【Institutional Strategy】The short-term corrective rally in the A-share market is expected to continue

Soochow Securities believes that on Thursday, the A-share market saw day-long choppy consolidation and adjustment. On the trading screen, oil and gas stocks were active, and the fiber-optic concept repeatedly strengthened; the computational power leasing concept saw a collective pullback. Local time on April 1, U.S. President Donald Trump delivered a nationwide address. Trump said that over the next few weeks, the U.S. would carry out stronger firepower strikes against Iran. This dramatic reversal—“yesterday they shook hands in reconciliation, today the swords are out”—could not be underestimated in terms of its impact on short-term trading sentiment. As a result, markets in the Asia-Pacific region fell broadly. However, the impact of developments in the broader information environment on the A-share market reflects that the market’s panic sentiment has already undergone a relatively sufficient round of release. Therefore, it is not pessimistic about short-term pullbacks; after any pullback, the A-share market is expected to see continued short-term, restorative market action.

Huolong Securities believes that on Thursday, the A-share market saw oscillating decline and shrinking trading volume. This is both a normal retracement caused by technical factors, as the index approaches the pressure level of the prior gap, and also a weakening of sentiment triggered by changes in expectations from overseas. The current market’s “money-losing effect” is still being released continuously, and sector differentiation is clear: the pharmaceutical sector surged and then fell back but performed better than expected overall; shipping and oil and gas strengthened due to news-driven stimulus; technology stocks are broadly weak overall. Whether the power sector can stop the decline is especially key—if it continues to weaken, it will further intensify negative feedback in the market. In the short term, the Shanghai Composite Index will most likely maintain a range-bound oscillation pattern; focus should be on opportunities among the leading core holdings within areas of divergence.

Caitxin Securities believes that on Thursday, Trump’s remarks triggered market volatility, and the A-share market adjusted with lower volume. On the trading screen, the oil and gas industry chain strengthened on the stimulus from the tightening situation between the U.S. and Iran; the dividend/“risk-off” sector performed relatively well due to its defensive attributes. Meanwhile, the Kechuang (STAR Market) direction, which was more affected by the decline in risk appetite, saw a comprehensive adjustment. Looking ahead, overseas, although the situation in the Middle East will most likely turn for the better amid a complicated, winding process, its repeatedly shifting nature will continue to disrupt the market. Until the end of the hostilities is fully confirmed, global risk appetite is likely to decline more easily than it rises. Domestically, the A-share market is more resilient than those of Japan and South Korea; as long as the Shanghai Composite Index does not break below its prior low, it can still be viewed as a rebound structure dominated by oscillation. However, after entering April, the A-share market will enter a period of dense disclosure of key financial reports. During this period, funds often avoid stocks with excessively high valuations or potential earnings risks, and market style may become more pragmatic. In summary, short-term market trading activity may be somewhat lackluster, and at the index level, oscillation may be maintained. In the medium term, the market will most likely be dominated by broad-range oscillation, and the magnitude of volatility could increase. It is advisable to manage position sizes reasonably and wait for signals of a market-driven turning point to appear. However, the foundation for the current A-share rally remains solid. We expect that the current Middle East conflict will only affect short-term sentiment and the market’s operating rhythm in the A-share market, and will not change the market’s direction. We still have confidence in the longer-term trend toward improvement, and it is not necessary to worry excessively.