The Shanghai Composite Index falls below 3,900 points! Banks demonstrate resilience, with Huabao Fund Bank ETF (512800) rising over 1% intraday! The Hong Kong Stock Connect Medical ETF strongly withstands declines.

The three major indices in the A-shares market collectively pulled back today (March 31).
By the close, the Shanghai Composite Index fell 0.80%, losing the 3,900-point mark;
the Shenzhen Component Index dropped 1.81%, and the ChiNext Index declined 2.70%.
The combined trading volume of the Shanghai, Shenzhen, and Beijing markets was 2.01T yuan,
a slight increase of 78.3B yuan compared to yesterday.

On the market, banks broadly rose, with the Baoshang (512800) bank ETF intraday price once up over 1%;
leading white liquor company Kweichow Moutai surged all day, driving consumer stocks to strengthen against the trend,
with popular ETFs that gather leading stocks in various consumer sectors—Consumer Leader ETF Baoshang (516130) and
Food & Beverage ETF Baoshang (515710), which reflects the overall trend of the eating and drinking sector—rising nearly 2% during the session;
the AH medical sector showed resilience, with representative medical ETFs (512170) and Hong Kong Stock Connect Medical ETF Baoshang (159137)
rising over 2% early in the session;
on the downside, semiconductor chips performed poorly, with the Sci-Tech Innovation Chip ETF Baoshang (589190) closing down 3.13%.

In terms of news, the Chinese Hong Kong-flagged container ships “COSCO North Ice Ocean” and “COSCO Indian Ocean,”
which had been stranded in the Persian Gulf for over a month, successfully passed through the Strait of Hormuz on the morning of March 31, Beijing time.
This is the first passage of large Chinese ships through the Strait of Hormuz since late February, restoring confidence in the tense global supply chain.

Looking ahead, Dongxing Securities pointed out that prolonged high-intensity conflicts are unsustainable,
and investors can focus temporarily on risk-averse and value-oriented companies.
Once negotiations reach a critical point, falling oil prices will ease inflation, and sustained loose monetary policy will lead to capital flowing back into stocks,
restoring market valuation and possibly shifting focus back to growth-oriented companies, with fundamentals and economic outlook as key drivers.
Falling oil prices benefit energy-intensive sectors such as airlines, shipping, chemicals, automobiles, and home appliances,
potentially leading to margin recovery.

Guosheng Securities noted that, given the current situation, geopolitical uncertainties remain,
and although recession risks still exist, market fluctuations are mainly driven by repeated uncertainties.
Adjusting positions or increasing defensive, low-volatility holdings remains a key strategy to cope with volatility.
Focus on banks and utilities with relatively certain profit models and dividend returns.

【ETF All-Know Hotspot Review】Focus on the trading and fundamentals of ETFs in banking, AH medical, and food & beverage sectors.

1. March exceeds expectations by over 10%, banks show resilience!
   State-owned six major banks’ revenue and net profit both grew, with Bank of China and Agricultural Bank rising over 3% against the trend.

Banks showed strong gains, with many stocks rising broadly.
Bank of China and Agricultural Bank rose over 3%,
Ping An Bank, China Construction Bank, Huaxia Bank, and others gained over 1%,
the Baoshang (512800) bank ETF intraday price once up over 1%, approaching a half-year high, closing up 0.88%.

Since March, the market has been disturbed by Middle East geopolitical risks,
and the banking sector has repeatedly performed counter to the trend.
The CSI Bank Index rose 3.83% this month, the highest among all CSI secondary industry indices,
while the Shanghai Composite, ChiNext, and Shenzhen indices fell 6.51%, 3.79%, and 7.02%, respectively,
making the banking sector outperform the Shanghai Composite by over 10.34%.

Note: The CSI Bank Index’s performance over the past five full years:
2025: +6.79%; 2024: +34.71%; 2023: -7.27%; 2022: -8.78%; 2021: -4.41%.
Index constituents are adjusted periodically according to the index rules; past performance does not predict future results.

Additionally, the stability of the six major state-owned banks provides confidence for investors.
Announcements show that the six major banks (ICBC, ABC, BOC, CCB, Bank of Communications, Postal Savings Bank)
will see both revenue and net profit grow in 2025, with core operational metrics improving quarter by quarter.
They also continue large dividend payouts, with total proposed dividends exceeding 400 billion yuan for the year.

Guosheng Securities emphasized that, given the current geopolitical risks,
adjusting positions or increasing defensive, low-volatility holdings remains a key strategy.
Focus on banks and utilities with relatively certain profit models and dividend returns.

Regarding future market logic, Galaxy Securities stated that short-term risk aversion benefits bank sector allocation,
and future recovery will likely come from fundamental improvements, with 2026 earnings potential further releasing.
In an environment of low interest rates and accelerated long-term capital inflows,
high-dividend, low-valuation bank stocks remain attractive to long-term funds like insurance companies,
accelerating valuation re-pricing.

The Bank ETF (512800) and its linked funds (A: 240019; C: 006697) passively track the CSI Bank Index,
which includes 42 listed banks in A-shares, making it an efficient tool for overall bank sector investment.
The Bank ETF (512800) has a recent scale of nearly 12 billion yuan,
with an average daily turnover over 800 million yuan since 2025,
making it the largest and most liquid among the 10 bank ETFs in A-shares.

2. CXO leaders lead, Hong Kong Stock Connect Medical ETF and Medical ETF show resilience!
   Kangtai Ying’s post-earnings surge, institutions see CXO as a potential sector turnaround pioneer.

The market again faced correction, but the AH medical sector showed strength,
with the representative Medical ETF (512170) and Hong Kong Stock Connect Medical ETF Baoshang (159137)
rising over 2% early in the session. Despite declines in the afternoon, both closed above water,
with 159137 ending higher.

CXO concept stocks performed counter to the trend, providing strong support.
Kangtai Ying’s AH shares surged strongly, hitting the daily limit,
while Hong Kong shares rose 13.54%!
Yesterday evening, Kangtai Ying released its 2025 annual report,
showing double-digit YoY growth in revenue and net profit, with net profit attributable to parent at 1.13B yuan, up 19.35%.

On the same day, Zhaoyan New Drug surged then pulled back,
initially hitting the daily limit in A-shares, closing up 6.54%,
and Hong Kong shares soared over 15% in the morning, ending up 0.67%.
In 2025, the company achieved net profit attributable to parent of 298 million yuan,
tripling YoY, but revenue declined nearly 18% YoY.

Public data shows that the Medical ETF (512170) covers 8 CXO leading stocks in A-shares,
with a combined weight of 25%.
Six of these have disclosed annual reports, with only Kanglong Chemical experiencing single-digit profit decline,
while Zhaoyan New Drug, Tigermed, and WuXi AppTec saw YoY net profit growth over 100%.

Hong Kong Stock Connect Medical ETF Baoshang (159137) covers 9 CXO leading stocks in Hong Kong,
with a combined weight of 42%.
All have disclosed annual reports, with 7 showing double-digit profit growth,
and 4 exceeding 100%. Jing Tai Holdings’ 2025 revenue and net profit both doubled,
with revenue growth at 201%.

Xiangcai Securities pointed out that the CXO industry is experiencing a strong recovery,
with “leading companies driving, structural differentiation” becoming evident.
Supported by stable global outsourcing demand and blockbuster drugs like GLP-1,
CXO is expected to lead a sector turnaround.
However, internal industry differentiation is intense, with resources and orders likely concentrating among large leaders,
showing a pattern of “CDMO outperforming CRO, large firms outperforming small and medium.”

3. Moutai price hikes ignite eating and drinking sector, Baoshang Fund Food & Beverage ETF (515710) rose nearly 2% intraday!
   Valuation at low levels signals a good window for allocation.

The eating and drinking sector showed resilience.
The Food & Beverage ETF Baoshang (515710), reflecting the sector’s overall trend,
rushed higher after opening, once up nearly 2% intraday, then pulled back,
closing down 0.36%.

In terms of constituents, liquor stocks led gains, with some mass-market brands performing well.
By the close, Andeli surged 2.83%, Kweichow Moutai rose 2.11%,
Jinzhongzi, Haitian Flavoring, Yingjia Gongjiu also gained prominently.

Kweichow Moutai announced on the evening of March 30 that, starting March 31,
the sales contract price of Feitian Moutai increased from 1,169 yuan to 1,269 yuan,
and the retail price from 1,499 yuan to 1,539 yuan, breaking the 8-year-old pricing guidance.

Analysts see this price hike as part of Moutai’s 2026 market-oriented transformation.
The timing suggests that Q1 Moutai sales exceeded expectations,
driving positive quarterly results, with stable market prices after the Spring Festival peak.
The price increase now allows more relaxed Q2 sales planning, supporting price stability and profit growth.

Notably, Kweichow Moutai is the largest holding in the Food & Beverage ETF Baoshang (515710),
accounting for 14.76% as of the end of 2025.

Valuation-wise, the sector remains at low levels.
As of yesterday’s (March 30) close, the Food & Beverage ETF Baoshang (515710) tracked a sub-index with a P/E ratio of 19.43,
at the 2.54% percentile over the past decade, indicating attractive long-term valuation.

Looking ahead, Aijian Securities noted that as policy pressures ease and consumption policies expand,
demand for white liquor is expected to gradually recover.
The sector is currently undervalued, with pessimistic expectations priced in,
and industry clearing expected to become clearer, with a more defined bottom.
Price stabilization and increased dividends from leading companies make dividend yield attractive.

Investors can consider allocating core assets in the food & beverage ETF Baoshang (515710).
According to China Securities Index Co., this ETF tracks the CSI Sub-Index of Food & Beverage Industry,
with nearly 60% of holdings in leading liquor stocks, including “Maotai, Wuliangye, Fenjiu,” as well as Yili, Haitain Flavoring, and others.
Off-exchange investors can also use the Food & Beverage ETF Baoshang linked funds (A: 012548 / C: 012549) to build positions.

Note: Fees are detailed in each fund’s legal documents.

Source: Shanghai and Shenzhen Stock Exchanges, as of 2026.03.31.
Reminder: Recent market volatility may be significant; short-term gains or losses do not predict future performance.
Investors should rationally consider their own financial situation and risk tolerance, and manage positions and risks carefully.

*Institutional reference sources:
① Dongxing Securities March 31 A-shares Strategy Weekly “Waiting for the Critical Point with Calm Negotiations”
② Guosheng Securities March 31 Research Report “April Strategy and Top Picks: Balancing Low-Volatility Defense and Performance Certainty”
③ Guosheng Securities 20260331 “April Strategy and Top Picks”
④ Xiangcai Securities 20260328 “Medical Services Weekly: CXO Leaders Lead, Strong Demand for GLP-1 and ADC”
⑤ Aijian Securities March 31, 2026 Food & Beverage Industry Follow-up Report “Spring Festival Summary, Rational Feedback”

Risk warning:
The Baoshang Bank ETF passively tracks the CSI Bank Index, based on the date 2004.12.31, released on 2013.07.15;
the Baoshang Medical ETF and its linked funds track the CSI Medical Index, based on 2004.12.31, released on 2014.10.31;
Hong Kong Stock Connect Medical ETF Baoshang tracks the CSI Hong Kong Stock Connect Medical Theme Index, based on 2018.12.31, released on 2022.07.21;
Food & Beverage ETF Baoshang tracks the CSI Sub-Index of Food & Beverage Industry, based on 2004.12.31, released on 2012.04.11;
Consumer Leading ETF Baoshang tracks the CSI Consumer Leading Index, based on 2004.12.31, released on 2018.11.21;
Sci-Tech Innovation Chip ETF Baoshang tracks the SSE Sci-Tech Innovation Board Chip Index, based on 2019.12.31, released on 2022.06.13.
Constituent adjustments are made according to index rules; past backtested performance does not predict future results.
Mentioned stocks are for objective illustration only, not recommendations, and do not represent fund manager or investment directions.
All information (including stocks, comments, forecasts, charts, indicators, theories, etc.) is for reference only.
Investors are responsible for their own investment decisions.
The views, analyses, and forecasts in this article do not constitute investment advice and do not guarantee any specific outcomes.
Investors should carefully read the fund legal documents, understand the risk-return profile, and choose products suitable for their risk tolerance.
Past performance does not predict future results; performance of other funds managed by the same manager does not guarantee future performance.
According to the manager’s assessment, the risk levels are:

• Bank ETF Baoshang, Medical ETF Baoshang, Food & Beverage ETF Baoshang, Consumer ETF Baoshang: R3 - Medium risk, suitable for balanced (C3) or higher investors.
• Hong Kong Stock Connect Medical ETF Baoshang, Sci-Tech Innovation Chip ETF Baoshang, Medical ETF Link Funds: R4 - Medium-high risk, suitable for active (C4) or higher investors.
  Appropriateness opinions are subject to sales institutions’ judgment.
  Fund risk ratings are evaluated by sales institutions according to legal requirements and should not be lower than the manager’s rating.
  Differences may exist between the risk features described in the fund contract and the risk level.
  Investors should understand the risk-return profile, consider their own investment goals, time horizon, experience, and risk capacity, and bear the risks themselves.
  CSRC’s registration of the funds does not imply any judgment or guarantee of their investment value, market prospects, or returns.
  Invest cautiously.