The market hits bottom and rebounds, with the ChiNext Index rising 1.41%; seize certainty opportunities amid market fluctuations.

How does geopolitical conflict affect fluctuations in the A-share market?

On Monday, the market bottomed out and then rebounded, with the Shenzhen Component Index and the ChiNext Index turning positive, rising by 0.19% and 1.41%, respectively. In the Hong Kong market, the Hang Seng Index closed up 1.45%, and the Hang Seng Tech Index rose 2.69%. Industry analysts believe that, amid ongoing external risks and the domestic earnings disclosure season, the market may continue to fluctuate. It is recommended to focus on sectors supported by fundamentals and policies.

Storage Chip Concept Stocks Surge

On the 16th, after opening, the three major A-share indices experienced oscillations and dips. Driven by a rally in Hong Kong stocks, the A-shares rebounded from their lows, with the Shenzhen Component Index and ChiNext Index turning positive. By the close, the Shanghai Composite fell 0.26% to 4,084.79 points; the Shenzhen Component rose 0.19%; and the ChiNext gained 1.41%. The total trading volume was 2.33 trillion yuan, shrinking by 75 billion yuan compared to the previous trading day. The Hang Seng Index closed up 1.45%, and the Hang Seng Tech Index increased by 2.69%.

Market-wise, concepts like storage chips and advanced packaging were active. The Memory Index surged 5.52%, with notable stocks such as Langke Technology up 20%, Baiwei Storage up 13.35%, and Tai Chi Industrial, Demingli, and GigaDevice hitting the daily limit. Additionally, shipping, liquor, and automotive sectors performed well. In shipping, China Merchants South Oil hit the limit, while COSCO Shipping Energy and China Merchants Shipping rose over 7%. In liquor, Huangtai Winery increased 5.55%, and Kweichow Moutai, Jinhui Liquor, and Jiugui Liquor all gained over 3%.

Non-ferrous metals, petrochemicals, and large infrastructure sectors saw declines, with stocks like Shanjin International, Western Gold, Shandong Gold, Zhaojin Gold, Yunnan Copper, and Huayou Cobalt falling more than 5%.

Investment Styles May Become More Balanced

Looking back at recent market movements, on March 4, 9, and 16, the Shanghai Composite Index bottomed near 4,055, 4,052, and 4,048 points, respectively. Each time, the index found support around 4,050 points and rebounded, forming a “triple bottom” technical pattern. Analysts from Jufeng Investment believe this indicates short-term support at this level is strong, and selling pressure has been somewhat alleviated. From the extent of the correction, the Shanghai Composite, which had fallen from a previous high of 4,197 points, declined by a maximum of 150 points. Currently, market sentiment has stabilized, and further significant declines are limited.

“Currently, the duration and evolution of geopolitical conflicts are highly uncertain, with the core issue being when the Strait of Hormuz can resume normal navigation,” says China Merchants Securities. For the A-share market, the ongoing rise in oil prices in the short term weakens expectations for Federal Reserve rate cuts. Meanwhile, with PPI expected to rebound and turn positive, investors’ allocation styles may become more balanced, favoring value and cyclical sectors such as inflation-sensitive industries.

Jufeng Investment also notes that geopolitical conflicts remain uncertain and can cause sharp fluctuations in international oil prices, which may influence the A-share market through cost transmission and inflation expectations, leading to sector differentiation. The market is still in a phase of oscillation and adjustment, so investors should avoid blindly bottom-fishing. Patience is needed until market direction becomes clearer, with particular attention to the support around 4,050 points and trading volume.

Ping An Securities recommends focusing on sectors supported by fundamentals and policies. In the medium to long term, signs of domestic economic improvement are accumulating. The “14th Five-Year Plan” emphasizes strengthening industrial foundations, and Chinese assets’ attractiveness due to certainty is expected to further increase. Structurally, attention can be given to: 1) advanced manufacturing sectors benefiting from global demand recovery and capacity restructuring (such as power equipment, machinery); 2) technology sectors supported by policies and showing growth potential (TMT, innovative pharmaceuticals); 3) cyclical sectors benefiting from commodity price increases (chemical, building materials, steel, coal, non-ferrous metals); 4) high-quality dividend assets still holding investment value.
Reporter: Chen Hui