At the closing, the Shanghai Composite Index briefly fell below 4000 points! What's the next move?

Questioning AI · The Shanghai Composite Index fell below 4,000 points and then recovered. What market sentiment does this imply?

Daily Economic News Reporter: Zhao Yun Daily Economic Editor: Ye Feng

On March 19, the market experienced a day of oscillation and adjustment, with all three major indices falling more than 1%. The Shanghai Composite Index briefly dropped below the 4,000-point mark during trading.

In terms of sectors, green energy and computing electricity synergy concepts performed countertrend, computing power leasing concepts repeatedly active, and oil and gas concepts showed strong performance. On the downside, non-ferrous metals led declines, and the steel sector weakened.

Nearly 5,000 stocks in the entire market declined. The combined trading volume of the Shanghai and Shenzhen markets was 2.11 trillion yuan, an increase of 64.9 billion yuan compared to the previous trading day.

Affected by the overnight plunge in U.S. stocks, Asian markets generally opened lower and continued to decline today, and A-shares were no exception.

By the close, the Shanghai Composite Index fell 1.39%, closing at 4,006.55 points.

During the day, the index repeatedly approached 4,000 points without breaking it, only finally losing that level briefly at 14:44 — the first time since the beginning of the year; a few minutes later, it recovered amid volatility.

Looking at the number of advancing and declining stocks, 4,955 stocks declined today, the most in a single day this year.

This indicates that, after Tuesday (March 16), market sentiment has once again hit a low point. The “double dip” is often seen as a sign of a stronger short-term rebound.

Since March, despite external disturbances, the market has not been without resistance but has repeatedly bottomed out and rebounded; however, the candlestick bodies have been gradually declining, especially over the past six days (from March 12 to now), as risks have been fairly fully released.

So, will the lowest point of 3,994.17 on the day for the Shanghai Index be this year’s “bottom”?

Based on the multiple extreme recoveries during the day, the 4,000-point level is indeed regarded by many funds as an important psychological threshold.

However, referring to last year’s market performance during volatile periods, such integer levels like 3,900 and 4,000 are actually “flexible,” mainly influencing sentiment and causing fluctuations, amplifying chip exchanges — just like in today’s late trading.

Looking slightly further down, the current 120-day moving average of the Shanghai Index (about 3,992 points) and the gap left by the gap-up opening on January 5 (around 3,977 to 3,983 points) still serve as technical support levels.

Therefore, as we recently discussed, support levels often serve as nodes for left-side trading, but a “left-side” trend suggests that lower prices may still occur in the short term; if right-side trading is your comfort zone, it’s better to wait for a “big rebound” before participating.

Huadong Securities’ research report states that, amid geopolitical disturbances, several favorable factors still support the market’s steady operation.

First, the economy remains resilient. In the first year of the “14th Five-Year Plan,” various sectors are seizing opportunities, promoting major projects, and driving investment recovery.

Second, policy expectations are stable. The 2026 Government Work Report proposes continued deepening of comprehensive reforms in capital market investment and financing, further improving the long-term capital entry mechanism, and enhancing investor protection.

Third, uncertainties are gradually being priced in by the market.

Looking ahead, Debon Securities believes that the A-share market may continue its structural trend. From a macroeconomic perspective, China’s economy is at a critical stage of transformation and upgrading, with policy support continuously increasing, providing fundamental backing for the market. However, the conflict between the U.S. and Iran, leading to the closure of the Strait of Hormuz, has increased external uncertainties, and the risk of slowing global economic growth has risen, putting pressure on market sentiment.

In terms of market style, it is expected that value and growth styles will continue to diverge. Low-valuation, high-dividend value sectors may be relatively resilient, while high-valuation, highly elastic growth sectors could face significant adjustments. Additionally, the intensive disclosure of annual reports by listed companies in late March may lead to further adjustments if earnings fall short of expectations. Policy factors, such as industry policy adjustments and fiscal and monetary policy trends, will also significantly impact related sectors.

From today’s market, energy sectors like oil and gas, natural gas, and coal ultimately withstood the opening decline, rallying against the trend at the close.

CITIC Construction Investment Securities states that crude oil, as an irreplaceable strategic physical asset, not only has resilience against inflation but also tends to outperform general financial assets in stagflation environments, showing significant volatility or a central upward shift. The investment logic of the oil sector continues to evolve under the resonance of restrained capital expenditure and sustained high oil prices, with oil companies accelerating transformation into dividend assets with “strong free cash flow + high dividends + ongoing buybacks.”

Changjiang Securities estimates that if the Strait of Hormuz remains blocked long-term, global coal demand for power could increase by 84.86 million tons annually; if China’s coal chemical plants operate at full capacity, this alone could boost domestic coal consumption by nearly 50 million tons.

Daily Economic News