When Will the Current Healthy Correction in the A-Share Market End? Top 10 Brokers' Strategies Here

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Source: Cailian Press

Cailian Press, March 22 (Editor: Lachen) — The latest strategies and views from the top ten securities firms are now available, details as follows:

CITIC Securities: Key controversies regarding the impact of Middle East conflicts—answers will gradually emerge after April

Regarding key controversies about the impact of Middle East conflicts, answers will be gradually revealed after April. The core market questions mentioned earlier will be addressed step by step in April. Until then, the market will remain in a narrative game phase, reflecting liquidity withdrawal characteristics. U.S. Treasury yields are still rising rapidly, with the 10-year yield jumping from 3.97% at the end of February to 4.39% now, the highest since August last year. From the current global market landscape, as risk aversion diminishes, countries are strengthening energy and resource security strategies and accelerating electrification—these are new development trends. China’s competitive manufacturing industry is just beginning to shift towards pricing power and profit margins. From a trading logic perspective, rising prices and PPI rebound are ongoing signals. The only current concern is the difficulty of upstream prices passing downstream. At present, midstream and upstream sectors have started raising prices, but downstream remains cautious and is digesting inventories. Only over time, as commodity volatility decreases, downstream procurement will normalize. Whether prices can be maintained, profit margins expanded, and market share advantages translate into pricing power remains to be seen. Investors should remain patient, calmly handle stock fluctuations. April and May are critical decision periods. In the first three months of this year, sector rotations driven mainly by narratives and gains/losses occurred. Even if trading did not lock in profits, it’s no big deal. In fact, the median return of active equity funds has already returned to 0.7% this year.

Firmly focus on re-evaluating China’s manufacturing pricing power and adjust allocations accordingly. The current core holdings are industries with a share advantage in China, high costs of overseas capacity reconfiguration, and supply flexibility easily influenced by policies—based on new energy, chemicals, electrical equipment, and non-ferrous metals. Recent liquidity shocks have pushed valuations of many stocks back into attractive zones, similar to the post-April 7, last year, export-oriented stocks, bringing significant expectations and undervaluation again. Based on these core holdings, continue increasing exposure to undervalued factors, especially in insurance, securities, and power sectors. From a short-term cyclical signal perspective, price increases remain the sharpest weapon, and PPI trading is increasingly likely to be the main theme for the year. April and May are decisive periods. Prioritized opportunities include: 1) Chemical products with alternative raw materials/process routes under oil shocks (Chinese varieties tend to have higher coal content than overseas competitors), where rising crude oil prices create high spreads; 2) Stocks with significant Middle East/Western European capacity, where supply disruptions may lead to supply-demand gaps and price hikes; 3) Substitutes affected by costs that drive prices up, with demand increases creating supply-demand gaps; 4) Stocks already in an upward price channel, where rising costs provide opportunities for pass-through and profit margin expansion.

Huaxi Securities: Allocate to banks and wait for more “stabilizing market” policies

Huaxi Securities notes that most global stock markets declined this week, with A-shares and European markets leading the fall. On one hand, the geopolitical situation between the US and Iran remains uncertain, with large uncertainties ahead for oil prices and inflation trends, increasing the risk of stagflation. On the other hand, the Fed’s March meeting kept rates unchanged but adopted a hawkish tone, with the possibility of future rate hikes, raising concerns about dollar tightening. Under risk aversion, A-shares declined overall, with trading volume shrinking, reflecting cautious investor sentiment amid rapid sector rotations. Structurally, defensive sectors like food and beverages, banks, and high-growth directions such as storage and AI computing are relatively better.

Market outlook: Focus on allocating to banks and wait for more “stabilizing market” policies. The ongoing US-Iran conflict and expectations of overseas rate cuts are intertwined, keeping global markets under risk pressure in the short term. Compared to this, domestic policy environment is more certain. Regulators have signaled “stabilizing the capital market,” and policies such as “stabilization funds,” structural support tools, long-term funds entering the market, and counter-cyclical regulation are expected. Meanwhile, imported inflation has limited impact on domestic monetary policy, and loose liquidity will continue. Fiscal efforts will also help restore investor confidence.

HuaAn Securities: When will the current healthy correction end?

HuaAn Securities states that overseas risks continue to accumulate, with US-Iran tensions unresolved and inflation fears pushing the Fed hawkish. Domestic incremental policies are unlikely to be announced due to strong economic data. The market is expected to remain weak and volatile. In terms of allocation, short-term beneficiaries include banks, utilities, and sectors with price-raising catalysts like chemicals, machinery, and storage. Growth stocks remain the core medium-term theme but are still in a correction phase. After correction, the market may enter a second phase of profit-driven bull market, so this correction is considered healthy.

US-Iran tensions show no signs of easing; Trump’s postponement of China visit indicates ongoing external disturbances. Inflation concerns from rising oil prices led the March FOMC to adopt a hawkish stance, with increased likelihood of rate hikes. External shocks persist. During this first healthy correction in the growth cycle, although short, the main sectors and representative stocks tend to experience a “drop → rebound → drop” pattern with wide fluctuations. The recent strong performance of growth stocks and the telecom sector is part of this rebound phase. Further declines in key growth stocks and telecom may be needed to solidify the next upward trend.

Dongfang Securities: China still maintains a downward risk assessment and risk appetite shifting from both ends toward the middle

In the short term, global risk assessments are rising, risk-free rates are increasing, risk appetite is declining, and earnings expectations are being revised downward, posing challenges to global markets. However, domestically, there is little need for excessive worry. Recent years have seen diminishing negative impacts from geopolitical risks on China’s equity markets. The process of risk assessment shifting from both ends toward the middle continues.

Energy security and technological manufacturing are converging, with a focus on photovoltaic equipment. The main theme remains global energy security; style shifts point to power equipment and machinery sectors. Examining the intersection and evaluating from profitability and valuation, photovoltaic equipment is relatively undervalued.

China Galaxy Securities: The duration and evolution of geopolitical conflicts remain highly uncertain

“Two changes” and “two constants”: The first change is the geopolitical shift under the tension in the Strait of Hormuz. The US-Iran conflict continues to escalate, with no signs of easing. The conflict has expanded to regional energy infrastructure, with spillover risks. The second change is the phase of global liquidity tightening. Rising oil prices and inflation expectations have reduced easing expectations, marginally tightening global liquidity and pressuring risk assets. The constants are: policy expectations remain unchanged—central banks emphasize maintaining stable financial markets; and the long-term liquidity environment remains positive, with improved long-term capital supply to A-shares.

A-share market outlook: The duration and evolution of conflicts are uncertain, and short-term volatility in global risk assets is expected to persist. Under the main domestic logic, downside risk is limited, and the market will likely digest external pressures through oscillation and sector rotation. Key variables include oil prices, which influence inflation and energy demand, and sectors like coal, chemicals, and defense. Defensive assets such as financials, utilities, and transportation are also focal points. Technology sectors like power equipment, new energy, energy storage, semiconductors, and communications are worth attention. Valuations in consumer sectors are low, with some segments showing recovery potential, such as agriculture, food and beverages, and household appliances.

Industrial Securities: When will the market rally again?

Recent market adjustments mainly stem from two concerns: economic stagflation risk and escalation of conflicts. Neither may be the final outcome of current conflicts. In the short term, escalation may create opportunities for de-escalation, often when market sentiment is most pessimistic. Medium to long term, stagflation could be the worst-case scenario but not necessarily the baseline. The current market’s pessimistic expectations provide a foundation for medium- and long-term recovery.

In terms of allocation, based on upward revisions of earnings forecasts for 2026 since the start of the year, focus on sectors with good first-quarter performance prospects: AI hardware (consumer electronics, components, computing and communication equipment, electronic chemicals), software (gaming, digital media, IT services), advanced manufacturing and export chains (new energy—batteries, photovoltaics, wind power; military—navigation equipment; machinery—rail transit, specialized equipment, construction machinery; commercial vehicles; auto parts; medical services), cyclical price-up chains (non-ferrous metals, coal, steel, chemicals—rubber, building materials—glass fiber; shipping ports; gas), and consumer & financial sectors (agriculture, retail, jewelry, securities).

Zhongtai Securities: How to interpret the recent plunge in precious metals?

Recently, gold and oil prices have shown a strong inverse correlation: oil surged this week, while precious metals declined sharply. Generally, rising oil prices support gold via two channels: 1) increased risk aversion demand due to geopolitical tensions; 2) rising energy prices boosting inflation expectations, enhancing gold’s inflation hedge appeal. Thus, oil and gold often move together, especially when inflation expectations rise.

However, recent market behavior indicates a phase shift in gold’s pricing logic. After a year of rising prices, gold’s asset attribute is shifting from “safe haven” to “traded risk asset.” On one hand, global liquidity easing expectations, central bank gold purchases, and geopolitical risks drove large gains. On the other hand, continuous inflows have crowded trading structures, making prices more sensitive to marginal liquidity. Under this environment, gold is increasingly influenced by capital flows and trading structures rather than fundamentals.

In the short term, reduce exposure to conflict-driven sectors like shipping, ports, and coal chemicals. In the medium to long term, focus on new energy and global manufacturing restructuring: 1) under energy security and AI-driven power demand growth, demand for PV, energy storage, and power equipment is expected to rise; 2) geopolitical turbulence shifts global manufacturing toward “security-first,” raising demand for non-ferrous metals, engineering machinery, and high-end equipment, with a systemic upward shift in demand centers.

GF Securities: Impact of high oil prices on the stock market

Currently, A-shares remain resilient supported by policies, fundamentals, and liquidity, with short-term volatility. (1) The recent oil price rise may have a weaker inflation impact than in 2007 and 2022: a) U.S. energy’s CPI weight has decreased significantly; b) U.S. economy and employment are slowing; c) short-term imported inflation in China is limited. (2) The oil price increase may negatively affect U.S. stocks but less so than in 2008 and 2022: a) U.S. inflation may rise but less than in 2007/2022, reducing rate hike expectations; b) the impact on U.S. fundamentals is limited. (3) A-shares may remain relatively resilient due to policy support and ongoing recovery: a) policies remain proactive; b) economic and earnings are recovering; c) liquidity remains loose domestically; external liquidity easing expectations have eased, but medium- and long-term funds may continue to enter.

Sector allocation: Short-term balanced allocation among high-quality tech, some cyclical, and undervalued dividend sectors. (1) Short-term outperformance likely in petrochemicals and energy-related sectors, which tend to benefit from oil price surges; tech hardware sectors may also perform well as AI demand rises. (2) Balanced allocation includes sectors with upward policy and industry trends: energy storage, power, communications, semiconductors, non-ferrous metals, chemicals, military (aerospace), pharmaceuticals, and others; and undervalued sectors like coal, power, and banking.

Guojin Securities: The narrative of global physical asset rise is not over

This week, major global assets faced pressure, seemingly due to demand concerns, but the core issue is the escalation of US-Iran conflict reversing the previous “weak dollar” narrative. Before the conflict, the dollar was weakening, capital flowed out of dollar assets, U.S. stocks underperformed global markets, and commodities with higher per-ton value outperformed, highly sensitive to the dollar index. Countries with high beta to the dollar index saw higher gains early this year before the conflict. Internally, U.S. tech stocks and infrastructure stocks were overtaken by small and medium-sized firms, and U.S. financials lost some centripetal momentum. After the conflict, the dollar index rebounded sharply, capital returned to the U.S., with U.S. stocks showing resilience and dollar-sensitive markets falling more. Commodities with higher per-ton value, like copper and aluminum, declined less than gold. Recent AI industry catalysts in the U.S. have led to Nasdaq outperforming Russell 2000. Chinese tech-related sectors, especially computing power chains, also performed better. The global stagflation and recession fears are surface reasons; the real driver behind market performance may be the reallocation of dollar liquidity in financial assets.

The narrative of rising global physical assets is not over. To see the true picture, we must look beyond the dollar. We recommend: 1) Under global turmoil, energy security becomes crucial, with a focus on primary energy sources like crude oil, shipping, coal, copper, aluminum, gold, and rubber; 2) China’s manufacturing remains the global ballast, with slow but steady asset flow revaluation—especially in power equipment, new energy, machinery, and chemicals; 3) As negative factors reverse, seek structural opportunities in consumption—tourism, scenic spots, fermented flavorings, beer and spirits, pharmaceuticals, medical aesthetics, etc.