The concept of new infrastructure, encompassing advanced technologies as well as a revised approach to traditional construction, has significantly influenced China’s economic landscapeWith a freely circulating market value exceeding 30 trillion yuan, it’s intriguing to note that no focused tracking entities yet exist for these new infrastructure indexes, marking a unique gap in the investment area.

In the wake of a global push for stability and growth, investment in infrastructure has once again become pivotal for policymakersOn April 26, a crucial meeting outlined directives to enhance the layout of infrastructures and architect a modernized infrastructure system, emphasizing principles like "adequate foresight" and other strategic goalsInterestingly, a subsequent meeting just days later reiterated the necessity for a comprehensive bolstering of infrastructure development.

These meetings emphasize five critical frameworks of infrastructure development: network infrastructure, industrial upgrading infrastructure, urban infrastructure, rural infrastructure, and national security infrastructure

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Each of these frameworks comprises a variety of sub-frameworks that, if executed diligently, can lead to enormous investments capable of reshaping economic dynamics.

According to analysis by Zhejiang Securities, the projected infrastructure investment for 2022 stands at around 20.79 trillion yuan, with an anticipated growth rate of approximately 10%. Meanwhile, Citic Securities predicts an optimistic growth rate potentially hitting the same 10% mark for the yearIn a more cautious appraisal, Zhongtai Securities projects a growth of 5.7%, up from 4.9% in 2021. This shift comes after a prolonged period from 2018 to 2021, during which infrastructure investment growth consistently trailed behind GDP growth.

When delving into themed funds related to infrastructure, as of May 16, eight infrastructure-themed index funds exist in the market

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These include six ETFs and two conventional index funds, all trailing three traditional infrastructure indicesHowever, products tracking two newly established indices, the CSI New Infrastructure Index and the CSI New Infrastructure 50 Index, remain absent.

As of mid-May, the price-to-earnings (PE) ratio for the three traditional infrastructure indices was recorded at 10.90, 8.38, and 10.36 times, compared to the new indices which stood at 22.58 and 20.93 timesThe median PE from the previous three years reaffirmed the growing interest in alternative yet promising investment areas.

The national economic narrative took a significant downturn as reported on May 16, with April's economic data showcasing a stark slow-down in growth: a month-over-month retail sales contraction of 0.69%, and a marked decline in industrial and investment outputs

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Such declines were unprecedented since early 2020, with various sectors echoing caution amid fragile economic signals.

Moreover, the April 13 data disclosure from the central bank indicated that financing from social sectors had only risen by 910.2 billion yuan, equating to about 49.01% of last year’s growthWithin this figure, loans extended to the real economy only amounted to 361.6 billion yuan, roughly a mere 28.16% of the previous year's resultsThis dwindling economic activity has led to heightened investor anticipation regarding infrastructure investment.

In light of these evolving circumstances, the frequency and emphasis on infrastructure at the April meetings reflect a strategic pivot for maintaining economic stabilityThe broader framework includes intricate sub-development systems, suggesting a comprehensive operational strategy that echoes earlier economic policy directives established back in December 2018.

The discussions also brought forth the concept of "new type infrastructure," entrusting investment with a critical role while calling for acceleration in technological upgrades across various sectors

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This includes enhancements in 5G implementation, AI development, urban logistics, and public service improvements—further illuminating the gaps in rural infrastructure and natural disaster prevention capabilities.

Despite the ongoing trends indicating a weakening of infrastructure investment over the past four years in relation to GDP growth, 2022 may herald a turnaround according to experts including those from Zhejiang SecuritiesThey forecast a favorable investment growth trajectory due to comprehensive resets in policy focus.

However, amid these promising indicators lies a stark division within segments of the infrastructure investment realm, compounded by various factors impacting individual stocks differentlyFor example, among the main indices, some companies have seen dramatic gains contrasted against their peers enduring significant losses

This dichotomy reveals an ever-evolving landscape where selective investment strategies will triumph.

As investors sift through potential opportunities, the traditional infrastructure sector remains relevant with established funds tracking existing indices structured from previous years, instilling a sense of reliability in a fluctuating marketPopular among these are the CSI Infrastructure Index and the CSI Construction Engineering Index launched in March 2015. As of mid-May, their asset bases together encompassed trillions of yuan, portraying a substantial foundation for future growth.

Interestingly, the absence of new infrastructure index products hints at an untapped market potential, aligning with moves made by notable companies like ICBC Credit Suisse, Huatai-PineBridge, and others in the pursuit of index funds focusing on this emerging sector

The groundwork has already been laid with over 30 fund applications made since a national directive in 2020 targeted new infrastructure as a focal point for technology and economy.

The CSI New Infrastructure Index, featuring 100 key stocks from cutting-edge sectors, showcases not only market value but also a testament to the burgeoning rise of 5G, AI, and other related economiesThe rapid valuation and market performance as of May 16 reveal growth trends that significantly outpace traditional counterpartsThe evolution of market mentality shifts towards inclusivity, acknowledging both traditional and technological facets that together can bolster robust economic growth.

As China continues to calibrate its financial strategy amid fluctuating global conditions, enthusiasm around infrastructure investments, particularly in newly defined realms, could depict the next phase in transforming the country's economic narrative