External markets plummet, but A-shares stay strong! What's next?

Ask AI · What are the core variables that will affect the April performance of China’s A-share market?

After overseas markets fell sharply overnight, on March 30, A-shares held up relatively well. After opening lower, they moved upward. A total of 2,868 individual stocks closed up in the green, and trading volume increased moderately, but still did not break through 2 trillion yuan.

Interviewees said that opening lower and then rising with volume shows resilience in A-shares, making them a “safe haven inside the global storm’s eye.” However, the overall market risk appetite remains at a low level, and there is no obvious positive policy or data catalyst yet. As a result, the market does not have the conditions for a sustained upward trend; going forward, it will most likely be dominated by range-bound trading and structural repair. It is recommended that investors keep positions at around 50% to 70% at present, so they can “go on the offensive when opportunities arise and retreat when needed.”

Nonferrous metals, communications, and defense leading the charge

In the morning, A-shares opened lower and dipped, then rebounded, with performance remaining steady in the afternoon. The index trend was mixed: the Shanghai Composite rose 0.24% to close at 3,923.29 points; the ChiNext index fell 0.68% to close at 3,273.36 points. The Shenzhen Component fell 0.25%. The STAR Market 50, Shanghai-50, Beijing-50, and CSI 300 all closed lower, but their declines did not exceed 1%.

Trading volume did not shrink—it increased. Today’s trading value rose by 63.9 billion yuan to 1.93 trillion yuan. Leveraged funds continued to cool down; as of March 27, the margin financing and securities lending balance across the Shanghai, Shenzhen, and Beijing markets fell to 2.61 trillion yuan.

On the individual stock front, 2,868 stocks closed higher, and 76 hit the daily limit up. 2,464 stocks closed lower, and 16 hit the daily limit down. Only 4 stocks had daily trading values exceeding 10 billion yuan. Power equipment stock Sungrow Power Supply (阳光电源) fell nearly 4%. Consumer electronics equipment stock Luxshare Precision (立讯精密) closed down 3.66%, while China Aluminum (中国铝业), Tian Ci Materials (天赐材料), Aerospace Development (航天发展), and DeMingLi (德明利) performed well.

On the board, oil and natural gas rose, while communication equipment and precious metals, as well as the superconducting concept, all rose. But consumer electronics equipment, power equipment, and electric power fell.

Among 31 Shenwan一级行业 (Shenwan first-level industries), 13 closed lower. The public utilities sector fell nearly 3%. Sectors including home appliances, power equipment, and non-bank financials also declined.

Nonferrous metals, building materials, communications, national defense and military industry, and textiles and apparel led the gains. Biotechnology and pharmaceuticals and the steel sector also closed up.

Nonferrous metals were favored by capital, with 6 related stocks hitting limit up, including Liyuan Shares (利源股份), Minfa Aluminum (闽发铝业), Aiqiu Resources (怡球资源), Changlv Shares (常铝股份), Nanshan Aluminum (南山铝业), and Tianshan Aluminum (天山铝业).

The communications sector also performed strongly. Hengtong Optic-Electric (亨通光电), Yangtze Optical Fibre and Cable (长飞光纤), and Yangtze Communications (长江通信) all hit limit up. Yongding Co., Ltd. (永鼎股份), Zhongtian Technology (中天科技), Chengtian Weiye (澄天伟业), and FiberHome Technologies Group (烽火通信) saw encouraging gains. FiberHome (中际旭创) and Tianfu Communication (天孚通信) dipped slightly, while XinYiSheng (新易盛) rose more than 2%.

Twelve biotech and pharma stocks hit limit up. Haitai Xinguang (海泰新光) hit a “20cm” limit up. Sansheng Guojian (三生国健) rose nearly 14%. Dongcheng Pharmaceutical (东诚药业), Aifub China (合富中国), Celic Med (塞力医疗), Minao Pharma (美诺华), Lianhuan Biopharma (联环药业), Ji’an Medic (九安医疗), Double-lux Pharma (双鹭药业), Asia-Pacific Pharmaceuticals (亚太药业), and Jinzhou Pharmaceutical (津药药业) all hit limit up.

Opening lower and then rallying shows resilience

How should we view the overnight overseas market selloff, while A-shares opened lower and then rebounded?

Chen Xingwen, Chief Strategy Officer at Heiqi Capital, told reporters that the chill from overnight overseas markets failed to freeze A-shares’ resilience. Instead, it generated a classic “spring warmth rising”行情. The low opening this morning was a knee-jerk reflex from algorithmic trading to overseas sentiment; the subsequent rise on expanding volume reflected rational rebalancing by “smart money” in response to the “discount in China assets.” A-shares are becoming a safe haven inside the global storm’s eye. The subtle resonance between Northbound capital returning and mutual fund managers adjusting their portfolios suggests that upside momentum is still being accumulated, but the market has not slipped into irrational, broad-based frenzy.

“Healthy rotation across sectors shows that capital is still looking for a ‘value-for-money’ anchor point; the market is not overheated.” Chen Xingwen added that today’s surge in nonferrous metals is by no means accidental. It serves as a hedge tool in response to the marginal easing of dollar credit, and it also reflects a price revaluation after the upstream capacity in the新能源产业链 (new energy industry chain) clears. The joint strength of communications and defense aligns with two narratives at once: the acceleration of digital infrastructure and increased geopolitical premium. By contrast, the pullback in power equipment is just tactical rest after crowded high-dividend strategies, not a reversal of the underlying industrial trend.

“Because the overall market risk appetite is low and there is still no clear positive policy or data catalyst, the index currently does not have conditions for a trend-based upward move. Going forward, it will most likely be dominated by range-bound trading and structural repair, and it is unlikely to produce a sustained one-way rally.” As for the sustainability of the upside, Cheng Tianyi, Senior Researcher at Qingdao Anzhi Investment, told reporters directly that today’s A-shares opened lower and then rallied essentially because overseas events—such as the Iran-U.S. geopolitical conflict—kept perturbing the market. In the short term, gains and losses clearly track overseas market fluctuations. After the earlier index experienced a rapid decline, it has already entered the area of phase-support, creating a demand for a technical oversold rebound.

Primarily range-bound and choppy

In the short term, how will A-shares move? As April approaches, what factors should the market pay attention to?

“Against the backdrop that global geopolitical uncertainty still remains and external risk disruptions have not fully faded, market risk appetite may be difficult to rise quickly. At the index level, it is likely to remain primarily range-bound.” Liu Youhua, Director of Research at Paipaiwang Wealth, told reporters of the International Finance News that from a mid-term perspective, domestic macro policies overall still maintain a steady-growth stance, the liquidity environment is relatively loose, and the fundamentals of the economy are also showing a mild repair trend. This provides some support for the A-share market. Therefore, systemic downside risks are relatively limited. However, with valuations at a phase-high and trading activity somewhat cooling off, the market’s style and industry structure may continue to diverge; structural opportunities will remain the main characteristic.

“The market may continue with a structural, diversified trading pattern, where the intermediate-level business cycle and micro-level performance matter even more.” Mingyu Asset Management believes that the duration of the U.S.-Iran conflict exceeds the market’s expectations. Military strikes have expanded to more industrial facilities. The Strait of Hormuz remains blocked, intensifying global energy shocks and supply-chain disruptions. As stagflation expectations warm up, U.S. Treasury yields continue to rise, suppressing market risk appetite. With the U.S. dollar strengthening, the pace of RMB appreciation is slowing. Overall, there is still a possibility that the Middle East conflict could escalate further; A-shares may continue to show range-bound and divergent behavior, but the impact magnitude may be smaller than in overseas markets.

Chen Jiande, General Manager of Taintea Fund, told reporters that the Iran conflict is still ongoing and is affecting global capital market risk appetite as well as oil price movements. If oil prices remain high for a long time, it will also affect the U.S. CPI and the Federal Reserve’s path toward rate cuts. The Iran conflict’s impact on the market in the near to mid term will therefore continue, with relatively high uncertainty.

Chen Xingwen believes that the core contradiction of the April market will shift from “policy expectations” to “performance validation.” The market may climb step by step during the fluctuations, but volatility will inevitably rise. Investors need to closely watch three major variables: first, the persistence of domestic credit pulses—whether social financing data can validate the rollout of “credit easing”; second, the re-calibration of the Federal Reserve’s policy path, where the hawk-dove swings in the dot plot will disrupt global risk asset pricing; and third, the “expectation gap” in listed companies’ Q1 reports, especially the margin recovery situation of midstream manufacturing.

How to position holdings

In a choppy market, how should investors allocate sector exposures?

Liu Youhua suggested paying attention to cyclical sectors that benefit from rising resource prices and supply constraints, as well as high-quality assets with stable cash flows and strong dividend capabilities. At the same time, investors should watch for phased opportunities to allocate to growth sectors after adjustments.

Cheng Tianyi said that on the allocation side, positioning could focus mainly on the “new and old energy” directions. Traditional energy benefits from price support brought by geopolitical conflicts and has relatively strong defensive attributes. Overall, the operation should mainly be “buy on dips,” and then patiently wait for external risks to ease and market sentiment to stabilize.

For the holding strategy, Chen Xingwen recommended a strong-conviction allocation approach of “strategic long-term holding”: keep a core position in high-dividend, dividend-yielding assets and cyclical resource exposures to counter macro uncertainty. Use tactical positions around structural upgrade opportunities in AI computing power infrastructure, the overseas expansion of high-end equipment, and structural improvements within consumption downgrading, aiming to capture alpha from industry trends.

Mingyu Asset Management reminded investors to pay attention to resource-price rally catalysts from escalating overseas geopolitical conflicts, such as oil, coal, aluminum, and new energy sectors. Also pay attention to defensive dividend directions such as banks and public utilities, as well as service consumption, agriculture, and food and beverage that are more driven by domestic demand. For directions with stronger earnings certainty, such as AI software and hardware, advanced manufacturing, defense and military industry, and innovative drugs—after market risk appetite stabilizes—these may also show performance.

“Keep 50% to 70% of your portfolio in position now, with the ability to go on the offensive and retreat when needed.” Chen Jiande suggested. However, the marginal impact of the war on A-shares will gradually weaken and become dull; unless there is a major escalation in the war’s intensity. For long-term capital, A-shares’ valuation is currently relatively low, and China is affected relatively less by the Iran conflict. Long-term capital can buy on dips.

Reporter: Zhu Denghua

Text Editor: Chen Si