The A-share market fluctuates wildly; what should you choose for a worry-free investment? Just go with broad-based funds!

Recently, the geopolitical situation has been unpredictable, and the A-shares market has once again experienced fluctuations and adjustments today, with increased market volatility. The escalation of conflicts in the Middle East is a Damocles sword hanging over the market. High oil prices not only boost global inflation expectations but also trigger concerns about economic recession, leading to capital withdrawal from equity markets. Using the joint U.S.-Israel launch of “Judea Shield” on February 28 as the starting point of this phase, as of March 31, the Shanghai Composite Index has fallen by 6.51%, and the CSI 300 has declined by 5.53%.

Against the backdrop of a market dominated by geopolitical factors, the core logic of the market is undergoing a transformation. Looking ahead, how will the A-shares market perform?

【Short-term: April may be a window for market allocation!】

Hualong Securities pointed out that, first: valuation rationalization. Under the influence of geopolitical conflicts, the market has experienced a phased correction, with overvalued sectors’ valuations being digested clearly, and some undervalued sectors also experiencing a downward adjustment due to negative feedback from market sentiment. Therefore, in April, there are opportunities for short-term valuation rebounds and medium- to long-term allocation.

Second: positive changes in oil exports. Compared to the progress of conflicts and negotiations themselves, the market is more focused on the navigation issues of the Strait of Hormuz and whether other energy channels can be realized, with some positive developments recently.

Third: the direction of U.S.-Iran conflict. Anti-war sentiment is strong within the U.S., and Trump’s support rate has significantly declined. Considering mid-term elections and the expiration of war authorization, these are important factors for easing U.S.-Iran tensions.

【Long-term: Under the perspective of global uncertainties, A-shares still show resilience!】

Galaxy Securities stated that, under external uncertainties, the domestic certainty advantages are prominent, strongly supporting the resilience of the A-shares market:

1. The reform measures in the first year of the new five-year plan are steadily implemented, with policies safeguarding the steady and healthy development of the capital market.

2. The resonance of residents relocating wealth and long-term funds entering the market improves the supply of medium- and long-term capital with certainty.

3. The certainty of domestic manufacturing advantages is prominent. With a complete industrial chain system and ongoing upgrades in competitive advantages, a solid endogenous foundation has been built to cope with external fluctuations. (Source: Galaxy Securities, 20260328, “Where is the resilience of A-shares from a global perspective?”)

【How to comprehensively grasp the short-term opportunity for market allocation and the long-term value?】

From a macro perspective, as the first-quarter earnings disclosures begin, the market is shifting from “emotion-driven” to “performance verification”. Sectors with high earnings certainty and sustained improvement in prosperity will become the core focus for funds. Although recent geopolitical games and global inflation fluctuations have caused some market corrections, this “early spring chill” has created a rare “golden pit” for second-quarter deployment.

It is worth noting that during volatile markets, when the market direction is unclear, hot spots rotate rapidly, and individual stocks fluctuate sharply, broad-based ETFs are more suitable for investment because they can maximize risk diversification, smooth out volatility, and reduce timing difficulties, perfectly matching the core needs of a volatile market for “stability, loss prevention, and waiting for rebounds.”

Specifically, in terms of allocation tools, A500ETF Huitianfu (563880) focuses on core “new” assets of A-shares, with high earnings certainty and continuous improvement in prosperity. Kechuang 50 ETF Huitianfu (588870) and ChiNext ETF Huitianfu (159247) track the core indices of the STAR Market and ChiNext, focusing on independent controllability and industrial upgrading themes!

【Main theme 1: Focus on core “new” assets】

By 2026, China’s economic restructuring will enter a deep-water phase, with traditional industry leaders and emerging industry pioneers undergoing deep integration. Against the background of expectations for U.S. dollar rate cuts and ample domestic liquidity, foreign capital and medium- to long-term funds prefer high-quality assets with “ESG attributes + industry balance.”

Entering April, the A-shares market is about to enter earnings season, and the fundamental factors’ effectiveness is increasing. As of March 31, among the constituent stocks of the A500ETF Huitianfu (563880) index, 190 companies have announced earnings forecasts, with 139 reporting positive net profits, and 123 showing positive growth. Constituents like Tonghua Dongbao, Foton Motor, Cambrian, SAIC Motor, and Lead Intelligent have seen their net profits double! Looking further ahead, analyst forecasts predict that the net profit growth rates of the A500ETF Huitianfu (563880) index in 2026-2027 will reach 17.24% and 11.45%, respectively, higher than the CSI 300 (12.86%, 9.71%).

【Forecast of the A500ETF Huitianfu (563880) index performance】

【Main theme 2: The return of “high prosperity” after adjustments】

Recently, the market experienced a significant correction, but for some indices with rapid gains (such as Kechuang 50), this has somewhat alleviated valuation pressures. On March 20, the Shanghai Stock Exchange officially accepted the IPO application of Yushu Technology on the STAR Market, sparking market discussion. From a fundamental perspective, 2026 is expected to be the year when artificial intelligence (AI) is widely implemented and domestic semiconductor substitution achieves performance realization. Institutions forecast that the net profit growth rate of Kechuang 50 constituents will lead the market significantly this year. Under external technological restrictions and strong internal policy support, the “hard tech” attributes of the STAR Market have become scarce assets.

Over the past year, Kechuang 50 ETF Huitianfu (588870) has outperformed over 54% of its constituent stocks! Compared to individual stock risk, buying ETFs avoids “black swan” events of individual stocks, making it a safer choice! Buying ETFs also retains the 20% daily limit of the STAR Market, and does not require opening a STAR Market account (assets of 500k yuan, trading experience of over 24 months, etc.).

【Forecast of the Kechuang 50 ETF Huitianfu (588870) index performance】

Analyst forecasts predict that the net profit growth rates of the Kechuang 50 ETF Huitianfu (588870) index in 2026-2027 will reach 176.13% and 36.18%, far exceeding the CSI 300 (12.86%, 9.71%).

【Main theme 3: Focus on new energy and other advantageous sectors under energy substitution logic】

Amidst turmoil in the Middle East, energy security has become a global focus. China’s new energy industry is at the forefront worldwide. Based on this, the ChiNext Index, which gathers leading new energy companies, is showing strong resilience in 2026!

With the export of new energy vehicle supply chains, the valuation restructuring of biomedicine, and the dividends brought by the latest five-year plan, the ChiNext Index is no longer just a collection of thematic stocks but has become a profit center driven by Chinese innovation. On the news front, top leaders stated at an important meeting in March that a more precise and inclusive listing standard will be established for the ChiNext Market. Actively supporting high-quality innovative and entrepreneurial enterprises in new consumption and modern service industries to list on the ChiNext.

Over the past year, the ChiNext Index has performed remarkably, with the ChiNext ETF Huitianfu (159247) index rising by 54.37%, far outperforming the CSI 300 during the same period!

The ChiNext ETF Huitianfu (159247) index also features high innovation and growth characteristics:

1) High innovation: The index includes 84 listed companies in strategic emerging industries, accounting for 94% of the weight, contributing 69% of operating revenue and 83% of net profit. Additionally, the R&D investment ratio and R&D personnel ratio of the ChiNext Index are significantly higher than the overall A-share level.

2) High growth: Over the past five years, the operating revenue compound annual growth rate of ChiNext constituent stocks has reached 23.0%, and the net profit attributable to parent compound annual growth rate is 21.0%, significantly outperforming broad indices like the SSE 50 and CSI 300.

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