Geopolitical conflicts disrupt Asia-Pacific markets; institutions: A-shares' "safe haven" attribute is expected to gradually become more prominent

Ask AI · How can China’s energy security become the cornerstone of A-share stocks as a safe haven?

On March 30, both the Nikkei 225 index and the KOSPI index in South Korea fell by more than 2%, making China’s A-share market a bright spot in the Asia-Pacific region.

In early trading, major A-share indexes opened lower across the board, and as the midday close approached, the Shanghai Composite Index rebounded and turned positive. By the close, the Shanghai Composite Index rose 0.24%, the Shenzhen Component Index fell 0.25%, the ChiNext Index and the STAR Market Composite Index declined 0.68% and 0.18%, respectively; total market turnover for the full day was 1.93 trillion yuan.

Data disclosed by the National Bureau of Statistics showed that in January to February, cumulative profits of industrial enterprises totaled 10,245.6 billion yuan, up 15.2% year over year, the highest level in nearly four months; operating revenue was 2.08 trillion yuan, up 5.3% year over year, reaching a new high since 2023.

Guotai Junan Securities believes that under the “new normal” of geopolitical conflicts, factors such as China’s stronger energy security advantages, its complete industrial system and supply-chain resilience, and the improvement of market-stabilizing mechanisms with Chinese characteristics all make stability the underlying tone of China’s economy and stock market. This gives the Chinese market a lower risk assessment. In addition, the risk-distribution value arising from the low correlation between China’s assets themselves and global assets could gradually make its “safe-haven” attributes more evident.

On one hand, from an energy structure perspective, China’s primary energy consumption is dominated by coal, and its self-sufficiency rate has long remained above 90%. Oil and natural gas account for less than 30%, which is significantly lower than the global average. On the other hand, factors such as the diversified and dispersed sources of crude oil imports, as well as the leading global scale of new energy installed capacity, provide important adjustment flexibility for China’s energy system under external shocks.

“Developments in the Middle East highlight the strategic value of China’s ‘coal + new energy’ dual-pillar energy system, which is expected to help support A-shares outperform globally.” said CICC Capital Investment.

Zhang Yu, chief economist at Huachuang Securities, stated that since 2025, the midstream manufacturing sector has faced a triple shock—tariffs, rising costs driven by higher non-ferrous metal prices, and higher oil prices—but its gross margin has remained stable. Although the impact of this round of oil price increases still needs to be observed, considering that non-ferrous metals have a larger weight on the cost side, she believes that China’s electricity prices are relatively less affected by oil prices. She said that “the current high oil prices stemming from supply shocks may lead to more energy investment, which could increase midstream demand, and therefore the midstream gross margin may be more resilient.”

Against the backdrop of ongoing growth in geopolitical risk, global efforts to push forward on cutting-edge technologies such as AI and robots have not slowed down.

CICC Capital Investment believes that in 2026, global AI computing-capacity capex will have already seen substantial and large, continuous upward revisions from what was in 2025. Recently, the growth rate of capital expenditure has slowed, and the chain of price increases replacing capex has become the main driver for the sector. Against the backdrop of a boom in the global AI wave, demand across many links of the industrial chain remains in short supply relative to supply, and short-term adjustments in the sector do not change its long-term positive trend.

Amid external uncertainty, multiple domestic certainty advantages have become even more prominent. “On the policy side, reforms and measures have been steadily implemented in the opening year of the ‘15th Five-Year Plan for the 5-year period,’ and policy support is safeguarding the stable and healthy development of the capital market. A resonance between residents moving their wealth and long-term funds entering the market provides certainty for improvements in the supply of long-term capital,” Galaxy Securities said. It added that the certainty of China’s manufacturing advantages is particularly strong; by relying on a complete industrial chain system and continuously upgrading competitive advantages, China has built an endogenous foundation to cope with external fluctuations.

(This article comes from First Financial.)