Asia-Pacific stock markets come under pressure again on Tuesday. How will the A-shares perform in the second quarter?

Asian market benchmark stocks were once again under collective pressure on Tuesday.

As of the close on March 31, Japan’s Nikkei 225 fell 1.58% to 51,063.72 points, while South Korea’s KOSPI index plunged even more sharply, down 4.26% to 5,052.46 points. The Shanghai Composite Index fell 0.8% to 3,891.86 points; the Hang Seng Index closed up 0.15%.

In terms of trading volume, the total turnover of the Shanghai and Shenzhen markets was 1992.5 billion yuan, up 76.6 billion yuan from 1915.9 billion yuan on the prior trading day.

Regarding the market pullback, a brokerage’s investment consultant said: “On Tuesday, there are two characteristics: first, trading volume has been staying around 2 trillion yuan recently, with shrinkage; second, high-dividend stocks are clearly strengthening. Judging from the performance already released, some companies saw a significant quarter-on-quarter drop in fourth-quarter data, including some consumer-related and even export-related firms. We hope there will be a rebound in the first quarter, and if it falls too much, there could also be some repair in April.”

Another analyst noted that on Tuesday the three major indices initially moved higher together at the open. However, after they repeatedly failed to fill the gap near the upper area, some short-term funds began to cash out collectively, which then caused the three major indices to turn red and continue falling. But in terms of the overall trend, the upward trends on a weekly basis for the three major indices have not been broken, and the M10 on a monthly basis also shows strong support.

A research report from Huaxi Securities believes that weak volume and liquidity is the key feature of the current market. From last Thursday to this Monday, the citywide trading value remained below 2 trillion yuan for three consecutive days, pointing to a reduction in market divergence. Whether investors are watching from the sidelines or bullish, most have adopted a holding attitude. With relatively few floating shares, if the chips are mainly concentrated in short-term trading funds, the行情 (market行情) is usually likely to be lifted quickly. But the market has recently been neither hot nor cold, meaning most chips may be held by medium- and long-term allocation funds. When volume and liquidity deteriorate to the extreme, a rebound becomes possible. However, even if there is a rebound, the pace may be relatively mild, making it difficult to see a situation of rapid upside.

However, China’s assets have shown greater resilience in March than both the Japanese and Korean stock markets. According to Wind data, the Nikkei 225 fell 13.23% in March, while the KOSPI index in South Korea plunged 21.486%. The declines in the Shanghai Composite Index and the Hang Seng Index in March were both around 6%.

With the trading time for the second quarter about to begin, will the resilience shown by China’s assets continue?

Wang Han, Chief Economist of Industrial Securities and Co-Head of the Institute of Economics and Finance, said that for asset allocation in the second quarter, at the strategic level, investors should not be overly bearish on A shares, as there is clear support. At the tactical level, it is necessary to face the intensifying market volatility and adhere to a contrarian approach. Capital markets naturally dislike risk, and A shares are especially sensitive to this.

The UBS Wealth Management Investment Director’s Office (CIO) published an institutional view stating that the current adjustment in the China market may already be excessive. Investors may have an opportunity to increase holdings of high-quality China AI stocks at lower valuations. The China internet sector’s 12-month forward P/E is currently about 13x, nearing the level before DeepSeek was released. The current valuation has not yet fully reflected the gains brought by AI investment and monetization over the past year. UBS Wealth Management expects that MSCI China’s EPS growth rate this year will be about 13%, and that the profit growth rate for the technology sector could reach 20% to 25%. In addition, policies continue to actively support AI development and technological innovation. As market sentiment and fundamentals improve, earnings, valuation, and positions are expected to gradually recover.

In its report, the 广发 (Guangfa) strategy team analyzed that under short-term external disturbances, China’s assets’ structural advantages and policy support still have resilience. The valuation “safety cushion” provides downside protection; industrial upgrading and policy dividends provide upside drivers. Against the backdrop of global asset reallocation, China’s assets’ safety advantage remains prominent, and the logic for medium- to long-term allocation is clear.

The view from Bosera Fund is that going forward, attention should be paid to whether demand improvement can transmit from the manufacturing sector to a broader range of service industries, and whether cost pressure will erode corporate earnings. It suggests focusing on the first-quarter economic data and listed companies’ earnings reports to verify the actual strength of improvement in fundamentals. On the investment side, in the short term under the disturbance of external geopolitical conflicts, defensive strategies may still be a better choice; for equities, it may be worth considering an allocation of “low-volatility dividends + certain growth.”

Huatai Securities stated that looking ahead, there are geopolitical variables externally and the “effect ahead of holidays” suppressing activity internally, which creates pressure on trading activity. However, from the cross-month perspective, as A shares in April enter a period of dense earnings disclosures, the market’s pricing anchor is expected to gradually look through sentiment disturbances and return to verifying fundamentals.

On allocation, Huatai Securities suggests giving a moderate focus to coal and power segments and chemical raw materials that may benefit from high potential oil prices and also have the ability to pass through costs, and using low-level essential-consumption as a base holding.

A private fund manager said that the market may continue to be a structurally diversified trading environment characterized by oscillation. Macro cyclical conditions and micro performance are even more important. There are three directions worth watching: first, a resource-price uptrend catalyzed by intensifying overseas geopolitical conflicts, such as oil, coal, new energy, and aluminum; second, dividend directions with defensive attributes, such as banks and utilities, as well as service consumption oriented more toward domestic demand, agriculture, and food and beverage; third, directions with stronger earnings certainty, such as AI hardware and software, advanced manufacturing, military industry, and innovative drugs. After market risk appetite stabilizes, there may also be performance.

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责任编辑：石秀珍 SF183