Shanghai Index Barely Holds 3800 Points as CSI 300 ETFs See Collective Volume Surge! What Signal?

What strategic considerations are behind AI and CIC increasing their holdings in the CSI 300 ETF?

Amid the intertwining of conflicts, oil prices, and inflation, global equity assets have experienced a “Black Monday.” The resilient A-shares market also entered a “big震” mode, with the index dropping below 4,000, 3,900, and 3,800 points in just two trading days. On March 23rd, by the close, supported by “mysterious” funds, the index barely closed above 3,800 points.

Specifically, at 2 p.m., the Shanghai Composite Index declined without resistance, approaching 3,800 points. During this time, trading volume surged collectively in large-cap broad-based CSI 300 ETFs, including the CSI 300 ETF by Huaxia (510330.SH), which is among the most sizable and liquid. The Q4 2025 report shows that institutional investors 1 and 2 hold 88.62% of this ETF.

Although the report does not specify the names of institutional investors 1 and 2, based on the Q4 2024 report, the first and second holders of Huaxia CSI 300 ETF (510330) are China Central CIC Investment Ltd. and China Central CIC Asset Management Ltd.

CIC has repeatedly spoken out to stabilize the stock market during moments of “panic,” such as in July 2015, October 2023, February 2024, and April 2025, announcing “increased holdings of ETFs.” The subsequent market movements have indeed played a role in “supporting the bottom” and “boosting confidence.”

Why are large funds like CIC favoring broad-market ETFs such as the CSI 300 during market panic declines? Besides the advantages of large scale and liquidity, there are other practical considerations:

1. Broad industry coverage and relatively balanced style

The primary goal for large funds entering the market is to build confidence. Choosing sufficiently “broad” indices that cover many industries and maintain a balanced style, while including leading stocks by weight, can help boost overall market sentiment.

2. In weak market conditions, risks are more controllable

Large funds have lower risk tolerance for drawdowns and require higher trading volumes. Broad-based ETFs not only have large capital capacity but also, over the long term, exhibit smaller maximum drawdowns and lower volatility compared to sector-specific narrow ETFs.

3. Broad market ETFs are more sensitive to macroeconomic conditions

The CSI 300 covers financials, consumer, technology, and other sectors, making it more responsive to macro policies like fiscal and monetary policy. They tend to follow the economic cycle upward, sharing beta gains from corporate earnings growth. Some domestic consumption stocks, after being unfairly punished, now have higher valuation and cost-effectiveness, with potential for recovery.

For ordinary individual investors, during periods of index volatility and unclear main themes, using large-cap value-style indices like the CSI 300 can help balance offense and defense, effectively grasp market trends, and smooth risk exposure.

Daily Economic News