Top 10 Funds Analyze the Shanghai Composite Retreating Below 3800: Market Pricing Has Become More Fully Valued, and the Value of Low-Volatility Asset Allocation Is Rebounding

Ask AI · How does the Iran-U.S. conflict become a key variable influencing A-share market volatility?

On Monday, the A-share market experienced another correction.

On March 23, the three major A-share indices fell over 3%, with the Shanghai Composite Index retreating below 3,800 points. By the close, the Shanghai Composite dropped 3.63%, the STAR 50 Index fell 4.31%, the Shenzhen Component Index declined 3.76%, and the ChiNext Index decreased 3.49%.

In the ETF market, Huatai-PineBridge CSI 300 ETF traded nearly 6.8 billion yuan on Monday, nearly doubling compared to the previous trading day; the E Fund ChiNext ETF, Southern CSI 500 ETF, Huaxia SSE 50 ETF, Southern CSI 1000 ETF, and GF Shanghai Stock Exchange Composite Index ETF all saw significant buying at the close. Specifically, the GF S&P Oil & Gas ETF and the Harvest S&P Oil & Gas ETF both hit the daily limit up; meanwhile, 14 gold-themed ETFs fell more than 9%.

Regarding the cause of Monday’s abnormal market fluctuations, Pelican News interviewed ten public funds after market hours. Many believe that the latest developments in the Iran-U.S. conflict are the most critical marginal variable currently affecting the market, but the decline in equity markets has clearly been an “overreaction.” The long-term valuation core of the A-share market remains rooted in domestic fundamentals. Market allocation strategies favor low-volatility assets, and sectors with clear industry trends and strong growth prospects are more resilient.

Caitong Fund: The core is high oil prices’ sustained impact on inflation, interest rates, and economic fundamentals

On Monday, the A-share market declined across the board, mainly due to ongoing geopolitical risks and the macro impact of high oil prices. Over the weekend, there was no sign of easing or resolution in the Iran-U.S. conflict, raising concerns that sustained high oil prices could continue to boost global inflation and suppress economic fundamentals, leading to a rapid decline in risk appetite. Additionally, the prolongation of the conflict is expected to keep oil prices sticky at high levels, strengthening inflation expectations and the US dollar, while gold sectors face profit-taking and leverage effects, further intensifying risk aversion and volatility.

Looking ahead, the progression of the Iran-U.S. conflict remains the key market variable. The impact of high oil prices on RMB assets mainly manifests as temporary pressure on exports, imports, and domestic demand. However, domestic policies aimed at stabilizing growth and expectations continue to exert counteracting effects. The overall situation is manageable, as the market is not purely driven by risk aversion and stagflation logic.

The current core trading logic is not about betting on a quick end to the conflict but on the duration of high oil prices’ influence on inflation, interest rates, and economic fundamentals. In this context, sectors with clear industry trends and strong growth prospects are more resilient, and AI-related sectors may still be a key allocation focus. During turbulent times, the certainty of earnings and delivery capacity are fundamental; focusing on high-growth, high-performance quality stocks is essential to potentially weather short-term geopolitical and macro fluctuations. Patience is advised.

Morgan Stanley Fund: Market pricing is already quite sufficient

The overall suppressive factors remain the risk of stagflation from Middle East tensions, and domestically, rising costs pressure manufacturing profit margins. Concerns will ease only if overseas situations clarify. Recent developments show no significant improvement and have exceeded expectations. Crude oil prices are approaching $110 per barrel again, adding inflationary pressure in many countries. While the European Central Bank and Federal Reserve have been on hold in recent months, sustained high oil prices could trigger a rate hike restart, impacting global investments.

Currently, the domestic market is pricing in the global economic impact of overseas developments. Compared to major manufacturing countries abroad, China’s manufacturing advantages are significant, and some export sectors may benefit, so excessive pessimism is unwarranted.

China Europe Fund: The value of low-volatility asset allocation is gradually rising

Market risk appetite has sharply declined, driven by geopolitical conflicts increasing safe-haven demand. However, this decline is often trend-like; early macro shifts tend to see the market seeking “beneficiary sectors” based on momentum. For example, last week’s overseas optical module conference boosted optical sector performance beyond expectations, with the Philadelphia Semiconductor Index and ChiNext attracting attention from both US and Chinese markets. Other sectors, however, saw a significant drop in risk appetite. Under rising volatility, and amid expectations of PPI rebound, defensive assets with dividend styles are favored. If panic spreads further and causes larger shocks, focus should shift to sectors with long-term growth certainty.

Global inflation and escalating geopolitical tensions will further drive cyclical commodities. In a rising volatility environment, low-volatility assets are increasingly valuable, with three main directions: traditional low-volatility dividend stocks, chemical sectors with profit margins likely to improve beyond expectations (e.g., coal chemical), and oil & gas sectors benefiting from long-term product price increases.

Guotai Fund: Short-term market may collectively hedge for about two weeks

Since the Iran-U.S. conflict erupted, its duration has significantly exceeded market expectations, causing large swings in oil prices. Despite efforts by developed countries to stabilize prices, effects are limited. Near-term oil prices remain stable, but longer-term prices are trying to eliminate backwardation. This environment raises global inflation expectations, especially in countries already experiencing high inflation, reversing easing policies, and pushing bond yields higher. Equity valuations are thus under pressure. Continuous market declines have led some absolute return investors to reduce positions, accelerating the process.

Most of the current volatility stems from panic sentiment. Under liquidity disruptions and risk appetite pressure, the market may see about two weeks of collective risk aversion. However, medium-term market trends are expected to rebound, favoring large-cap growth stocks, including AI hardware, grid, energy storage, and photovoltaic industries.

Shangyin Fund: Equity market declines are clearly “overreacting”

While concerns about energy prices dragging down economic growth are not unfounded, Monday’s equity market decline was an obvious overreaction. Looking ahead 1-3 months, key indicators of Middle East conflict include US ground troop movements, damage to oil infrastructure, and US-China summit timing. Also important are the extent of US stock declines and domestic attitudes toward the war. If liquidity risks continue to spread, the Fed may expand its balance sheet to provide liquidity (noting the Fed chair change in May).

Therefore, a dual approach is recommended: first, in the short term, wait for liquidity risks to be released before entering, with signs including a weaker dollar, stable gold, or market consolidation and rotation; second, focus on sectors benefiting from rising energy prices and increased energy security, such as segments potentially benefiting from supply chain disruptions (semiconductors, fertilizers) and financial sectors that may stabilize the market.

Bosera Fund: Domestic fundamentals remain the long-term valuation core of A-shares

Looking ahead, the short-term market will likely be highly sensitive to geopolitical developments. The actual blockade of the Strait of Hormuz, whether energy facilities are targeted, and whether conflicts spill over to other oil-producing countries will directly influence oil price levels and global inflation expectations.

In this highly uncertain phase, dividend sectors with high yields and stable cash flows, offering some defensive value, are preferable. In the medium to long term, the valuation core of A-shares remains domestic fundamentals—both the Two Sessions have set clear growth targets, and macro policies continue to be proactive. However, external risks are not fully released, so caution is advised. It’s prudent to control positions and wait for clearer developments.

Ping An Fund: Good opportunities for A-shares and Hong Kong stocks are emerging

From a medium- to long-term perspective, China’s economy still shows resilience and structural opportunities. The Two Sessions have set annual growth targets, and fiscal and monetary policies remain supportive, especially for technology industries. Amid the rapid external negative shocks, it’s actually a good time to allocate to A-shares and Hong Kong stocks, focusing on sectors and stocks with strong fundamentals and promising long-term growth.

Key themes include: technology growth sectors benefiting from policy support and industrial upgrades; high-dividend assets with stable cash flows; upstream energy and commodities benefiting from rising resource prices.

Overall, short-term markets may remain volatile, but the medium- and long-term logic remains intact, and structural opportunities are still worth actively capturing.

Cinda AO Asia Fund: Global equity assets may continue to fluctuate

In the short term, the Iran-U.S. conflict remains the core factor in global asset pricing. Until geopolitical clarity emerges, global equities are likely to remain volatile, closely watching developments.

In the medium term, on one hand, after recent adjustments, the selling pressure on Chinese assets may have eased, given China’s relatively complete industrial system and stable, safe characteristics. On the other hand, with proactive policies under the “14th Five-Year Plan” and the focus on “stability, quality, and efficiency” by 2026, economic recovery and seasonal economic activity could support earnings recovery, warranting attention.

Additionally, as the disclosure period for 2025 annual reports and Q1 results approaches, earnings factors may increasingly influence the market, making high-quality main lines attractive.

Yongying Fund: Balancing defensive and growth opportunities moving forward

Going forward, a balanced approach to defense and growth is recommended. In the face of liquidity disruptions and risk appetite pressure, the “HALO PLUS” strategy is favored. Defensive positions (HALO) focus on high-cash-flow, heavy-asset, high-threshold sectors with low TMT correlation, such as coal, utilities, and construction, to hedge macro risks. Offensive positions (PLUS) target growth sectors with low trading congestion and weak interest rate sensitivity, like commercial aerospace, batteries, and solar energy. Additionally, military industry themes and sectors benefiting from self-reliance are also monitored.

Manulife Fund: Risk appetite weakens, valuation bottoming features emerge

Recently, global markets have been disturbed by central bank policies and geopolitical conflicts, with stagflation trading continuing and asset performance diverging. Domestically, risk appetite has weakened, and valuations are at bottoming levels.

In the current environment, short-term investments should focus on undervalued, high-performance certainty sectors to avoid risks. Sector adjustments include upgrading the auto sector from underweight to neutral, moving chemical from neutral to overweight, and reducing computer stocks from neutral to underweight, serving as references for future sector allocation.