On December 25, the A-share market experienced a contraction in trading volume, highlighting a significant divergence in the performance of large-cap and small-cap stocksWhile indices led by major blue-chip companies such as the Shanghai Stock Exchange 50 Index (SSE 50) and the CSI 300 Index recorded gains, indices that focus on mid and small-cap stocks like the CSI 1000 Index and CSI 2000 Index faced downward pressureThe total trading volume in the A-share market reached 1.29 trillion yuan, marking the lowest since September 27, with trading volumes above 1 trillion yuan for 61 consecutive trading days, indicating a record high for the A-share market.

Financial analysts suggest that, despite recent fluctuations, liquidity in the A-share market remains abundant, and the potential for downward risks appears limitedThey recommend paying closer attention to dividend-paying sectors during this period of market adjustment.

The day of December 25 specifically showcased a stark split in the performance of large versus small stocks

By the close of trading, the SSE Composite Index fell by 0.01%, the Shenzhen Component Index dropped by 0.64%, and the ChiNext Index, which focuses on innovative and growth-oriented companies, saw a decline of 0.55%. Conversely, the STAR Market 50 Index gained 0.33%. The SSE Composite Index closed at 3,393.35 points, while the ChiNext Index finished at 2,201.30 pointsThe sentiment among large-cap stocks remained strong, with the SSE 50 Index and the CSI 300 Index rising by 0.29% and 0.05%, respectivelyHowever, medium and small caps, alongside mini-cap stocks, weakened significantly, as evidenced by declines in the CSI 1000 Index (down by 1.13%), CSI 2000 Index (down by 2.33%), and the Wind Micro Cap Index (a notable drop of 3.16%).

In terms of trading volume on December 25, the market saw an aggregate of 1.29 trillion yuan, split into 522.17 billion yuan from the Shanghai Stock Exchange and 759.14 billion yuan from the Shenzhen Stock Exchange

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A total of 910 stocks rose in price, with 46 hitting their upper limits, while 4,400 stocks fell and 62 reached their lower limitsProminent stocks in the A-share market, especially those within the top ten by total market capitalization, displayed resilience, with only Kweichow Moutai and CATL experiencing slight dips, while the majority climbed higher, further showcasing the strength of large-cap equities.

Examining sector performance, industries such as coal and banking emerged as strong performersIn contrast, sectors such as synthetic diamonds, AI technology, and internet marketing struggledAmong the first-tier industry classifications by Shenwan, only coal, banking, and the petroleum sector experienced positive returns of 1.13%, 1.08%, and 0.28%, respectivelyOther sectors, particularly media, textile and apparel, and social services, faced more substantial setbacks, each declining by over 2%.

In the leading coal sector, Yunwei Corporation saw its stock surge to the daily trading limit, while companies like Yunmei Energy, Xinjie Energy, and Zhengzhou Coal Electric experienced increases exceeding 4%. The banking sector also fared well, with Industrial and Commercial Bank of China rising over 2%, while China Bank, Agricultural Bank of China, and China Construction Bank all gained over 1%, pushing their stock prices to historical highs.

According to Hu Mohan, a fund manager at Mingze Investment, the current market reflects ongoing structural trends characterized by the cutoff between high and low performance sectors

Stocks that previously gained considerably are now entering an adjustment period while heavyweight sectors are showing signs of recovery, thus providing essential support to the indices.

However, despite these gains in certain sectors, leading logical primary capital flows continue to show a net outflow on December 25, with a reported withdrawal of 47.94 billion yuan from both the Shanghai and Shenzhen Stock Exchanges over a continuous 18-day periodNoteworthy, the CSI 300 saw a net outflow of 6.83 billion yuan, revealing an overall cautious sentiment amongst investors.

In terms of individual stocks, Wan Feng Ao Wei, ZTE Corporation, Guoxing Optoelectronics, Zhongke Shuguang, and Softcom all observed significant net capital inflow, with figures standing at 1.12 billion yuan, 430 million yuan, 413 million yuan, 350 million yuan, and 268 million yuan respectivelyMeanwhile, stocks such as Dongfang Caifu, Klaus, Lingnan Shares, SunRise Orient, and Tibet Tianlu reported considerable net outflows.

The potential for market upside appears cautiously optimistic given the ongoing environment

Trading data illustrate that since September 25, the A-share market has sustained over 1 trillion yuan in daily transaction volume for 61 consecutive trading sessions, highlighting a sustained level of liquidityAnalysts from Huabao Securities indicate that because the trading activity remains high, the downtrend risks are limited, and structural opportunities continue to surface.

In the short term, amidst ongoing oscillations within the market, the probability of maintaining a pattern marked by rotation and fluctuations is significantHu Mohan remains optimistic about the long-term upward trajectory of the A-share market, especially considering current proactive policies, steadily improving economic data, and synchronized capital movements, all contributing to a potential boost in investor confidenceTherefore, it is advisable for investors to pay close attention to policy developments and seize structural opportunities during the upcoming transitional market phase.

Furthermore, as analysts suggest, the recovery process for the economy may progress at a slower pace