Top 10 Funds Analysis: Shanghai Composite Index Retreats to 3,800 Points — Market Pricing Has Become More Fully Valued; The Value of Low-Volatility Asset Allocation Is Rebounding

Monday’s A-share market faces another correction.

On March 23, the three major A-share indices fell over 3%, with the Shanghai Composite retreating below 3,800 points. By the close, the Shanghai Composite dropped 3.63%, the STAR Market 50 Index fell 4.31%, the Shenzhen Component Index declined 3.76%, and the ChiNext Index decreased 3.49%.

In the ETF market, Huatai-PineBridge CSI 300 ETF traded nearly 6.8 billion yuan on Monday, nearly doubling from the previous trading day; the E Fund ChiNext ETF, Southern CSI 500 ETF, Huaxia SSE 50 ETF, Southern CSI 1000 ETF, and GF Shanghai Stock Exchange Composite Index ETF all saw significant buying at the close. Specifically, the GF S&P Oil & Gas ETF and the Harvest S&P Oil & Gas ETF both hit the daily limit up; meanwhile, 14 gold-themed ETFs fell more than 9%.

Regarding the cause of Monday’s unusual market volatility, Pelican News interviewed ten public fund managers. Many believe that the latest developments in US-Iran conflicts are the most critical marginal variable currently, but the decline in equity markets has clearly been an “overreaction.” The long-term valuation core of A-shares remains rooted in domestic fundamentals. Market allocation strategies favor low-volatility assets, and sectors with clear industry trends and strong growth are more resilient.

Caitong Fund: The core is high oil prices’ sustained impact on inflation, interest rates, and economic fundamentals

Monday’s all-around decline in A-shares was mainly driven by ongoing geopolitical risks and the macro impact of high oil prices. Over the weekend, there was no sign of easing or resolution in the US-Iran conflict, raising concerns that sustained high oil prices could continue to boost global inflation and suppress economic fundamentals, leading to a rapid decline in risk appetite. Additionally, the prolongation of the conflict is keeping oil prices high, reinforcing inflation expectations and strengthening the dollar, which impacts gold sectors through profit-taking and leverage effects, further intensifying risk aversion and volatility.

Looking ahead, the progression of the US-Iran conflict remains the key market variable. The impact of high oil prices on RMB assets mainly manifests as temporary pressure on exports and domestic demand. However, domestic policies aimed at stabilizing growth and expectations continue to exert counteracting effects. The overall situation is manageable, as the market is not purely trading risk aversion or stagflation logic.

The current core trading logic is not about betting on a quick end to the conflict but on the duration of high oil prices’ influence on inflation, interest rates, and economic fundamentals. In this context, sectors with clear industry trends and strong growth, such as AI, may still be key allocation directions. During turbulent phases, the focus should be on assets with high earnings certainty and strong performance, aiming to navigate short-term geopolitical and macroeconomic fluctuations with patience.

Morgan Stanley Fund: Market pricing is already quite sufficient

The overall suppressive factor remains the stagflation risk from Middle East tensions, while domestically, rising costs pressure manufacturing profit margins. Relief depends on clarity in overseas developments. Recent trends show no significant improvement, and the impact exceeds expectations. Oil prices are again approaching $110 per barrel, adding inflationary pressure in many countries. Although the European Central Bank and Federal Reserve have been on hold, sustained high oil prices could trigger rate hikes, affecting global investments.

The domestic market is currently pricing in the global economic impact of overseas developments. With recent sharp declines, the market has already priced in much of this risk. Compared to other manufacturing powerhouses, China’s manufacturing advantages remain significant, and some export sectors may benefit, so excessive pessimism is unwarranted.

China Europe Fund: The value of low-volatility assets is gradually rising

Market risk appetite has sharply declined, driven by geopolitical conflicts increasing safe-haven demand. However, this decline is often trend-like; early macro shifts tend to see markets seeking “beneficiary sectors” based on optimism inertia. For example, last week’s overseas optical module conference boosted optical sector performance beyond expectations, with the Philadelphia Semiconductor Index and ChiNext attracting capital from both US and Chinese markets. Other sectors, however, experienced significant risk-off. Under rising volatility, defensive assets focusing on dividend styles within stocks are favored due to the rebound in PPI expectations. If panic spreads further and causes larger shocks, focus should shift to medium- and long-term growth-verified sectors.

Global inflation and geopolitical tensions will further drive cyclical commodities. As volatility rises, the value of low-volatility assets increases, with attention on three areas: traditional low-vol dividend stocks; chemical industry segments with potential margin improvements, such as coal chemical; and oil & gas sectors benefiting from long-term product price increases.

Guotai Fund: Short-term market may collectively hedge for about two weeks

Since the outbreak of US-Iran conflict, its duration has exceeded market expectations, causing significant oil price fluctuations. Despite efforts by developed countries to stabilize prices, effects are limited. Near-term oil prices are stable, but futures are trying to eliminate discounts. This environment has heightened inflation expectations globally, especially in high-inflation countries, reversing easing policies, raising bond yields, and damaging equity valuations. Continuous declines have also led some absolute return investors to reduce positions, accelerating the process.

Current volatility mainly stems from market panic. Under liquidity disruptions and risk appetite pressure, the market may collectively hedge for about two weeks. Medium-term, market styles are expected to rebound, favoring large-cap growth, including AI hardware, power grids, energy storage, and photovoltaic industries.

Shangyin Fund: Equity market declines are clearly an “overreaction”

While concerns about energy prices dragging down economic growth are not unfounded, Monday’s declines in equities appear to be an overreaction. Looking ahead 1-3 months, key indicators of Middle East conflict include US ground troop movements, damage to oil infrastructure, and US-China summit timing. Also important are US stock declines and domestic attitudes toward the war. If liquidity risks persist, the Fed may expand its balance sheet to provide liquidity (noting that the Fed chair change is scheduled for May).

Therefore, a dual approach is recommended: first, in the short term, wait for liquidity risks to subside—signs include a weaker dollar, stable gold, or market rotation; second, focus on sectors with rising energy prices and strategic importance, such as semiconductors, grains, fertilizers, and financials that may benefit from supply chain disruptions.

Bosera Fund: Long-term valuation core of A-shares remains domestic fundamentals

Looking ahead, the short-term market will likely be highly sensitive to geopolitical developments. The blockade of the Strait of Hormuz, potential attacks on energy facilities, and spillover effects to other oil-producing countries will directly influence oil prices and global inflation expectations.

In this highly uncertain phase, dividend sectors with high yields and stable cash flows have defensive value. Over the medium to long term, the valuation core of A-shares remains domestic fundamentals—both the Two Sessions have set clear growth targets, and macro policies remain proactive. However, external risks are not fully released, so investors should remain cautious, control positions prudently, and wait for clearer developments.

Ping An Fund: Good timing for A- and Hong Kong stock allocations

From a medium- to long-term perspective, China’s economy still shows resilience and structural opportunities. The Two Sessions have set annual growth targets, and fiscal and monetary policies continue to support technological industries. Amid the recent external shocks, it’s an opportune time to allocate to A- and Hong Kong stocks, favoring sectors and stocks with strong fundamentals and promising long-term growth.

Key focus areas include: technology sectors benefiting from policy support and industrial upgrades; high-dividend assets with stable cash flows and dividends; upstream energy and commodities benefiting from rising resource prices.

Overall, short-term markets may remain volatile, but the long-term logic remains intact, and structural opportunities are still worth actively capturing.

Cinda AO Asia Fund: Global equity assets may continue to fluctuate

In the short term, the US-Iran conflict remains the core factor influencing global asset prices. Until geopolitical clarity emerges, global equities are likely to remain volatile, closely monitoring conflict developments.

In the medium term, on one hand, after recent adjustments, the Chinese market’s selling pressure may have eased, and China’s stable and safe characteristics could show resilience amid a well-developed industrial system. On the other hand, with proactive policies under the “14th Five-Year Plan” and the goal of “stability with progress, quality improvement, and efficiency,” economic recovery is ongoing. As traditional economic activity enters peak seasons, the environment for profit recovery in A-shares remains promising.

Additionally, as listed companies disclose 2025 annual reports and Q1 results, earnings factors may increasingly influence the market, making high-quality growth themes worth关注。

Yongying Fund: Balancing defense and growth opportunities moving forward

Future strategies should balance defensive and growth opportunities. In the face of liquidity disruptions and risk appetite pressure, the market adopts a “HALO PLUS” approach. The defensive component (HALO) continues to focus on high-cash-flow, heavy-asset, high-entry-barrier sectors with low TMT correlation, such as coal, utilities, and construction, to hedge macro risks. The offensive component (PLUS) targets growth sectors with low trading congestion and weak sensitivity to interest rates, such as commercial aerospace, batteries, and space photovoltaics. Additionally, military industry themes and sectors benefiting from self-reliance are also under consideration.

Manulife Fund: Weak risk appetite and valuation bottom features

Recently, global markets have been affected by central bank policies and geopolitical conflicts, with stagflation trading continuing and asset performance diverging. Domestically, risk appetite has weakened, and valuations are at bottom levels.

Given the current situation, short-term investments should focus on undervalued, high-earnings certainty sectors to avoid risks. Sector adjustments include upgrading the auto sector from underweight to neutral, moving chemicals from neutral to overweight, and reducing computer stocks from neutral to underweight, serving as references for future sector allocation.

(Source: Pelican News)