A-shares open lower and decline further, with decreased trading volume: technology stocks all retreat, while oil, gas, and coal defy the trend and strengthen.

Ask AI · Earnings report busy period A-shares fluctuate, which undervalued sectors are expected to become safe havens for funds?

The three major A-share indices all opened lower on April 2. The oil and petrochemical sector initially rose strongly, once driving the Shanghai Composite Index into positive territory, then fluctuated downward. In the afternoon, the decline widened at times, with a slight rebound at the close.

From the market perspective, technology stocks all retreated, with AI applications, computing hardware, semiconductors, fintech, robotics, and consumer electronics concepts leading the declines; oil and gas, shipping, agriculture, and coal sectors defied the trend and strengthened.

By the close, the Shanghai Composite Index fell 0.74%, to 3919.29 points; the STAR 50 Index dropped 2.77%, to 1262.18 points; the Shenzhen Component Index declined 1.6%, to 13486.94 points; the ChiNext Index fell 2.31%, to 3172.65 points.

Wind statistics show that a total of 1,049 stocks across the two markets and the Beijing Stock Exchange rose, 4,372 stocks fell, and 67 stocks remained unchanged.

The total turnover of the Shanghai and Shenzhen markets was 1.843 trillion yuan, down 169.5 billion yuan from the previous trading day’s 2.0125 trillion yuan. Among them, the Shanghai market’s turnover was 811.9 billion yuan, down 85.4 billion yuan from 897.3 billion yuan the previous day; the Shenzhen market’s turnover was 1.0311 trillion yuan.

According to Great Wisdom VIP, 43 stocks across the two markets and the Beijing Stock Exchange gained more than 9%, while 23 stocks declined more than 9%.

Oil and petrochemicals surged sharply, semiconductors declined significantly

In sectors, rising international oil prices drove the oil and petrochemical sector sharply higher, with stocks such as Bohui Co., Ltd. (300839), China Oil Engineering (600339), Heshun Petroleum (603353), Compton (603798), Blue Flame Holdings (000968), and Beiken Energy (002828) hitting the daily limit or rising over 10%.

Bank stocks remained strong throughout the day, with Agricultural Bank of China (601288) up over 3%, Yunnan Rural Commercial Bank (601077), Shanghai Rural Commercial Bank (601825), and China Construction Bank (601939) up over 1%.

Agriculture, forestry, animal husbandry, and fishery stocks also performed well, with Superstar Agriculture (603477) hitting the limit, Zhongmu Co., Ltd. (600195) up over 7%, and others like Hui Sheng Biological (300871), Pingtan Development (000592), and Shennong Group (605296) rising over 4%.

Semiconductors opened lower and continued to decline, with Yingfang Micro (000670), Anlu Technology (688107) falling over 9%, Changchuan Technology (300604), Guoxin Technology (688262), GCL Integration (002506), Jincheng Co., Ltd. (603396), and Dongxin Co., Ltd. (688110) falling over 6%.

Real estate performed poorly, with Shunfa Hengneng (000631) and Zhujiang Shares (600684) dropping over 7%, Shahe Shares (000014), Huangting International (000056), Xiandao Electric (600641), and China Fortune Land Development (600340) falling over 4%.

Power equipment stocks declined notably, with Hongfa Co., Ltd. (600885), Shouhang New Energy (301658), Xiangming Intelligent (301226), Hema股份 (688032), and Huashengchang (002980) falling over 7%.

A-shares likely to fluctuate within a wide range

CICC believes that although there are still uncertainties in the short term, the current may represent a relatively low point for A-shares in the medium term, and the release of risks and downward adjustments could bring better allocation opportunities. While short-term trends remain uncertain, after adjustments, risks in the A-share market are further released, and valuations are at relatively reasonable levels. In the medium term, the macro environment remains fundamentally unchanged, supporting the logic of “stability and progress” for the A-share market. Risk release and downward adjustments are expected to create good allocation opportunities.

Zhongyuan Securities believes that the core pressure on the current market comes from overseas. If the Middle East conflict further escalates, it could trigger continuous oil price increases and intensify global stagflation pressures. If U.S. inflation continues to exceed expectations, the Federal Reserve may delay or even re-raise interest rates, putting pressure on global liquidity and risk appetite. Considering that domestic macro policies are becoming clearer, providing a solid bottom support; industrial enterprise profits in January–February rebounded significantly year-on-year, and inventory cycles showed signs of replenishment, supporting the fundamentals. The Shanghai Composite Index is likely to remain volatile, and close attention should be paid to macroeconomic data, overseas liquidity changes, and policy trends.

CFA Securities believes that looking ahead, with Iran actively expressing its stance, the US-Iran situation may accelerate toward improvement. Global risk appetite could recover in the short term, but the impact of the events on energy supply and “quasi-stagflation” still needs observation. This may cause the equity market to fluctuate during rebounds. Currently, the A-share market is viewed as a rebound within a range. Additionally, after April, A-shares enter an important earnings report period, during which funds tend to avoid stocks with high valuations or potential performance risks, focusing instead on undervalued stocks with earnings surprises. Market style may become more pragmatic. In the medium term, the A-share market is likely to fluctuate widely, with increased volatility. It is recommended to control positions reasonably and wait for spontaneous market turning points; however, the foundation of this A-share rally remains solid. The recent Middle East conflict is expected to only affect short-term sentiment and market rhythm, not change the market direction. Confidence in the long-term upward trend remains, and excessive worry is unwarranted.

Yang Chao, Chief Strategist at China Galaxy Securities, believes that as US-Iran ceasefire negotiations begin and earnings season uncertainties gradually clear, the market may enter a phase of bottoming and structural rotation. The three main supports—policy backing, capital inflows, and China asset revaluation—remain unchanged. The downside risk for A-shares is relatively limited, and a strategy focused on performance and opportunistic deployment is recommended. Specifically, Yang suggests focusing on three areas: first, the revaluation of strategic resource sectors, as market attention to inflation expectations and geopolitical security increases, with gold, copper, rare earths, and key materials likely to be revalued; second, the technology independence and new productivity sectors, as multiple major tech summits in April are expected to catalyze industries like AI computing power, optical modules, semiconductors, high-end manufacturing, humanoid robots (core stocks), and low-altitude economy; third, high-dividend and stable cash flow defensive sectors, such as utilities, environmental protection, and pharmaceutical outsourcing (CXO), which are preferred for core holdings during market volatility.

Huaxi Securities believes that undervalued styles continued to outperform in Q1. The reasons include the overall high valuation of the market and risk appetite pressure, with funds exhibiting a fear of high prices. However, the logic of stabilizing the market remains, and exiting entirely might miss rebound gains. Under these circumstances, funds tend to seek undervalued rebound opportunities. For Q2, the focus remains on undervalued sectors. From PE and PEG perspectives, power equipment and media are worth continued attention, with their PE (TTM) percentile since 2016 at 67% and 68%, respectively, and PEG at 0.91. From PB perspective, attention should be on agriculture, animal husbandry, and large financials, with PB percentiles generally below 20% and ROE above 8%. Conversely, non-ferrous metals and coal have higher PB percentiles, and their performance depends on whether inflation can continue to exceed expectations.