Top Ten Events in A-shares for 2024: Epic Surge Witnessing History, XUEQ from ICU to KTV, "Mystical Stock Trading" Chaos, Four Major Banks Repeatedly Setting New Highs

The bell for 2025 is about to ring. Looking back at the past year of 2024, the A-share market has frequently staged thrilling dramas, with its ups and downs comparable to Hollywood blockbusters.

The year did not start smoothly, as the A-share market faced significant corrections at the beginning of the year, testing investor sentiment. The turmoil caused by the "knock-in" products on the XUEQ platform further intensified concerns about market volatility.

However, shortly after, domestic policies experienced a historic turnaround. The release of the new "National Nine Articles" and the heavy implementation of the market value management system injected new vitality into the market, making dividend stocks and "Chinese-character stocks" the darlings of the market. The introduction of two major structural monetary tools further propelled the A-share market into a globally watched "epic" rally.

After the "mad bull" market, the pace of a "slow bull" gradually emerged. The A-share market sectors began to rotate rapidly, shifting from the "debt resolution" concept in early November to the "millet economy." At the same time, a wave of "mystical stock trading" swept in, with junk stocks unexpectedly rising, becoming a unique landscape in the market. During this period, the debut of the Saudi ETF and the CSI A500 ETF provided investors with more diversified investment channels.

The yield on government bonds hit new lows, bringing new uncertainties to the A-share market. While the market searched for new investment opportunities, it also faced a constantly changing economic environment.

As the new year approaches, market risk appetite has significantly declined. "Chinese-character stocks" are once again trading hotly, while high-dividend, low-volatility bank stocks have repeatedly hit new highs, leading to an independent market trend.

XUEQ "Knock-in" Turmoil

A major drop at the beginning of 2024 pulled XUEQ into a "knock-in" turmoil.

First, "Calm Tang" was reported to have a four-fold leveraged XUEQ position that was liquidated, losing all principal. Then, a certain top actress was rumored to have gone to a brokerage headquarters to seek an explanation after her liquidation, which was denied, causing panic over "collective liquidation of XUEQ products."

XUEQ products, also known as "automatic redemption-type option products," are a type of option structure. These products typically link to an underlying asset and set two barrier lines above and below. If the asset rises to the upper barrier line, it is called "knock-out," and if it falls to the lower barrier line, it is called "knock-in." Investors can choose to take profits when the underlying asset rises above the "knock-out" line.

As long as the underlying asset does not experience a sustained significant drop, the profits from this product will continue to grow, just like a snowball. However, if the price of the underlying asset continuously falls below the "knock-in" price before the contract expires, investors face significant principal losses.

Currently, most of these products in the market are linked to indices such as the CSI 500 and CSI 1000, with mainstream knock-in levels at 70%, 75%, and 80%, and knock-out levels at 100% or slightly higher.

Starting from January 8, the CSI 500 and CSI 1000 indices concentratedly fell into the "knock-in" zone, and on January 22, both indices recorded their largest single-day drop in over three years. Investors in XUEQ products faced a heavy blow, with over 50 billion in CSI 500 XUEQ and nearly 29 billion in CSI 1000 XUEQ products experiencing "knock-in" on that day Desperate XUEQ investors who have been trapped for half a year finally welcomed a historic rebound before and after the National Day. On October 8, the CSI 1000 and CSI 500 indices rose by 8.6% and 7.2%, respectively, both reaching new highs for the year.

According to an article from Securities Times, several personnel related to derivatives at various brokerages confirmed that a batch of XUEQ products had been successively "knocked out" before the National Day, and with the surge in A-shares, even more products were knocked out.

This wave of "knockouts" made XUEQ investors feel like they were "suddenly pulled from the ICU into a KTV," so moved they wanted to cry!

New "National Nine Articles" Released

On April 12, the State Council released the "Several Opinions on Strengthening Regulation, Preventing Risks, and Promoting High-Quality Development of the Capital Market," emphasizing the active resolution of the long-term net asset value issues of controlling listed companies; requiring strict continuous supervision of listed companies, and strictly regulating the reduction of holdings by major shareholders, especially controlling shareholders and actual controllers; strengthening the supervision of cash dividends of listed companies, and restricting major shareholders from reducing holdings and implementing risk warnings for companies that have not paid dividends for many years or have a low dividend ratio.

Regarding the delisting mechanism, the document emphasized the establishment and improvement of a differentiated delisting standard system for different sectors; tightening financial delisting indicators; and improving market value standards and other trading-related delisting indicators.

This is the third "National Nine Articles" of the capital market after those released in 2004 and 2014. On the first trading day after its release, the three major A-share indices collectively surged.

CITIC Securities compared the historical two "National Nine Articles" and found that the new "National Nine Articles" is more focused on the investor side than previous ones, affirming the investment and wealth management attributes of the capital market. CITIC Securities stated that if subsequent policies are effectively implemented, the overall dividend ratio of listed companies is expected to increase significantly, enhancing the real returns for investors in A-shares and making the capital market a major source of growth for residents' property income after real estate.

According to Wind data, as of December 23, 3,965 listed companies have implemented cash dividends this year, with a total dividend amount exceeding 2.38 trillion yuan, setting a historical record. Among them, over 100 listed companies achieved their first dividend since listing, and nearly 1,000 listed companies announced mid-year or third-quarter dividend plans, increasing the frequency of dividends.

In addition, CITIC Securities reviewed the situations following the issuance of the previous two "National Nine Articles" and found that each issuance had a significant uplifting effect on subsequent market performance.

Major Positive News Ignites Optimism, A-shares Welcome Epic Market

On September 24, the central bank introduced two structural monetary policy tools at a press conference held by the State Council Information Office:

One tool is the swap convenience for securities, funds, and insurance companies, with an initial operation scale of 500 billion yuan, which can be expanded in the future as needed. Central Bank Governor Pan Gongsheng stated:

"As long as this is done well, the first phase of 500 billion yuan can be followed by another 500 billion yuan, or even a third 500 billion yuan; I think all of this is possible and open."

The other tool is stock repurchase and increased loan support, with an initial quota of 300 billion yuan. "If this tool is used well, another 300 billion yuan can follow, or even a third 300 billion yuan; all of this is possible." "Pan Gongsheng also emphasized.

On September 26, the Political Bureau held a meeting to analyze and study the economic situation, significantly increasing the requirements for the counter-cyclical adjustment of fiscal and monetary policies. For the real estate market, it was the first time to propose the need to "stop the decline and stabilize." It also mentioned "guiding medium- and long-term funds into the market to support mergers and acquisitions of listed companies."

With a series of intensive policy measures such as reserve requirement ratio cuts and interest rate reductions, market sentiment was completely ignited, and the A-shares entered a "desperate rebound" mode.

From September 24 to October 8, the Shanghai Composite Index surged by 700 points, reaching a high of 3489.8 points, a two-and-a-half-year high, with a cumulative increase of nearly 30% over six trading days.

The ChiNext Index soared from 1530 points to around 2550 points, reaching a one-and-a-half-year high, with an increase of over 65% during this period.

At the same time, the Hong Kong stock market and U.S. stock market were also filled with a strong bull market atmosphere, with the Hang Seng Index peaking above 23,000 points.

"Mystical Stock Trading" Makes a Comeback, Junk Stocks Surge

After a round of explosive growth, the overall market entered a consolidation phase; however, the frenzy of individual stock speculation remained surging, with various unbelievable "mystical stock trading" trends prevailing.

First, the "Oriental" concept emerged. Starting from early November, 34 stocks in the market with "Oriental" in their names triggered wave after wave of limit-up trading, among which, Sunrise Oriental had 15 limit-ups in 20 days, Oriental Intelligence had 12 limit-ups in 18 days, and Great Oriental had 9 limit-ups in 12 days...

Following that, the "Southeast Northwest Central" and "Digital" concept stocks also did not back down, collectively showing unusual movements, with many stocks experiencing explosive trading.

Entering December, Hainan concept stocks rose across the board, and even "Korean concept stocks" inexplicably hit limit-ups, leaving people both amused and bewildered.

The hottest was the speculation on "Year of the Snake" concept stocks. Although there is only one stock with "Snake" in its name in the entire A-share market, China Merchants Shekou, this did not prevent the market from creating a large and peculiar Year of the Snake concept stock camp:

When "Snake" was not enough, "Dragon" and "Python" were added, with stocks like Chuanfa Longmang and Longbai Group being included in the Year of the Snake concept speculation;

Guifaxiang, due to its main product resembling a snake in shape, became a key member of the Year of the Snake concept stocks;

Zhangzhou Development was forcibly pulled into this concept camp because Zhangzhou is known as "Snake City" and produces snakes;

Baota Industrial leveraged the legend of the snake demon in Baota Town, Huluwa capitalized on the popularity of the animated series of the same name, and Dr. Glasses and others, due to their slight connections with snakes, all shared in the feast of this mystical speculation; Moreover, some company chairpersons belong to the snake zodiac, and their companies' stocks have also been hyped up in this wave of "snake" speculation.

Looking at each wave of "mystical stock speculation," especially the hype around junk stocks without fundamental or growth prospects, it is always the retail investors following the trend who bear all the losses, ultimately ending up with a mess.

Of course, this time is no exception.

The Explosion of the "Grain Economy"

The term "Grain Economy," which sounds quite rustic, is actually unrelated to agriculture but is derived from the phonetic translation of the English word "Goods." It refers to peripheral products in the ACG (Anime, Comic, and Games) culture, such as badges, posters, cards, keychains, standees, figurines, dolls, and so on.

With the breaking of the ACG culture into mainstream, more and more young people are joining the ranks of "consuming grain," and the "grain wind" has blown into the A-share market.

From November 25 to the present, concept stocks related to the "Grain Economy" have entered a concentrated explosion period, with Shifeng Culture achieving six consecutive trading limits, Guangbo Co., Ltd. achieving nine consecutive trading limits, and stocks like Xinghui Entertainment, Deyi Cultural Creation, Huali Technology, Aofei Entertainment, and Hengdian Film and Television experiencing significant increases.

It is worth noting that since September of this year, several securities firms, including Haitong Securities, CITIC Securities, Huachuang Securities, and Debon Securities, have released research reports related to the "Grain Economy," and many listed companies have successively disclosed their layouts and progress in the "Grain Economy" field.

According to data from the Forward Industry Research Institute, from 2016 to 2023, the scale of China's ACG industry has grown from 18.9 billion yuan to 221.9 billion yuan, with a compound annual growth rate of 42%. Among them, the scale of peripheral derivative industries has surged from 5.3 billion yuan to 102.3 billion yuan, with a compound annual growth rate of 53%.

CITIC Securities has found that China's current "Grain Economy" has similarities with Japan's "anime consumption" after the 1990s. The institution stated:

At present, China's economic level has the foundation to support the growth of spiritual consumption, and the entry of Generation Z into society will bring tremendous momentum to spiritual consumption. Compared to 2023, the proportion of Chinese residents' spending on education and entertainment still has a 4.7 percentage point gap compared to Japan in 2010. From both supply and demand perspectives, we believe that China's IP-related spiritual consumption is on the fast track to growth. Compared to Japan, there is still room for improvement in the audience and per capita consumption of China's IP-related spiritual consumption.

Implementation of Market Value Management System

In 2024, China's listed companies will enter the first year of market value management.

In March of this year, the China Securities Regulatory Commission issued the "Opinions on Strengthening the Supervision of Listed Companies (Trial)," clearly stating the need to "promote listed companies to strengthen market value management." In April, the new "National Nine Articles" was introduced, proposing to "promote listed companies to enhance investment value and formulate guidelines for market value management." In November, the "Guidelines for the Supervision of Listed Companies No. 10 - Market Value Management" was officially released, clarifying the responsibilities of the board of directors, directors, and senior management of listed companies Until December 17, the State-owned Assets Supervision and Administration Commission of the State Council officially issued the "Several Opinions on Improving and Strengthening the Market Value Management of Central Enterprises Holding Listed Companies," clarifying the goals and directions of market value management, pointing out the need to make good use of the "toolbox" of market value management, improve the working mechanism, strengthen positive incentives, and adhere to compliance bottom lines.

The "Opinions" also emphasized that central enterprises should regard market value management as a long-term strategic management behavior, improve the institutional mechanisms for market value management, and enhance the effectiveness of market value management work. The State-owned Assets Supervision and Administration Commission will include market value management in the performance assessment of the heads of central enterprises, strengthening positive incentives.

After the introduction of the new "National Nine Articles" and the market value management system, the market attention on dividend stocks and "China-character" stocks has surged, signaling a return to value investing.

Dividend Stocks and "China-character" Stocks Soar, Bank Stocks Hit New Highs

On December 18, the stock prices of companies such as China State Construction Engineering Corporation, China Railway Construction Corporation, and China National Materials Group Corporation saw significant increases. On December 19, China National Materials Group Corporation hit the daily limit again, and many "China-character" stocks also rose. On the 20th, against the backdrop of declines in the three major stock indices, more than 20 "China-character" stocks, including China Haifeng and AVIC Electromechanical Systems, rose against the trend. On the 25th, China National Materials Group Corporation hit the daily limit once more, with China State Construction Engineering Corporation, AVIC Electromechanical Systems, China Jinluo, and Zhongke Shuguang all experiencing significant gains.

This week, bank stocks have shown independent performance, becoming a beautiful "scenery line" in the A-share market.

On December 25, the stock prices of the four major banks—Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank—hit new highs again, with the market value of ICBC briefly surpassing China Mobile, becoming the "market value king" of the entire A-share market. According to statistics, the cumulative increase of the four major banks has exceeded 40% this year.

Guohai Securities stated that historically, bank stocks have shown post-cycle characteristics, performing well during periods of intensified counter-cyclical policies and improved economic expectations. In the past two years, high-dividend strategies have received continuous market attention, with declining long-term interest rates being an important factor driving the performance of high-dividend assets. The high dividends, low volatility, and stable operating style of bank stocks make them a "safe haven" for funds during market fluctuations. Especially at the end of the year and the beginning of the year, the expectation of increased allocation of insurance funds further enhances the attractiveness of bank stocks.

It is worth noting that this year, a total of 22 bank stocks have announced or conducted interim dividends, while last year, bank stocks only conducted year-end dividends, indicating a significant increase in the industry's dividend enthusiasm.

Government Bonds Soar, Yields Continue to Hit New Lows

In 2024, China's government bond market has welcomed a historic bull market, with government bond yields repeatedly hitting new lows, and the scale of several bond ETFs reaching new highs.

On the morning of December 13, the yield on 30-year government bonds fell below the 2.0% mark, dipping as low as 1.9975%, while just two days earlier, the yield on 10-year government bonds also fell below the 2.0% integer mark

In addition, the 5-year, 2-year, and 1-year government bond futures have also continuously set new records, with the 1-year government bond yield falling below 1% on the 20th, marking the first time since 2009.

The bullish trend in the bond market has led to a continuous inflow of funds into related ETFs. Data shows that as of the 26th, there are 20 bond ETFs, an increase of 1 since the end of last year; the total scale is close to 166.218 billion yuan, setting a new historical high, up 107.38% from 80.152 billion yuan at the end of last year.

CICC believes that the new low in the China bond market reflects growth expectation pressure. It reminds that as the important window period in the domestic market comes to an end, the market enters a policy vacuum period before the Two Sessions; additionally, external disturbances, especially the uncertainty regarding the future path of the Federal Reserve, still exist.

Guosen Securities states that the central level of long-term bond yields continues to decline, and the investment income pressure on insurance funds further increases. Since the beginning of this year, companies represented by Great Wall Life, China Pacific Insurance, and Ruizhong Life have increased their stakes in high-quality listed companies, mainly concentrated in industries such as public utilities, transportation, and banking, which have high dividends and relatively stable ROE levels.

The New Generation of Super Broad-based Index — A500 ETF Launches

In 2024, the A-share market welcomed an important new generation of super broad-based index — the CSI A500 Index.

On September 23, the China Securities Index Co., Ltd. officially released the CSI A500 Index. This index selects 500 securities with larger market capitalization and better liquidity from various industries as index samples, reflecting the overall performance of the most representative listed companies in each industry.

The first batch of 10 ETFs (exchange-traded funds) tracking the CSI A500 Index was launched, conducting a "lightning battle" fundraising issuance before the official release of the index.

On October 15, the first batch of CSI A500 ETFs was officially listed on the Shanghai and Shenzhen Stock Exchanges. On the first day of listing, the cumulative transaction amount of the 10 CSI A500 ETFs exceeded 10 billion yuan. Among them, the CSI A500 ETF under Guotai Fund had a transaction amount exceeding 3.1 billion yuan on its first day, setting a new high for the transaction amount of ETFs listed this year.

Since its listing, the A500 ETF products have continuously attracted fund inflows, rapidly expanding in scale.

According to Wind Information, as of December 20, the scale of 46 CSI A500 funds (counting only the main share classes) reached 323.628 billion yuan. If all share classes are included, the number of fund products established around this index has reached 94 (counting different share classes) Why is the CSI A500 so popular?

According to a previous article by Jiemian News, Tianhong Fund believes that an important reason is the strong vitality and attractiveness of this core index. Traditional broad-based indices, such as the CSI 300 and CSI 500, rely solely on the size of market capitalization and trading volume to select samples, but the CSI A500 index uses an industry-balanced sampling method, selecting 500 securities with larger market capitalization and better liquidity from various industries as index samples to reflect the overall performance of the most representative listed companies in each industry.

As a result, the CSI A500 avoids the drawback of excessive concentration in certain industries, especially the financial sector, which increases cyclical volatility. From the perspective of constituent stocks, this index is overweight in some high-growth emerging industries, such as information technology, new energy, and pharmaceuticals, while the proportion of finance has significantly decreased, making the index more future-oriented and reflecting the real structural changes in the economy.

Saudi ETF Launches on A-shares

On July 16, the first batch of Saudi ETFs officially launched on A-shares.

The Saudi ETFs under Huatai-PB and Southern Fund were listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange, respectively. This milestone event marks the first time that domestic investors can directly invest in the Saudi market, opening up new channels for investment in the Middle East market.

According to Wind data, on the first day of listing, both Saudi ETFs opened high and rose, ultimately closing at the daily limit, with a premium rate exceeding 6%, attracting a total of 4.896 billion yuan on the first day. As of July 23, the total trading volume over six trading days reached 31.6 billion yuan.

During this period, Southern Fund and Huatai-PB Fund also issued multiple announcements reminding investors to pay attention to the risk of trading price premiums. However, this still could not dampen investors' enthusiasm. Ultimately, the Shanghai Stock Exchange and Shenzhen Stock Exchange had to "pull the plug" and strictly identify abnormal trading of the two ETFs, taking self-regulatory measures such as designating them as key monitoring accounts, suspending account trading, and restricting account trading as necessary.

Under the dual influence of regulatory intervention and market self-adjustment, the prices of the two Saudi ETFs quickly fell from their highs, and the market gradually returned to rationality