Iran-US Conflict Disrupts Global Markets, A-Shares Demonstrate "Self-Reliant" Resilience, Institutions Bullish on Two Main Themes

Caixin News, March 22 — (Reporter Chen Junlan) As the US-Iran conflict continues to escalate, the security risk for the Strait of Hormuz, a vital global energy artery, has significantly increased. International oil prices have risen, the pace of major central banks cutting interest rates has slowed, and global stock markets are generally under pressure. In this turbulent environment, what impact will it have on the A-share market? Which industries are worth focusing on this year?

According to the latest analyses from multiple brokerages, the US-Iran conflict has shifted from a short-term “panic trading” phase to a longer-term “stagflation expectation trading,” where high oil prices are priced into economic and policy expectations. Despite ongoing external shocks, the upward trend of A-shares remains intact. Currently, the market is in the transition phase from the first stage of rally to a range-bound consolidation, building momentum for a second, more comprehensive rally.

In terms of allocation, technology and cyclical Alpha are the two main themes widely recognized by institutions. Investors can consider two strategies: one is to find sectors whose prices are linked to oil prices and are expected to benefit from rising oil prices; the other is to identify stocks with fundamentals less affected by oil prices and with independent growth prospects.

Global “Stagflation” Concerns Rise, A-shares Show Resilience

The escalation of geopolitical conflicts directly impacts global risk appetite. Similar to historical experiences, in the initial stage of this conflict, markets quickly priced in resource price increases and safe-haven assets, with crude oil, gold, the US dollar, and US Treasuries all rising, while major global stock indices generally declined. However, as the situation stagnates, markets are beginning to realize that high oil prices may persist longer, leading to a profound shift in trading logic.

Industrial Securities points out that the core contradictions in market pricing are changing in two major ways: first, from focusing on the “intensity of conflict” to “repeated negotiations”; second, from pricing resource price increases to assessing their impact on the economy and policy orientation. If oil prices remain high for a long period, it will increase global inflationary pressures and tighten monetary policy expectations, fundamentally altering asset price dynamics.

Against this backdrop, the policy certainty advantage of the A-share market becomes more apparent. Industrial Securities believes that China’s current prices are still low, policy interest rates are at historically low levels, and there is high tolerance for imported inflation driven by rising oil prices. Policy space remains ample. Domestic policies are likely to continue prioritizing “stabilizing growth” and maintaining reasonable liquidity, which will be key to the resilience of A-shares amid external shocks.

Shenwan Hongyuan Securities also emphasizes that the changing relative strength of countries is subtly affecting asset pricing. China is no longer a passive recipient of imported inflation; it demonstrates stronger proactive responses and adaptability in geopolitical games. The A-share market is adapting to this environment, with pricing based on medium- to long-term “competitive landscape” considerations, which naturally enhances resilience.

A-shares in the Accumulation Phase Still Set for Mid-term Uptrend, Second Stage Rally Expected to Start in H2 2026

Despite short-term external disturbances, broker reports generally remain optimistic about the medium-term prospects of A-shares. Shenwan Hongyuan maintains the “two-stage rally” view, believing that the current A-share market is in the high zone of the first stage of rally, gradually transitioning into a range-bound consolidation, which is precisely the phase for building momentum for a full second-stage rally.

During this consolidation, adjustments may be limited in magnitude but could last for several quarters. Shenwan Hongyuan notes that historical experience shows that a consolidation period often follows the first stage of rally before the second stage begins, helping to digest valuation and valuation attractiveness issues. Currently, overall valuations of A-shares are at historical highs, limiting new investment directions, and the market features a “focus on fundamentals over narratives.”

Regarding the timing of the second-stage rally, Shenwan Hongyuan provides a clear forecast: it may start in the second half of 2026 and extend into the first half of 2027. This will be driven by nonlinear changes in fundamentals and accelerated inflows of incremental funds. Fundamentally, the year-over-year growth rate of net profits attributable to parent companies for the entire A-share market in 2026 is expected to reach 12.9%, showing a quarterly upward trend. From a capital perspective, the profit-making effect of household asset reallocation is at a critical point; once a new wave of profit-driven inflows begins, capital will flow in more rapidly.

Chengtong Securities also believes that, from both fundamental and capital perspectives, the medium-term upward trend of A-shares remains unchanged. Even under different scenarios of conflict, structural opportunities in A-shares remain prominent, with key focus on the transmission chain of oil prices and independent growth sectors.

Focus on Two Main Themes: “Growth Tech” and “Cyclical Alpha”

In the face of complex geopolitical environments, research reports generally suggest that investment opportunities in 2026 will feature “clear main lines and differentiated structures.” Long-term investors should abandon the “general rally” mindset and focus on high-growth sectors and quality stocks.

Under high oil prices, price increases have become a market consensus. Shenwan Hongyuan explicitly states that the two types of inflation assets in the current era are new economy and strategic resources, which form the main sources of growth in growth-oriented investments. In the context of major power competition, ensuring the security of strategic resources is a necessity. Rising costs in mineral extraction, increased demand for new economy contributions, a weaker US dollar, and controllable strategic resource security all support the revaluation of resource stocks.

CITIC Construction Investment Securities reviews that industries whose prices or profits are expected to link with rising oil prices will be key “price increase chains” in the near future. Historical data shows that sectors with high correlation to oil prices include non-ferrous metals, coal, petroleum and petrochemicals, chemicals, steel, machinery, new energy, and agriculture. Rising oil prices directly boost upstream profits in oil extraction, oil services, and shipping, while coal, coal chemicals, and new energy will also benefit from energy substitution logic.

In the technology and growth sectors, the long-term logic of AI industry chains remains clear. However, investment focus is shifting along the industry chain. CITIC Securities believes that industries with strong trends and policy support, such as AI and advanced manufacturing, are less affected by short-term geopolitical risks and may, after an initial discount, benefit from independent growth and become relatively resilient under geopolitical tensions. Since the beginning of the year, profit forecasts for segments like AI hardware and advanced manufacturing have been continuously revised upward.

Shenwan Hongyuan suggests that during the accumulation phase, high-resilience investment opportunities will mainly come from extending core assets and expanding macro narratives. In terms of core asset extension, efforts should continue to explore new segments within the AI industry chain and cyclical Alpha. Following the “first-stage rally (AI hardware) to second-stage rally (AI applications)” industry chain, focus should be on hardware segments like optical modules and PCBs, which are affected by inflation and are penetrating global supply chains; later, attention should shift to application segments such as cloud computing, edge devices, and robotics, as well as opportunities arising from domestic AI chains.

(Caixin News, Reporter Chen Junlan)