Southern Fund's Free Cash Flow ETF Experiences 9 Consecutive Days of Net Capital Inflows; Institutions: A-Share Free Cash Flow is Recovering, Cyclical Manufacturing Inflection Point Has Arrived

Why is the rebound in free cash flow in A-shares beneficial for cyclical manufacturing?

As of March 23, 2026, 09:34, the Southern Free Cash Flow ETF (159232) traded 15.8855 million yuan, with the CSI All Share Free Cash Flow Index (932365) down 1.65%.

As of March 20, the Southern Free Cash Flow ETF (159232) had a net subscription of 79 million yuan on the previous trading day, with nearly nine consecutive days of net capital inflows.

Institutional analysis indicates that currently, A-shares’ free cash flow is recovering, and the turning point for the cyclical manufacturing sector has arrived. The free cash flow of all A-shares (excluding financials) is rebounding mainly due to cash flow restoration caused by reduced capital expenditures, reflecting an improvement in the financial health of listed companies from a micro perspective.

Looking at individual sectors, the free cash flow growth in cyclical sectors has increased year-over-year, mainly driven by passive improvements from decreased capital expenditures and reduced working capital increases. The year-over-year decline in free cash flow growth in the technology sector is narrowing, and pre-tax profit growth has turned positive. Historically, when the year-over-year growth of free cash flow in all A-shares (excluding financials) turns positive, cyclical manufacturing often enters an upward trend. Currently, from the perspective of free cash flow recovery, investment opportunities in cyclical manufacturing industries are emerging. During the PPI year-over-year turning positive, the free cash flow index is likely to outperform, and industries with early free cash flow recovery tend to see higher gains.

The Southern Free Cash Flow ETF (159232) closely tracks the CSI All Share Free Cash Flow Index, which selects 100 listed companies with high free cash flow rates as index constituents to reflect the overall performance of companies with strong cash flow creation ability. The top ten holdings are China National Offshore Oil Corporation, SAIC Motor, Gree Electric Appliances, COSCO SHIPPING Holdings, China Aluminum, TCL Technology, Muyuan Foods, Chint Electric, Baosteel, and Great Wall Motors.

By tracking companies with high free cash flow rates and eliminating “paper wealth,” the Southern Free Cash Flow ETF (159232) aims to select core assets with sustainable profitability and dividend-paying capacity, making it a powerful tool for investors to allocate high-quality assets and smooth investment fluctuations in the current market environment.

Southern Free Cash Flow ETF (159232), off-market connection (Type A: 025958; Type C: 025959).