Significant review of the first half of the year.
The thrilling first half of 2025 has finally come to an end.
Influenced by Trump 2.0, the global situation in the first half of 2025 is still filled with uncertainties:
At the beginning of the year, global stock markets staged a reversal, with Hong Kong and European stocks leading globally in the first quarter, while U.S. stocks lagged behind; the "4.2 equivalent tariffs" wreaked havoc globally, with the Hang Seng Index recording an epic one-day drop of 13%, and Gold stood out remarkably; after the collapse, global stock markets rebounded, with U.S. stocks hitting new historical highs, while Gold experienced fluctuating consolidation.
As of the close on June 30, the South Korean stock market has risen 28%, leading the global stock market, while the German DAX and the Hang Seng Index followed closely with a 20% increase; the Nasdaq and S&P 500 rose nearly 5% in the first half, the SSE Composite Index increased by 2%, and the CSI 300 Index slightly rose by 0.03%.
The extreme turbulence of the market in the first half of the year tells us: certainty has become the most expensive luxury of the current era, and adapting to change is the only rule for survival.
By peeling back the layers, the investment themes in the first half of 2025 can be summarized into four changes.
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The four major changes in A-shares in H1.
The first change is the revaluation of Chinese assets triggered by technological innovation.
At the beginning of this year, the emergence of DeepSeek, the popularity of Robotics, the continual heat of BD trading, and the conflict between India and Pakistan have led to a "DeepSeek moment" for computing power, Robotics, innovative drugs, and the military industry sectors, thus igniting a wave of revaluation of Chinese assets that have been dormant for three years. Among these, the Hang Seng Health Care ETF (159892) led the way with a 50.83% increase.
The second change is the reshaping of the consumer track, with new consumption focused on self-satisfaction gaining heat, as Labubu, traditional gold, and The Pet Economy become new favorites. The stock price of Laopu Gold tripled in the first half of the year, and the stock price of POP MART nearly doubled.
The third change is that under Trump’s "reciprocal tariffs" lightning strike, the credibility of the dollar system is shaken, and global capital seeks to rebalance. Gold becomes the preferred choice for hedging, with Gold Stocks ETF (159562) and ChinaAMC Gold ETF (518850) respectively rising by 38% and 23% in H1, while stablecoins become the hottest new term in June. The stablecoin index surged 76% to surpass DeepSeek and Gold, claiming the title of "The Most Attractive Index in A-shares for H1."
The fourth change is that China is entering an unprecedented low-interest-rate era, and the high-dividend direction that has prevailed for three years continues to be favored by funds. In the first half of the year, bank stocks hit new highs repeatedly, with over 10 billion yuan flowing into the dividend strategy ETF, and the Central State-owned Enterprises Dividend Index ETF (513910) rose by 10%.
Under the four major changes of technological innovation triggering a reassessment of Chinese assets, the explosion of new consumption, the impact of "reciprocal tariffs," and unprecedented low interest rates, funds initiated a historically rare mass migration in the first half of the year.
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The layout of funds in the first half of the year.
The prominent characteristics of funds in the first half of the year include funds flowing south to Hong Kong stocks, leveraged funds hitting peaks and then retreating, the 'national team' stabilizing the market through ETFs, and insurance funds frequently taking stakes in bank stocks.
Among them, ETFs, with their unique advantages of low cost, high transparency, and risk diversification, became the hub of the aforementioned fund layouts.
As of June 30, the ETF market size reached a historic high of 4.3 trillion yuan, with a total net inflow of 302.3 billion yuan in the first half of the year. The capital trend in ETFs is also an important observation window for fund preferences.
In June, southbound funds net bought HK stocks for 80.251 billion HK dollars, marking the 24th consecutive month of net purchases. In the first half of the year, the cumulative net purchase of HK stocks reached 731.187 billion HK dollars, approaching the total level for 2024 (807.866 billion HK dollars), and more than double that of 2023 (318.841 billion HK dollars).
The stocks that saw significant net purchases from southbound funds also experienced four major changes in the first half of the year: "Internet giants + bank stocks + new consumption + technological innovation."
(The content of this article consists of objective data information and does not constitute any investment advice.)
In fact, the major bull market in HK stocks is concentrated in a few sectors and even individual stocks, with only 35% of stocks outperforming the index since the beginning of the year. Therefore, ETFs have become one of the main tools for capital southbound, with the Hang Seng TECH Index ETF (513180) tracking the Hang Seng TECH Index attracting 15.1 billion yuan in the first half of the year.
In terms of leveraged funds, during the China asset revaluation triggered by DeepSeek in February-March, financing funds significantly flowed into A-shares, becoming one of the main sources of incremental funds. By the end of June, the rebound in financing balances also ignited a major financial market rally.
As the market trembled in April, financing balances decreased. Meanwhile, during the same period, entities like Central Huijin and China Chengtong, the 'national team,' significantly bought stock ETFs at lower prices, with monthly purchases exceeding 200 billion yuan, providing important liquidity support to the market. For instance, the net inflow of ChinaAMC 300 ETF (510330) in the first half of the year reached 30.317 billion yuan, ranking first in the entire ETF market.
In 2025, the insurance shareholding trend continues. As of June 20, the total number of shareholdings by insurance companies reached 19, including 9 instances in bank stocks (7 instances in Hong Kong bank stocks), 4 instances in transportation stocks, 2 instances in utility stocks, and 1 instance in non-bank financial stocks. This shows that high dividends remain the "ballast stone" for insurance capital allocation.
In the second quarter, which saw frequent risk events, growth stocks experienced a top reversal, and the defensive ability of the dividend low volatility index began to stand out, marking a new high point. The dividend low volatility ETF (159547) rose by 6% in the first half of the year, significantly outperforming the CSI 300 Index.
The dividend low volatility ETF (159547) and the China Southern CSI Banks ETF (515020) tracked the dividend low volatility index and the CSI Bank Index, which attracted inflows of 5.26 billion yuan and 3.222 billion yuan, respectively, in the first half of the year.
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How do mainstream large institutions view the second half of 2025?
For equity investors, this year requires adaptation to a different investment environment, including: drastic changes in external conditions, a global rebalancing of capital allocation, unprecedented high strategic positioning in the stock market, and embracing technological innovation.
If we rewind to observe since September 24 of last year, we find that the four significant changes summarized above [technological innovation leading to a revaluation of Chinese assets, the explosion of new consumption, the impact of "reciprocal tariffs", and unprecedented low interest rates] point to a breakthrough in the transformation of the Chinese economy — fiscal (domestic demand), technological innovation, and tariffs.
The Zhongjin team pointed out that one perspective for judging the direction in the second half of the year is to look at the relative changes in tariffs, fiscal policies, and AI. Given the overall recovery of the Chinese economy, along with structural highlights, this is more favorable for Hong Kong stocks, and it is recommended to focus on dividends, technology, overseas expansion, and new consumption.
From the mid-year strategies of various major brokerage firms, the "technology + dividends + consumption" barbell strategy is the mainstream view of institutions for the second half of the year.
Over the past three years, Hong Kong stocks experienced a rare crash, followed by an epic rebound. At the same time, leading A-share companies have listed in Hong Kong for secondary listings, the 18C system has attracted specialized and innovative enterprises, and U.S.-listed Chinese stocks are accelerating their return, bringing a wealth of quality assets to Hong Kong stocks.
Looking back at history, since 2019, every time the Chinese stock market has entered a major rally, Hong Kong stocks have led the way, followed by A-shares.
Since last year's "924 market rally," A-shares have mostly fluctuated within a narrow range around 3400 points. As the management continues to stabilize expectations in the capital market, protective funds have strongly supported the market during key moments. Furthermore, long-term funds entering the market have raised the market's central axis.
In this context, the national team represented by Central Huijin continues to purchase broad-based ETFs, and individual investors also participate in the market through ETFs, leading to explosive growth in the ETF market.
By the end of the third quarter last year, passive investment funds held more A-share market value than actively managed equity funds for the first time in history, profoundly affecting the market ecology and the development patterns of the public fund industry.
Taking Hong Kong stocks as an example, a large amount of capital has flowed into Hong Kong stocks over the past year, mainly favoring technology, healthcare, finance, and consumer sectors.
A-share investors are also investing in Hong Kong stocks through ETFs, with net inflows of 1.657 billion yuan for the Hang Seng TECH Index ETF, 1.458 billion yuan for the Hong Kong Stock Connect Financial ETF, and 0.167 billion yuan for the Hong Kong Stock Consumption ETF in the first half of the year.
The Hang Seng TECH Index ETF (513180) includes 30 of the largest Hong Kong-listed technology companies with significant R&D investments and good revenue growth, including Tencent, Alibaba, and Xiaomi. It covers several high-growth sectors such as the Internet, new energy vehicles, and semiconductors, making it a premium tool for investing in leading technology companies in Hong Kong.
The Hong Kong Stock Connect Financial ETF (513190) and its associated funds (Class A: 020422, Class C: 020423) focus on blue-chip financial stocks listed in Hong Kong, with constituent stocks covering banks, securities firms, insurance companies, and other financial enterprises.
The Hong Kong Stock Consumption ETF (513230) includes heavyweights such as Internet giants Xiaomi (16.17%), Tencent (14.99%), Alibaba (14.44%), as well as domestic sports brand LI NING and the new consumption leader POP MART, which are rare among A-shares.
In the A-share market, capital is favored in sectors like Technology and Finance:
The ChinaAMC STAR50 ETF (588000) and its associated funds (Class A: 011612, Class C: 011613) serve as tools to track core assets in the Star market, with constituent stocks highly focused on strategic areas such as semiconductors and CSI SWS Health Care index. The management fee annual rate is 0.15%, and the custody fee annual rate is 0.05%, both at the lowest level across the All Market.
To better serve the development of technological innovation and new quality productivity, the Star market's "1+6" policy was officially released on June 18th. In the future, there may be more technology companies at the unprofitable stage listed on the Star market, sending a policy signal to the market that "capital markets must provide long-term funding for hard tech." The market is bullish on the technology sector's rebound in June, with a significant net inflow of 1.636 billion yuan into the ChinaAMC STAR50 ETF that month.
The CSI Financials ETF (516100) and its linked funds (Class A: 023884, Class C: 023885) emerged as the "new first banner of the bull market" during last year's "9.24" trend, with a maximum increase of over 100% within the Range.
This ETF passively tracks the CSI CNI Xiangmi Lake Fintech Index, covering software development, Internet finance, and the Digital Currency industry chain, while also including popular stablecoin stocks such as Lakala Payment, Northking Information Technology Co., Ltd, and Sifang Jingchuang. The composition of stablecoin concept stocks accounts for 20.66%, leading to a net inflow of 0.217 billion yuan for the CSI Financials ETF in June, when the stablecoin concept was booming.
Humanoid Robotics, as a new generation of industry trend, has seen a net inflow of 10.4 billion yuan in the first half of the year just from the Robotics ETF (562500). This fund tracks the CSI Robotics Index, covering key areas of the Robotics industry chain such as sensors, servo systems, and AI Algorithms. Its constituent stocks include Ningbo Tuopu Group, Leader Harmonious Drive Systems, and Shanghai Moons'Electric, among leading enterprises.
365 Editor
4
Summary
Recent events have made it clear that the world is currently amidst a wave of transformation, with unprecedented turbulence experienced across various fields; stagnation leads to regression.
In May 2025, we witnessed the historic moment when bank deposit rates fell below 1%. The yield on money market funds has dropped from 6% in 2013 to nearly below 1% now, indicating that risk-free returns are close to zero. Future returns depend on how much risk one can tolerate and a clear understanding of the changing times.
However, equity investments often sit on the sidelines. In the 197 trading days from September 1, 2024, to June 30, 2025, the Wind All A Index has risen on 112 days, with a range increase of 31.79%. Notably, 97% of this increase came from just five trading days between September 24 and October 8 last year.
For ordinary investors, overcoming the 'timing impulse' and opting for long-term holding and disciplined investing is a more pragmatic choice.
As Howard Marks of Oak Tree Capital said, 'The key to investing is not timing, but time—how long you stay in the market is more important than when you enter the market.'
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Risk Warning: The above content reflects the current market situation and may change in the future. It does not represent any investment opinions or advice. Past performance of the index does not guarantee future results, nor does it constitute a guarantee of investment returns or any investment advice for funds. The short operating time of the index may not reflect all stages of market development. Index funds may experience tracking errors, and past performance of the fund does not indicate future performance. Please read legal documents like the 'Fund Contract' and 'Prospectus' before purchasing any fund products, and select products suitable for your risk tolerance, investment goals, etc. The market has risks, and investment requires caution.
