch on November 18, it has achieved a cumulative net subscription exceeding 9.1 billion shares, not only leading among the 12 ETFs tracking the A500 index in terms of net inflows but also ranking as one of the quickest A500 ETFs to reach this valuation.

Looking at liquidity, the leading A500 ETF recorded cumulative trading volume over 130 billion yuan over six days (November 18-25), with a daily average exceeding 21 billion and a daily turnover rate of over 32%. These trading indicators place it among the top contenders in its category, demonstrating the market's recognition of the A500 index's stature.

The popularity of the ETFs associated with the A500 index can primarily be attributed to two factors. Firstly, the A500 index is crafted as a new generation core broad-based index deploying a sector-balanced strategy. Secondly, it encompasses a wide array of emerging sectors, bringing together a substantial number of industry leaders.

Statistics from CITIC Securities highlight that relative to the CSI 300, the A500 index holds a more substantial weight in industries such as emerging technology, advanced manufacturing, and pharmaceutical biology, aligning more closely with the trajectory of new quality productivity. Its overall structure also exhibits a certain “barbell strategy,” positioning itself to tap both traditional undervalued segments and high-growth investment opportunities.

Specifically, the A500 index significantly underweights sectors like non-bank financial services, banking, and food and beverages while overweighting foundational chemicals, defense, electronics, media, metals, and pharmaceuticals, with a greater share of industries contributing to new quality productivity.

Besides its balanced industry representation (with relatively low weights in single industries) and comprehensive coverage (spanning 35 second-level industries and 91 third-level industries), the A500 index also integrates more leading stocks from specific sectors. Data from CITIC Securities shows that A500 index constituents include 266 stocks outside those in the CSI 300, capturing a range of leading companies that are mostly mid-cap to large-cap with high growth potential.

Generally speaking, industry leaders possess established competitive advantages built over years of operations, translating to better revenue growth rates and net profits. According to statistics from Wind and listed company reports, the average return on equity for the A500 index constituents in 2023 is 10.28%, with a five-year compound revenue growth rate of 17.48%, both considerably exceeding market averages.

Moreover, data from Wind and various fund semi-annual reports indicate that despite constituting under 10% of the total number of A-share companies, the 500 companies in the A500 index account for around 60% of the total market capitalization, contributing nearly 70% of the total net profit attributable to shareholders across the market.

In the intricate process of crafting the dragon head for the Lingnan dragon boats, artisans navigate a series of meticulous steps—from design, wood selection, and sample crafting to carving, polishing, painting, and decorating—all reflecting the masterful skills and meticulous spirit of the craftsmen. Similarly, the compilation of the A500 index reveals the creators' craftsmanship and ingenuity throughout.

First and foremost, the A500 index adopts a fresh compilation perspective. As institutional investors, predominantly medium to long-term funds, have become increasingly significant players in the A-share market, the A500 index’s compilation incorporates screening criteria such as interconnectivity and ESG assessments, omitting stocks rated C or below in ESG evaluations while including leading stocks from sectors that meet connectivity requirements, catering to both domestic and overseas investment needs in China's core assets.

Secondly, the A500 index implements a method that balances samples across industries, striving to maintain consistency between the industry market value distribution of sample stocks and the overall sample space. By establishing industry balance, the A500 index not only maintains market capitalization representativeness but also enhances industry representation, thereby bolstering its overall market relevancy.

Importantly, the selection of leading companies for the A500 index is based on a more nuanced breakdown of the third-level industries, resulting in constituents that include leaders from smaller sub-industries, while also ensuring a balanced market capitalization distribution among component stocks.

In summary, when compared with other broad-based indices like the CSI 300, the A500 index's distinction lies in the balanced integration of “core assets” and “new quality productivity.” Highlighted by its distinct core asset attributes, the index’s selection of component stocks considers market capitalization, liquidity, and ESG characteristics—even enhancing the weight of technology and manufacturing sectors within the “new quality productivity” framework.

Recent data reveals that component stocks within the A500 index from sectors such as industrial, information technology, communication services, and pharmaceuticals comprise nearly 50% of the index. This exceptional representation in “new quality productivity” situates the A500 index well ahead of broader indices like the CSI 300 and SSE 50.

As the Lunar Year of the Dragon draws to a close, the tales woven around the A500 index throughout this year will undoubtedly leave an indelible mark on the capital markets. Confronted with challenges and obstacles, the resilience, bravery, and excellence embodied by the dragon—echoed through the leading enterprises within the A500 index—propel the high-quality advancement of the economy and society.