One-finger Layout Covers Over 1,300 Growth Enterprises

Question: How does the ChiNext Composite Index reflect the implementation of China’s technological innovation strategy?

The National People’s Congress and the Chinese People’s Political Consultative Conference concluded successfully in March, with a series of “innovation” keywords attracting attention. The 2026 government work report emphasizes strengthening independent innovation capabilities to support high-quality development with technological backing.

The wave of technological innovation is surging. How to efficiently position “China’s growth and innovation power”? The ChiNext Composite Index may be worth monitoring. This index covers over 1,300 ChiNext-listed companies, gathering innovative forces across new energy, artificial intelligence, biomedicine, and other industry chains. This article introduces 12 aspects of the ChiNext Composite Index.

A panoramic view of ChiNext, a one-stop layout of China’s growth and innovation strength

************************1. ChiNext Composite, a panoramic view of ChiNext

The ChiNext Composite Index (399102.SZ) nearly covers all listed companies on ChiNext. The total market capitalization coverage is 99%, and the component stocks coverage is 97%, making it a convenient tool for a one-click layout of growth and innovative enterprises in A-shares.

Data as of 2025/12/31, industry classification based on Shenwan Level 1 categories.

************************2. Compared with mainstream ChiNext indices, it offers broader coverage

With over 1,300 constituents, the ChiNext Composite Index has more diverse industry and market cap distribution with lower concentration, better representing the overall performance of ChiNext. A larger sample size provides ample space for index enhancement products.

Figure: Main indices covering ChiNext and their differences

Index component data as of 2025/12/31, industry classification based on Shenwan Level 1 categories.

************************3. High content in new communication and new energy, focusing on innovation and growth

The index includes leading companies in new energy and optical communication industries, with high innovation and growth potential. Many of these stocks are recognized as core holdings by active equity funds, and they also include elements of traditional industry innovation and upgrading, forming a diverse portfolio:

• New energy chain, covering the full “upstream equipment → midstream batteries → downstream electronic control/storage” chain

• Optical communication/AI computing power chain, representing “China’s global AI infrastructure,” from “upstream underlying devices, midstream modules and equipment, to downstream data centers”

• Medical and health sector, with strong profitability in medical devices and medical consumables

• Traditional industry innovation and upgrading, including fintech stocks like internet brokers and financial terminals, as well as cyclical leaders in aquaculture and other sectors

Figure: Top 20 constituents and their weights

Index component data as of 2025/12/31, industry classification based on Shenwan Level 1 categories.

************************4. Strong long-term performance resilience, time as a witness to value

The ChiNext Composite Index demonstrates long-term value. Since its base date on 2010-05-31, it has gained 323.08% cumulatively, with an average annual return of 9.90%, significantly outperforming representative indices like Wind All A and also surpassing equity fund indices, highlighting the long-term investment value of China’s growth and innovation.

The maximum drawdown during the period was -67.38%. However, considering the risk-adjusted return, the Calmar ratio of the ChiNext Composite is 0.15, better than mainstream broad-based indices, indicating superior risk-adjusted performance, and better long-term risk compensation.

Figure: Performance since base date, demonstrating resilience of the ChiNext Composite

The index’s return is calculated as a total return index, reinvesting dividends of constituents. Data period: from 2010/05/31 to 2026/02/28, source: WIND. Annualized return over the period = [(1 + period return)^(250/trading days) - 1] * 100%. Calmar ratio = annualized return / absolute maximum drawdown during the period. Past performance does not guarantee future results; investment involves risks.

************************5. Industry distribution: mainly growth-oriented, diversified

The ChiNext Composite Index has a broad industry distribution, with high innovation and growth content, while also including traditional sectors, as of the end of 2025:

• Top five industries by weight: Electric Equipment, Electronics, Communications, Pharmaceuticals, Computers, accounting for 66.9%, with high growth potential

• Among the top ten industries, also include Chemical, Machinery, and other cyclical manufacturing sectors, totaling 87.1%

• All constituents cover 28 Shenwan Level 1 industries, reflecting diversification

Figure: Distribution of top 10 industry weights in ChiNext Composite

Data as of 2025/12/31, industry classification based on Shenwan Level 1 categories.

************************6. Constituents entering “high-speed growth lane,” with great growth potential

In terms of fundamentals, ChiNext constituents lead other major indices in revenue growth and profit growth, showing characteristics of high growth, high speed, and high potential. Especially in recent years, against the backdrop of economic recovery and technological explosion, it highlights “China’s growth and innovation power.”

Figure: Outstanding performance of ChiNext in growth indicators

Data sources: WIND, financial reports of index or sector constituents, as of mid-2025. Past performance does not predict future results; invest cautiously.

************************7. Growth and innovation gradually entering the “value realization period”

Both ChiNext and STAR Market serve China’s technological innovation strategy. The former emphasizes “Three Innovations and Four New”, while the latter focuses more on “hard tech,” jointly representing a batch of frontier innovative and growth-oriented companies.

Recent three-year financial data show that ChiNext companies are generally more mature compared to STAR Market, demonstrating strong profitability, dividends, and cash flow generation, while STAR Market companies are in rapid growth phases with high potential.

Figure: Financial comparison between ChiNext and STAR Market

Data sources: WIND, financial reports or announcements of sectors, with dividend yield as of 2025; other indicators as of mid-2025. Calculation methods: sector annual dividend yield = total actual cash dividends of listed companies in China / total market value of listed companies in China at year-end. Return on equity (TTM, overall method) = sum of net profit attributable to parent company shareholders (TTM) * 2 / (sum of beginning and ending net assets). Net cash flow from operating activities per share (overall method) = sum of cash flows from operating activities of constituents / total shares at period-end. Past performance does not predict future results; invest cautiously.

************************8. Market cap distribution: mainly small and medium, with leading giants

The market cap distribution of ChiNext Composite is relatively balanced, forming a complementary structure between small/mid-cap and large-cap companies, fairly reflecting the full picture:

• Companies with market cap below 30 billion yuan account for nearly 50% of weight, with 94.3% of the number of stocks, covering emerging small-cap stars

• Leading companies with market cap above 100 billion yuan account for over 33% of weight, exerting significant influence

• Companies with market cap between 30-100 billion yuan account for 17% of weight, with 4.5% of the number of stocks, indicating active participation of mid-large caps

Figure: Distribution of constituent weights by market cap

The chart shows the weight proportion of constituents at different market caps; X-axis: constituent market cap, Y-axis: weight. Data as of 2025/12/31, industry classification based on Shenwan Level 1 categories.

************************9. Through four bull-bear cycles, high resilience in upward markets

Review of the four cycles of ChiNext: Since its inception on 2010-05-31, the index experienced initial market adjustments, with the first “Mobile Internet Bull” explosion from 2012-2015. Then, de-bubble adjustment until the end of 2018, followed by a second large rally from 2019-2021 driven by “New Energy and CXO”, and subsequent three-year valuation contraction.

In terms of cycle returns, ChiNext has demonstrated high resilience in each upward phase due to its high-growth genes, with cumulative gains of 341.48% and 154.17% in the first two bull markets, outperforming major indices. Even during correction periods, valuations have rationalized afterward.

Currently at the start of the fifth cycle, the focus is on reasonable valuation zones to share long-term growth dividends of ChiNext companies.

Figure: Stage-wise performance since base date

Data period: from 2010/05/31 to 2026/02/28, source: WIND. Past performance does not predict future results; invest cautiously.

************************10. Dynamic witness to the rise and transformation of “China’s growth power”

ChiNext constituents have grown alongside the times, witnessing the rise and change of China’s “growth and innovation” enterprises:

• 2025: centered on “AI optical communication + global manufacturing”

• 2019-2021: represented by “new energy + pharmaceuticals”

• Around 2015: witnessed the rise of “media internet + domestic high-end equipment”

This reflects ChiNext’s concentrated advantages in emerging industries and high-tech sectors, advancing with “the main theme of the era.”

Figure: Industry weight distribution of ChiNext in three historical bull markets, showing dynamic changes

Index component data as of 2025/12/31, industry classification based on Shenwan Level 1 categories.

************************11. Valuation matches high growth, still within reasonable range

As of the end of February 2026, the PE ratio of ChiNext Composite is 73.51, at the 68.23% percentile over the past ten years, significantly below major indices, with considerable space from the PE peak of 174.93 in the past decade.

Considering future earnings growth, using PEG valuation (PE divided by expected earnings growth rate, with a PEG close to 1 considered reasonable), the current forecasted PEG of ChiNext is 1.01, also lower than major indices, supported by high growth expectations of constituents, indicating a reasonable valuation zone.

Figure: PE values still have room to rise from the high point

Data sources: WIND, period from 2016/03/01 to 2026/02/28. PE (TTM) = sum of constituent market caps / sum of net profits attributable to parent (TTM).

Figure: Predicted PEG value still within a reasonable range

Data sources: WIND, as of 2026/02/28. Forecasted PEG (FY2) = forecasted PE (FY2) / G (compound growth rate of net profit over two years). FY2 refers to the next forecast year; forecasted PE = closing price on a specific date / consensus EPS forecast for FY2; G is the two-year compound growth rate of net profit.

************************12. Looking ahead, long-term layout to harvest growth dividends

As a main battlefield of new productive forces, ChiNext gathers new energy, AI, and other hard tech sectors, aligning deeply with national strategies. Driven by policy dividends and ample liquidity, combined with the trend of medium- and long-term funds entering the market, long-term layout is expected to share in the era dividends of China’s growth and innovation enterprises.

This view is effective as of the end of February 2026. For reference only. Investment involves risks; proceed cautiously.

ChiNext Composite + Index Enhancement: A broad-based investment solution

Interested in positioning in ChiNext Composite? Index-enhanced funds may be an option. Xingquan ChiNext Composite Index Enhanced Launch Fund is currently issuing, aiming to outperform the benchmark by anchoring the ChiNext Composite Index and employing enhancement strategies. Why might index enhancement be an optimal broad-based investment approach?

************************** The trend of tool-based indexing, aiming to capture β + α opportunities**

Index-based investment is becoming a major allocation trend. Since 2024, passive equity funds have surpassed active funds in scale. Among them, index-enhanced funds, as a passive investment tool, have exceeded 262 billion yuan, anchoring quality indices to share both β (index itself) and α (excess returns).

Figure: Since 2024, passive equity fund scale surpasses active funds

Data period: 2016-2025, end of each year, data from public fund quarterly reports and Galaxy Securities. Classification of passive and active equity funds from Galaxy Securities.

Figure: Growth of index-enhanced funds, mainstream broad-based indices favored

Data period: 2016-2025, end of each year, data from WIND, using its classification of index-enhanced funds.

************************** Broad-based investment with quantitative index enhancement**

The ChiNext Composite Index offers a large sample space, providing fertile ground for quantitative strategies. Using multi-factor models and portfolio optimization, efforts are made to efficiently select quality stocks across the market and capture excess returns.

************************** Xingquan Quantitative Team: Outstanding excess performance**

Xingzheng Global Fund continues to develop its quantitative strategy products, currently covering mainstream indices and themes, aiming to provide investors with diverse investment tools.

The Xingquan quantitative team has demonstrated significant strength, with all quantitative public fund products established so far achieving notable excess returns (as of 2026/02/28, only including products established for more than 6 months). The team emphasizes market-cap neutrality and deviation control, focusing on factor research and strategies, with over 3,000 factors tracked daily in the database, aiming to deliver long-term enhancement solutions.

Data as of 2026/02/28. Quantitative strategies refer to funds with multi-factor quantitative stock selection and portfolio optimization strategies as specified in the fund contract. Scale based on 2025 quarterly reports, total of all share classes. Performance data outside regular reports has been verified by custodians. Performance, fund manager tenure, and fee information are detailed at the end of the risk warning page. Past performance does not predict future results; invest cautiously.

Xingquan ChiNext Composite Index Enhanced Launch Fund

Panoramic tool for ChiNext, one-click enhancement

Now open for subscription from March 16 to 27, 2026

Fund codes: A class 026814, C class 026815