A-shares Market Close: Shanghai Composite Index up 1.78%, Power stocks surge, Military industry stocks soar!

On March 24, the hope for negotiations between the U.S. and Iran increased, and the three major A-share indices rebounded after hitting bottom.

By the close, the Shanghai Composite Index rose 1.78% to 3,881 points, the Shenzhen Component Index increased by 1.43%, and the ChiNext Index was up 0.5%.

The total market turnover was 2.1 trillion yuan, a decrease of 352 billion yuan compared to the previous trading day, with over 5,100 stocks rising and more than a hundred reaching their daily limit.

On the market, power stocks surged, the military industry sector was active, the CRO sector rose, and waterproof materials, heating service stocks gained ground, while shipping, micro-cap stocks, aquaculture, outdoor camping, and cables were among the top gainers. Additionally, international oil prices plummeted, causing oil and gas stocks to collectively decline, and the coal chemical sector also fell.

Specifically:

Ground weaponry and military stocks saw significant gains, with Northern Long Dragon rising over 16%, Tianqin Equipment up more than 12%, and several stocks including Great Wall Military Industry, Galaxy Electronics, and Optoelectronic shares hitting their daily limit. Zhongbing Hongjian and Northern Navigation were up more than 5%. Huafu Securities believes that with continued military conflict between the U.S. and Iran this week, geopolitical risks in the Middle East are persistent, and sectors such as missiles, automation, and military trade may see short-term catalysts. Kaiyuan Securities pointed out that military trade and sales are expected to accelerate against the backdrop of escalating Middle East tensions.

Power stocks led the gains, with companies like Disen Corporation, Energizing Wind Power, Guangdong Power A, Jinka New Energy, and Zhejiang New Energy hitting their daily limit. In terms of news, the National Bureau of Statistics stated that it will work with relevant departments to vigorously promote the collaborative project for computing power and electricity, ensuring that the proportion of green electricity applications in newly built computing power facilities at hub nodes reaches over 80%. Dongwu Securities believes that deepening electricity reforms will lead to a significant revaluation of electricity, with the configuration value of dividends being notable. The three major suppressing factors of green electricity—“absorption + electricity price + subsidies”—are gradually easing, allowing new energy to enter the market comprehensively, with market forces leading to high-quality development of new energy.

The CRO and medical services sectors strengthened, with Jinkai Bio rising over 9%, Sunshine Novo Nordisk and Haoyuan Pharmaceutical increasing more than 8%, and WuXi AppTec and Yaokang Bio rising over 6%. In individual stock news, WuXi AppTec’s net profit attributable to the parent company is projected to be 19.195 billion yuan in 2025, a 105.2% year-on-year increase.

Shipping and port stocks were strong, with China Merchants Nan Oil and COSCO Shipping Energy hitting their daily limit, Ningbo Shipping and HNA Technology rising over 7%, and China Merchants Industry up over 6%. Huatai Securities believes that market concerns over global energy and trade supply chain disruptions continue to intensify, with war risk premiums being released, and freight rates in oil shipping, container shipping, and bulk cargo sectors are likely to see a significant jump. In oil shipping, Iran’s ban on ships passing through the Strait of Hormuz has raised supply chain disruption risks and driven up freight rates; in container shipping, market expectations have reversed, with dual disturbances on Middle East/Red Sea routes, leading to a potential significant rebound in freight rates.

Oil reform concepts declined, with Intercontinental Oil and Gas falling over 5%, China Petroleum down more than 2%, and China Petrochemical and Guangju Energy following suit. In terms of news, the fluctuating U.S.-Iran situation has stirred the market, and Guojin Securities released a report stating that regardless of whether considering the economic compensation resulting from this war or the losses in supply and transportation capabilities for the warring parties and surrounding countries, it is highly likely that oil and gas prices will remain elevated, and the impact on chemicals will be difficult to eliminate in the short term, with the duration of the impact expected to be significantly prolonged.

Looking ahead, Meng Lei, a China equity strategy analyst at UBS Securities, pointed out that the “de-risking” in the A-share market may be nearing its end in the short term, with the impact of rising oil prices on total demand and profit margins yet to be observed, but recent consensus expectations for earnings have been upgraded.

From a macro perspective, China’s dependence on oil and gas is relatively low compared to major economies globally, and the short-term surge in oil prices seems to have limited impact on the main indices of the A-share market. Under the baseline scenario, it is expected that the overall A-share profit growth rate will rise to 8% by 2026.