Top institutions' outlook: A-shares are still in a medium- to long-term upward cycle, with the slow bull trend unchanged. The pullback is just extending the consolidation period, and technology and cyclical sectors are returning to the main trend.

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This week’s three major indices: the Shanghai Composite Index fell 1.10%, the Shenzhen Component Index fell 0.76%, and the ChiNext Index fell 1.68%. How will things develop next? See what institutions are saying.

CITIC Securities: Hold to China’s advantage in manufacturing, wait for the April decision. Restoring market sentiment and liquidity in this cycle may also take several months

After Trump’s TACO this Wednesday, the Middle East situation may show a delicate balance in which the two sides maintain deterrence while also preventing the situation from getting out of control. The fact of supply chain disruption still hasn’t been reversed, but before a ceasefire agreement is reached, there may be intermittent freedom of navigation. In an environment where global rules and order are gradually eroded, countries with resources, geographic advantages, and manufacturing advantages will fully leverage these comparative advantages to survive and develop. Placed in the context of the Middle East war, intermittent blockade of the Strait of Hormuz may be a tool used to balance actions by the U.S. and sustain the probability of continuous and repeated energy supply disruptions. However, the impact of energy and resource supply disruptions on industrial demand may differ from the 1970s to 1980s, when the U.S. and Europe had already entered early deindustrialization, outsourced production, and pushed forward globalization. Two oil crises actually accelerated this process. Today, the major background difference is that the world is in a process where insecurity among countries is increasing and countries are pushing toward reindustrialization. This also affects the future analytical framework. From the direct impact of the event, three directions are worth watching next: the acceleration of global electrification, overseas orders shifting to domestic production, and more “supply chain diplomacy.” In the short term, capital markets are still in a cool-down period for sentiment; loss-avoidance mentality may create some demand to reduce positions. In terms of allocation, it is recommended to continue to hold to China’s advantage in manufacturing and wait for the April decision.

CITIC Construction & Investment: Closely track the Middle East’s changing situation and capture China’s advantage assets

The situation of the conflict between the U.S. and Iran has eased somewhat, and global market panic sentiment has been repaired. But the U.S. military’s latest deployment plan against Iran still shows a risk that the war could escalate. Attention should be paid to market sentiment fluctuations over the next month. Currently, the adjustment in A Shares has been relatively sufficient; investors can wait for bullish signals and deploy when opportunities arise. Going forward, A Shares will focus on energy security and industries that benefit from high inflation, high-cash-flow products, growth that is easy to be mistakenly sold off, and relatively low-valuation cyclical sectors with good fundamentals. Sectors to watch include coal chemical, new energy, energy storage, lithium battery materials, pesticides, fertilizers, coal, hydropower, AI computing power, metals, innovative drugs, consumption, and more.

Recently, Trump has temporarily delayed the plan to strike Iran, and combined with some ships resuming passage through the Strait of Hormuz, global markets have entered a brief “breather.” However, according to the U.S. military’s latest plan for the “last strike” across four options and Polymarket’s predictions, there is still a risk of war escalation. Market expectations in the future may fluctuate, so pay attention to contrarian operations. For the A Share market, although overall capital expectations have leaned toward panic over the past month, there are already signals showing that this mid-term correction is close to ending. Also, this cycle’s long-term logic of market reform for the bull market in capital markets has not changed. Therefore, left-side capital can wait for bullish signals, capture China’s advantage assets, and deploy strategically when the timing is right.

China is entering a new strategic window. This refers not only to strategic initiative in geopolitics, but also to the strategic opportunities brought by the “coal + new energy” dual-pillar energy base for China’s energy sector, manufacturing industry, and the entire renminbi-denominated asset complex. Therefore, although the global economy and markets face dual pressure from inflation and recession, China’s economy may benefit relatively more. A Shares have the potential to lead global equity markets; it is recommended to continue capturing China’s advantage assets.

For sector allocation, asset allocation can follow the following four approaches: first, stay tightly aligned with the main line of energy security and high inflation. Under pressure from unstable supply chains, coal chemical and new energy can act as substitute resources and help reshape manufacturing. If natural gas and other input raw-material costs rise, pesticide and fertilizer products may also see price increases. Second, stick to defensive assets with stable cash flow, such as coal and hydropower companies with high dividend yields and stable dividend characteristics. Third, mine certainty in growth sectors that have been mistakenly sold off due to market sentiment—such as AI computing power and innovative drugs, which already have clear cyclical strength logic. Fourth, focus on potentially cyclical sectors with relatively low valuations; they may become the beneficiaries of valuation expansion from high to low under tighter liquidity—for example, consumer sectors that currently have relatively low deal congestion.

Key sectors to watch include: coal chemical, new energy, energy storage, lithium battery materials, pesticides, fertilizers, coal, hydropower, AI computing power, metals, innovative drugs, consumption, and more.

Guangfa Securities: Indices need some time to grind down at the base

First, indices need some time to grind down at the base. Second, for the “April decision,” focus on some independent, high-quality growth directions that are not closely related to overseas high oil prices, high inflation, and high interest rates—such as new energy, domestic AIDC, and overseas computing power, and so on.

Recap how markets and sectors have moved after several wars and crises:

（1）Directions that delivered excess returns during the crisis: first, oil, precious metals, and defense and military industry catalyzed by war; second, defensive dividend sectors such as telecom and tobacco. But if a bear market scenario unfolds, defensive products may also underperform late in a bear market, as in Aug–Sep 1974; third, directions with strong industry trends—such as mass consumption in the 1980s and the new tech wave in the 1990s.

（2）Excess returns from oil and natural gas generally follow when oil prices peak and then peak; the sectors most hit by high oil prices are usually tourism and leisure.

（3）If after an oil-price pulse, high prices are maintained for a longer period, it’s necessary to further discuss the magnitude of the impact on inflation and demand. The first oil crisis was a negative case (entering a stagflation period); the second oil crisis was a positive case (the war shock lasted only 1 month). The Kosovo war was also a positive case (oil-price impact approaches gradually).

（4）If oil-price pulses fall back, after the market briefly reflects the war factor, it typically returns to its original operating track (the main-line sector themes are different in each era). Even capital may concentrate toward sectors with more certain cyclical strength—such as defense and military industries around 1980, consumption around 1990, and technology in the late 1990s.

Shenwan Hongyuan: A Shares are still in a medium-to-long-term uptrend cycle; pullbacks are just extending the rest time

I. Is the pricing of medium-term stagflation insufficient? Reiterate that stagflation itself has uncertainties; both China and the U.S. tightening of monetary policy are not baseline assumptions.

At the same time, the potential upward clues in A Shares have also not been priced in sufficiently. High-quality new energy growth + subsequent export-chain Alpha and pricing power verification → Middle East capital pricing + resonance with foreign capital returning → A Shares reflect the impact of energy security and supply-chain security.

This could form clues for A Shares to return to a stronger state more quickly. Upward and downward risks have both not been priced in sufficiently; in the short term, A Shares are not in stable equilibrium, but they are also in neutral pricing. In the short term, global capital markets are still largely pricing around event-driven catalysts stemming from the U.S.–Iran conflict, and it is not the time to place heavy bets.

The current market scenario for the U.S.–Iran conflict impact still mainly follows the logic chain of: “Weak freedom of navigation through the Strait of Hormuz → Oil prices rise → Inflation expectations rise → Concerns about the Fed hiking rates intensify → Concerns about stagflation intensify.” Some investors worry that medium-term stagflation may objectively exist, but since market pricing is insufficient, they think the market is overly optimistic. In our view, short-term A Shares’ pricing is not stable-state, but it is also in a neutral state: first, the stagflation inference itself has uncertainties. When facing imported inflation, the optimal choices for monetary policy in both China and the U.S. may not be tightening. China has a low inflation base + a mature structural control framework, so not tightening is an absolute high-probability outcome. The U.S. jobs market is weak, and it has already become a crude oil exporting country, so the strength of the inflation feedback loop is limited. “Volts” support for U.S. manufacturing reshoring requires a weak dollar, low interest rates, and low costs. Raising rates to respond to a one-time rise in the inflation center is obviously not the optimal choice. If monetary policy tightening is questionable, then the pressure from economic slowdown can also be kept under control.

At the same time, we also point out that the potential upward clues in A Shares have not been priced in sufficiently either. An upward shift in the energy center may make new energy and the new energy vehicle industry chain a medium-term growth direction. China’s energy security + supply-chain security: some export-chain links may play out an Alpha logic; when facing rising costs, they can effectively pass through prices, which also forms a new fundamental trend direction. This landed structure may, in tandem with the resonance of Middle East capital pricing + foreign capital returning, cause optimistic expectations about relative country strength to be further amplified. Under baseline assumptions, for A Shares to return to strength, it needs verification that the new economy has made “leapfrog progress” / cyclical improvement in fundamentals. Repricing opportunities along manufacturing investment may also form clues for A Shares to quickly return to strength. Upward and downside risks have both not been priced in enough, and the medium-term outlook scenarios have not yet converged. A Shares are not stable equilibrium in the short term, but they are also a neutral state.

II. Revisit the stability of China’s capital markets: high energy self-sufficiency + dispersed external energy supply construct energy security; new energy advantages are reappraised. The resonance between supply-chain security and energy security, and windows for China’s exports to have Alpha and pass-through pricing power may open again. The fundamental base for healthy development of the A Share market has not changed; policies safeguarding stable expectations for the capital market remain in place. A Shares are still in a medium-to-long-term uptrend cycle; the accumulation of the “making money effect” meets disruptions, but it only extends the rest time after the “first phase of the up move.” There is a high probability that there will be a “second phase of the up move.” For short-term adjustments, it’s not far from the target valuation position near the dynamic valuation historical median (“target position for valuation adjustment during the consolidation phase” in the “two-phase up move” scenario). A Shares’ intrinsic stability may gradually be repaired.

III. The oscillation and consolidation segment between the two-phase up moves—tech mainline extension + macro narrative expansion—remains the main source of high-elasticity investment opportunities. In this stage, individual opportunities in sub-industries still have elasticity, but sector linkage is relatively weak, making it difficult for the “making money effect” to spread broadly. For tech “reality checks” that were strong before the U.S.–Iran conflict, there is still an opportunity in the short term. Focus on CPO, energy storage, and AI power. In the next stage, new energy and new energy vehicles may become the new leading direction. This is a direction that may form resonance with the macro narrative, with upward elasticity and expansion of the making-money effect.

Dongwu Securities: Find medium-term certainty amid fluctuations in geopolitical expectations; A-share long-term bull market has not been disproven by the U.S.–Iran conflict

The A-share long-term bull market has not been disproven by the U.S.–Iran conflict. At present, the index is adjusting in the 3800~3950 range. With a赔率 (odds-based) mindset, at this position “adding” clearly has a better risk-reward ratio than “reducing.” And “adding” mainly revolves around two types of directions: first, placing importance on “energy security” and the “oil-price central tendency transmission” that is likely to be upgraded into one of the medium-term main lines. The preferred choices include pan-new-energy and energy infrastructure categories such as energy storage, lithium batteries, wind power, and power grid equipment. For the associated theme side, watch nuclear fusion, green fuels, green electricity, and so on. Second, focus on low-entry additions to directions with relatively independent cyclical logic and where EPS growth can offset liquidity fluctuations—such as gas turbine and marine turbine (gas turbine ship power equipment), lithium battery equipment, domestic computing power, increased capacity for advanced domestic processes, cloud computing, liquid cooling, and some non-ferrous metals with weak supply elasticity and where downstream pricing is not very sensitive / with medium-term growth logic (such as tungsten, tantalum, lithium, etc.).

China Southern Tài Securities: Trump’s expectation management fails— which directions in A Shares might benefit?

The relatively large supply-demand gap for crude oil determines that Trump’s “expectation management” can only be “treating the symptoms by buying time.” Oil prices are moving around at high volatility with the central tendency leaning upward. For A Shares:

In the short term, as expectations for negotiations are gradually ruled out, sectors that directly benefit from the war may see a second round of the market. The first round of trading in sectors directly benefiting from the war—energy, chemical, and similar—has ended. With ongoing pullbacks in the related sectors and a continuous decline in the proportion of trading value, there may be opportunities to set up for a new round of game-playing.

For small and mid-cap companies, and for technology sub-sectors related to overseas mappings, after a short-term rebound they may still need to pay attention to risks. Continued escalation of the U.S.–Iran conflict exerts dual pressure on technology growth sectors. Under this backdrop, for overseas computing-chain-related products such as optical modules and PCB, the future demand timeline may be revised downward. After the short-term rebound, it is suggested to remain cautious.

In the medium term: focus on high-weight value sectors in the index, such as: energy and chemical, public utilities (water, gas, and heat—market-oriented pricing reforms), insurance, banks, and so on. These can be accumulated on dips.

In the long term, for pan-growth sectors it is recommended to focus on the main line of “safety—export demand.” As the global energy system’s trend of “decarbonizing away from fossil energy dependence” strengthens, new energy investment is expected to become a medium-to-long-term certainty direction. Looking from a longer-cycle perspective, geopolitical turmoil may have evolved from a stage shock into a structural trend. It is recommended that over the medium-to-long term, pay attention to overseas-demand opportunities for small metal materials, optical fibers, machinery, and power equipment, and other products related to the global defense and military-industrial—manufacturing expansion cycle.

Oriental Securities: Overseas pressure remains; focus on the security main line

For China’s domestic equity market, we believe there is no need to worry excessively, and we also cannot be complacent. Instead, we should focus on the security main line and proceed steadily. The negative impact of geopolitical disruptions on China’s domestic equity market is getting smaller and smaller, and we build a two-dimensional analytical framework of “efficiency—security” to analyze this phenomenon. The results show that sectors with high security-related correlation contribute significantly; the correlation between the comprehensive industry index of high-security importance and geopolitical risk has dropped substantially. If we further dig into the underlying reasons, it mainly comes from years of efforts to break through bottlenecks and “cut off choke points,” as well as China’s strong full-industry-chain system, which has greatly enhanced the pressure-resistance capability of China’s economic system. Therefore, going forward, we may still not be able to relax due to the external environment, but China’s asset security advantage means we don’t need to worry too much. In the future, we should more should focus on the security main line and proceed steadily.

Zhejiang Securities: The midline bottom structure for a stable market may form in mid-to-late April

Because the “input shock” brought by Middle East geopolitical turmoil cannot be eliminated in the short term, we expect that global capital markets will remain in an adjustment state. Among them, because A Shares have fallen rapidly recently, they have already formed a pattern of “downward shift of the volatility range.” Taking the Shanghai Composite as an example, the volatility range has shifted down from the previous 4000 to 4200 range. The lower end of the new volatility range is the 0.382 quantile point of the “bull market wave 3” since last April, at the 3800 integer level. This support has held up under testing on Monday this week. As for the upper end of the new range, from the perspective of chip distribution, it is the 4000 to 4040 area around an integer level, which is the “high transaction concentration zone” formed in the previous few months. We expect that in the short term, the Shanghai Composite Index will run in the manner of “range-bound consolidation to find a bottom, with support at the lower end and pressure at the upper end,” and most broad-based index funds may run in sync. A slight exception is the ChiNext Index, which hit a new high on March 20; it still shows differentiation among constituent stocks and a weekly MACD top-backing divergence state, and there may be adjustment pressure in the future. Looking at longer cycles, a stable midline bottom structure may form in mid-to-late April, and could form a weekly-level rebound. As for the continuation of the “systematic slow bull” pattern, it depends on whether the subsequent shock at the 4000-point threshold can “return strongly” to the original volatility range.

In terms of allocation, based on our judgment of “volatility spillover center moving downward, with support below and pressure above,” we suggest: in the short term, stay cautious and treat the broad market with range-bound consolidation. When the stock index moves to the new volatility range’s “lower end,” overcome fear and make modest “low buy” entries; and when the stock index approaches the new volatility range’s “upper end,” give up greed and “take profit at highs” appropriately. If after mid-April the Middle East situation becomes clearer and the midline bottom structure of A Shares takes shape, then investors can actively increase allocations and expand upside flexibility.

Kaiyuan Securities: The best observation indicators for positioning under conflict—OVX and VIX

Amid market turmoil triggered by geopolitical conflicts, stepping out of a single “event-driven” logic and shifting to a quantitative volatility framework and cross-asset indicators is the core approach for institutional investors to make defensive allocations or left-side positioning. At present, for “U.S.–Israel–Iran uncertainty,” entering should be validated through “volatility convergence,” rather than through “event clearance.”

To observe volatility effectively, we introduce two volatility indicators: OVX and VIX. OVX is the crude oil ETF volatility index; it measures the market’s expectation for crude oil volatility over the next month and represents energy supply risk. VIX is the Chicago Options Exchange volatility index, popularly known as the “fear index.” It measures the market’s expectation for the volatility of the S&P 500 Index over the next month and represents recession risk.

When OVX rises rapidly and VIX reacts with relative lag, it indicates that risk is still concentrated on the energy end and has not fully transmitted to global macro credit risk or earnings expectations. Once the two move in synchronized resonance upward, it often means that geopolitical risk has already triggered a liquidity crisis or recession expectations for the global economy. Currently, risk is still concentrated on energy supply risk and has not fully transmitted to global macro credit risk or earnings expectations. Compared with historical VIX readings, the current reading is lower than the VIX value seen in the April 2025 U.S.–China trade conflict.

Investment recommendation—“volatility four quadrants”

（1）OVX high + VIX choppy: the market is in a localized energy crisis. For allocation, overweight traditional energy / energy substitutes, and prefer directions with strong price transmission ability. Recommend power equipment, coal, and coal chemical industry;（2）OVX elevated + VIX quickly rising: geopolitically induced systemic recession / liquidity risk—defense first;（3）OVX peaks then falls + VIX oscillates down: the term structure for crude oil volatility shifts from inversion to normal, the crisis is over, and the focus turns to technology growth. Recommend computing power, semiconductors, Hong Kong stock internet, robots, storage, price-increase products, AI4S, etc. Theme investing enters a banner year;（4）OVX declining + VIX unusually high: geopolitics ends, but the impact of high oil prices on the economy is still there. Shift to high-dividend / low-volatility.

Guohai Securities: Patiently wait for mid-term narratives to become clear in April–May

The current market is still in the stage of “marginal changes” in the trading of the Middle East situation. As statements between the U.S. and Iran switch back and forth between hard pressure and tentative contacts, risk appetite keeps wavering. And from historical experience, the market has not yet fully priced in the “stagflation-like” risk caused by this round of conflicts and the compression of U.S. stock valuations.

The medium-term narrative is expected to become clear in April–May, after which the main line of the market this year may appear. In April–May, as China’s Q1 reports land, U.S. nonfarm employment data and inflation data are released, and potential war nodes draw near, whether narratives about stagflation are entering may become clearer.

Besides that, based on historical patterns, June is often the point when industry rotation speed starts to decline, and it is also an important window to observe whether the annual main line can be established. Directions that run out by mid-year have a relatively higher probability of sustaining strength across the full-year dimension.

Maintain patience and structural hedging before the medium-term narrative becomes clear. Continue the previous three main-line allocations, and also focus on crowdedness levels: 1）high-quality, stagflation-beating large-cap growth—energy storage / battery materials, optical modules (crowdedness sentiment rises quickly, pay attention to extreme positions); 2）large-cap value with strong interval calendar effects—low-volatility dividends/free cash flow, financials and transport (crowdedness sentiment remains low); 3）outbound/export chain with extremely low expectations (crowdedness sentiment remains low).

If the Middle East conflict ends faster than expected, for investors with high turnover rates, we suggest focusing on media, defense and military industry, and non-ferrous metals’ oversold rebound opportunities.

Goldman Securities: The narrative of the rise of global real-world assets has not ended

The narrative of the rise of global real-world assets has not ended. Only after you brush away the mist of the U.S. dollar can you see the truth of the world. We recommend the following: first, in a globally turbulent setup, energy security becomes even more important. This year, development in primary energy is stronger than secondary energy projects. We give priority to crude oil, oil transportation, coal, copper, aluminum, gold, and rubber. Second, China’s manufacturing is the real “stabilizer” for the world; it’s just that the flow speed of physical goods is slower than that of financial assets, and we are waiting for the arrival of the revaluation—power equipment new energy, mechanical equipment, and chemical. Third, under conditions where suppressing factors are reversed, look for structural opportunities in consumption—tourism and scenic spots, seasoning fermentation products, beer and other alcoholic beverages, pharmaceutical commerce, medical aesthetics, and so on.

Debon Securities: Risk appetite recovering

The Middle East situation will still continue to suppress risk appetite through oil prices and volatility in external markets, but the trading focus of A Shares has shifted from purely defensive hedging to the recovery of internal themes and growth styles. Going forward, we still need to closely watch the evolution of the Middle East situation, international oil price trends, and how volatility in overseas markets re-transmits to A Share sentiment.

Huajin Securities: The slow bull trend remains unchanged; return to fundamentals—technology and the cycle return to the main line

In April this year, A Shares may fluctuate but remain relatively strong, and the slow bull trend remains unchanged. (1) In April this year, the economy and corporate earnings may continue to rebound. First, the economy in April may continue to see some repair: consumption growth may keep stabilizing; infrastructure and manufacturing investment growth may further rebound; and finally, exports may continue to maintain high growth rates. Second, corporate earnings in April may continue to be on an upward trend: April’s PPI year-over-year growth and A Shares’ Q1 report growth may continue to rebound. (2) In April this year, policy may still be positive, and external risks may ease. First, in April policy may still be relatively positive. Second, external risks in April may marginally ease, and A Shares’ response to concerns about risks such as the U.S.–Iran conflict may have been relatively fully priced in. (3) In April, domestic liquidity may remain loose, and stock market funds may flow back somewhat.

In April, technology and cyclical styles may be relatively dominant, with large-cap and small-cap styles remaining fairly balanced. (1) Technology and cyclical styles may be relatively dominant in April. First, looking back at history, in April, stable and financial styles tend to lead, largely driven by policy and external events. Second, in April this year technology and cyclical styles may be relatively dominant: first, financial and stable styles in April may be difficult to outperform; second, policies supporting tech innovation and reducing internal competition (“anti-involution”) may further land and be implemented; finally, in April, cyclical industries and tech hardware such as are likely to keep moving upward in terms of cyclical strength. (2) Large-cap and small-cap styles may be relatively balanced in April. First, looking back at history, large caps usually outperform relatively in April. Second, in April this year, large-cap and small-cap styles may be fairly balanced: first, cyclicals and tech industries’ earnings may be higher in April, which benefits small and mid-cap styles; second, overseas liquidity expectations may be difficult to loosen significantly in April, which may benefit large-cap styles; finally, domestic policies may favor small and mid-cap styles.

Industry allocation: in April, allocate on dips to high-quality technology and some cyclical industries, and so on. (1) After prior negative shocks caused an adjustment in A Shares, in April high-quality technology and some cyclical industries may still be dominant. First, looking back at history: after prior negative shocks led to A Shares’ adjustment, parts of technology and cyclical industries with leading performance rankings may still outperform relatively in April. Second, looking at the current situation, in April this year industries such as electronics, communications, non-ferrous metals, and power equipment may be relatively dominant. (2) In growth this year, power equipment, media, and automobiles with relatively low PEG; in the dividend style, non-bank financials and food & beverage have relatively low valuation percentile positions historically. (3) In April, it is recommended to allocate on dips: first, sectors that are up on policy and industry trends in “electric new” (AI power, energy storage), communications (AI hardware), electronics (semiconductors, AI hardware), non-ferrous metals, chemicals, defense and military (commercial aerospace), innovative drugs, and so on; second, low-valuation dividend sectors such as coal, power, and banks.

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