Baijiu Rises, Resource Stocks "Cool Down"! How Should A-Shares Be Positioned?

March 16, A-shares rose intraday, but trading volume slightly contracted, with stockholder battles and obvious wait-and-see sentiment. On the market, electronics and liquor sectors led the gains, while coal, steel, non-ferrous metals, and chemical resource stocks all declined.

Sources said that A-shares exhibit a “high-low switching” structural feature. Although resource sector stocks have pulled back due to short-term profit-taking, the mid-term logic for some varieties remains unchanged. In the short term, clear signs of stabilization are still needed. It is recommended to stay observant and not rush into positions. Meanwhile, focus on industry trend-supported leading stocks such as AI+ and semiconductors, and consider phased left-side positioning.

Storage Chip Sector Surges

After a dip in the morning, A-shares rallied in the afternoon. Shenzhen market outperformed Shanghai, with mixed individual stock performance. The Shanghai Composite fell slightly by 0.26% to 4,084.79 points, while the ChiNext Index rose 1.41% to 3,357.02 points. The Shenzhen Component Index showed a slight gain. The STAR Market 50 and CSI 300 indices were slightly red, while the SSE 50 and CSI 50 declined modestly.

Market sentiment remains cautious. Today’s trading volume shrank by 77.39 billion yuan, with total market turnover dropping to 2.34 trillion yuan. As of March 13, the margin loan balance in Shanghai, Shenzhen, and Beijing markets was 2.65 trillion yuan.

On the sector front, divergence continued. Over the past two days, liquor and beverage stocks led gains, while resource stocks cooled off. Chemical raw materials, gold concepts, base metals, and steel sectors all declined. Today, storage chips surged, with semiconductor, electronic components, and auto chips performing well.

Market profitability was not prominent. A total of 2,843 stocks closed higher, with 60 hitting daily limit-ups; 2,494 stocks declined, with 10 hitting limit-downs. 16 stocks traded over 10 billion yuan in daily turnover, with New Yisheng up nearly 5%, Zhongji Xuchuang up about 4%, but Tianfu Communication down over 4%. Power supply equipment stocks saw mixed performance: CATL rose nearly 3%, Sunshine Power declined. China Power Construction hit the limit down, China Energy Construction fell over 8%.

Among the 31 first-level industries in Shenwan, 17 sectors closed in the green. Food & beverage, retail, and beauty & personal care led the gains, with the electronics sector also performing well. Communications, computing, and defense military sectors showed slight gains.

Nine electronics stocks hit the daily limit, with Yachuang Electronics hitting the limit with “20cm,” and Buwei Storage, Benchuang Intelligent, Huahong Company, Yihou New Materials, and Guoke Micro all up over 10%. Victory Precision, Jinan Guoji, Shenhua Development A, Chaoying Electronics, and Demingli also hit the limit.

Resource stocks plummeted, with steel, non-ferrous metals, basic chemicals, utilities, and coal leading declines. Construction decoration, building materials, oil & petrochemical, and environmental protection sectors all declined, with power equipment also retreating.

“The core of sector divergence lies in capital reallocation and differences in sector fundamentals and policy guidance,” said Bi Mengran, a researcher at Gushang Fund, to the International Financial News. She explained that funds are shifting from cyclical resource sectors to defensive consumption and high-growth tech sectors: driven by risk aversion and pursuit of returns, capital is withdrawing from previously high-flying resource stocks and moving into more certain fields. The electronics sector is supported by industry logic: a global chip price surge, explosive growth in AI computing demand causing structural supply-demand imbalance, combined with significant increases in mobile storage chip prices, attracting capital back into semiconductor and related fields. Since consumer and tech sectors have a higher weight among Shenzhen’s leading stocks, they outperform the mainly cyclical Shanghai market.

Clear Battle for Stockholder Funds

How to interpret today’s A-shares performance?

Zhang Pengyuan, a researcher at Panpan Wealth, told the International Financial News that the main reason for today’s shrinking volume is the divergence between incremental and stockholder funds’ repositioning. The afternoon rally was driven by continued bets on consumption and tech policy benefits, coupled with rebound in small and mid-cap stocks in Shenzhen and support from heavyweight stocks. Sector divergence reflects funds rotating from previously high-flying resource stocks to sectors benefiting from economic recovery and policy-driven tech tracks. Overall, it shows short-term battles; whether this can sustain depends on whether incremental funds and fundamental data can support it.

Liu Yan, Director of Trading at Honghan Investment, said that although volume declined, the market rebounded intraday, demonstrating resilience in current A-shares, consistent with the recent “high-low switching” structural feature. After a phase of adjustment, storage semiconductors and other varieties rebounded amid declines in cyclical and dividend-heavy sectors, indicating active stockholder battles.

Hu Mohan, fund manager at Mingze Investment, analyzed that today’s volume contraction and afternoon rally essentially reflect rotation within a stockholder battle pattern. The market has support on the downside, showing resilience. Funds are gradually shifting from large resource sectors to data-supported fields and industries with clear trends. Although resource stocks have pulled back due to short-term profit-taking, the underlying global supply chain restructuring and supply-demand logic of some varieties have not fully reversed. Future performance will depend more on their fundamentals.

Bi Mengran believes that today’s market operated with low volume, mainly due to cautious sentiment and weak willingness of new funds to enter, with intra-market fund shifts being the main activity. The afternoon rally was driven by concentrated efforts on quality sectors and marginal sentiment recovery, not a broad rebound. Tensions in the Middle East caused some shipping and port stocks to rise, injecting momentum into the afternoon session. Coupled with market expectations of policy benefits, funds focused on advantageous sectors, forming the afternoon rally. However, due to limited volume, the rally lacked strength to lift the entire market.

Continued Volatility and Divergence

After last Friday’s sharp decline, today’s market remains weak. What factors will influence A-shares next? What is the outlook?

Hu Mohan predicts that short-term, the market will likely continue to oscillate and diverge, with the Shanghai Index possibly fluctuating around 4,100 points. As earnings season approaches, performance will become the core basis for stock differentiation.

Liu Yan believes that there is no significant risk of a sharp decline in A-shares. With the spring rally over, the current phase is mainly about positioning for annual and first-quarter reports, likely forming a consolidation range. During this period, it is advisable to accumulate technology stocks with good disclosures at lower levels and seize opportunities to take profits at high levels.

Fang Lei, Vice General Manager of Xing Shi Investment, states that in the short term, geopolitical conflicts remain uncertain, and overseas factors continue to impact the A-share market. As more industries show profit recovery, fundamentals will gradually replace valuation as the main driver of the market.

“Market may continue a structural pattern of oscillation and divergence, with mid-cap sectors and micro-performance becoming more important,” said Mingyu Asset. He noted that the Iran-U.S. conflict shows no signs of easing, global supply chains are increasingly disrupted, and inflation expectations are rising. The Fed’s rate hike expectations are delayed, affecting market risk appetite.

“Currently, major A-share indices remain in a high-level zone; short-term, the market may continue to oscillate.” Zhang Pengyuan said that policies from the National Two Sessions, which promote high-quality development and guide long-term capital inflows, provide some support. However, given the large gains in some sectors earlier, risk appetite may fluctuate temporarily, and indices are likely to remain in consolidation.

“Short-term, A-shares will likely show a pattern of divergence and structural oscillation,” Bi Mengran added. One reason is that volume remains insufficient, and new funds are reluctant to enter, so intra-market shifts will dominate. The Shanghai Index may continue to test support at low levels due to its heavy cyclical stock weight; the ChiNext Index, supported by tech stocks, may remain relatively strong with some upward momentum but could face short-term profit-taking and correction risks. Sector rotation may continue at a rapid pace, with recent gains in semiconductors and port shipping sectors needing further observation. Without new main themes, market sentiment may fluctuate, and short-term consolidation and digestion will be the main theme—no large declines or volume-driven breakouts are expected.

Focus on Tech and Resource Stocks

Sector divergence is evident. Consumer stocks continue to strengthen, resource stocks remain under pressure, and tech stocks are not particularly strong. Is the market style shifting? How should positions be arranged?

Hu Mohan recommends maintaining a balanced allocation, controlling positions while focusing on two main opportunities:

1. Tech sector: During ongoing corrections, focus on leading stocks supported by industry trends such as AI+ and semiconductors, and consider phased left-side positioning.

2. Resources: Some varieties still have mid-term logic, but short-term signals of stabilization are needed. Maintain observation without rushing to buy.

“The core strategy now is to accumulate quality chips amid volatility and patiently wait for value reversion,” Hu Mohan said.

Mingyu Asset suggests paying attention to resource price increases driven by geopolitical tensions, such as oil, coal, new energy, aluminum, and chemical sectors benefiting from “anti-involution” cycles. Also, focus on policies supporting domestic demand expansion and new productive forces, which may present better entry points after corrections—like AI, semiconductors, robotics, commercial space, and consumer services. Keep an eye on economic data, Middle East conflicts, US-China trade negotiations, and the March Fed meeting.

“In the short term, under cautious risk appetite, sectors with stable cash flows and assets may maintain relative advantages, while tech growth stocks may continue to diverge internally,” Zhang Pengyuan said. Structurally, recent funds have concentrated on high-cash-flow and defensive sectors like power, utilities, and resources, aligning with the global trend of HALO trading (heavy assets, low淘汰率).

Bi Mengran offers these strategic suggestions:

1. Focus on certain consumer sectors with policy support and reasonable valuations, as their recent strength reflects policy dividends and industry recovery expectations, likely to continue short-term upward trends.

2. Rationally view tech stock corrections, and look for low-entry opportunities in quality sub-sectors. Recent tech declines have been followed by capital inflows into electronics, with semiconductor and related fields performing well. The core logic is industry cycle recovery and profit improvement, not just hype. Tech stocks may continue to consolidate short-term, with those having solid fundamentals and core technologies—like semiconductors and consumer electronics—likely to recover. Be cautious of US tech stock adjustments transmitting downward and profit-taking pressures; avoid chasing highs blindly, and wait for dips to buy.

3. Exercise caution with resource stocks, avoid short-term risks, and wait for stabilization signals. Steel, non-ferrous metals, and chemicals declined sharply today due to commodity price corrections and fund withdrawals. Short-term, the downside pressure remains. Although long-term trends relate to global economic recovery and commodity cycles, the lack of clear positive signals and evident fund outflows suggest avoiding bottom-fishing. Consider small positions in high-quality leaders once stabilization and commodity price rebounds occur, focusing on stocks with strong earnings and commodity linkage, and low valuations.

Reporter: Zhu Denghua

Copyeditor: Chen Cai