Major indices in Shanghai and Shenzhen continued to adjust on March 4, with the Shanghai Composite Index closing down 0.98% and falling below the 4100-point level. The ChiNext Index declined over 1.4%, while trading volume shrank significantly to 2.38 trillion yuan. Escalating geopolitical tensions in the Middle East have heightened global risk aversion, putting short-term risk assets under pressure. Key variables influencing global asset classes going forward include fluctuations in crude oil prices, potential disruptions to shipping through the Strait of Hormuz, and whether the Federal Reserve delays interest rate cuts due to rising inflation expectations.
Macroeconomic factors are exerting significant influence in March. Domestically, this period marks a verification phase for post-holiday work resumption data, coinciding with the "Two Sessions" political meetings and important diplomatic events. Internationally, geopolitical conflicts are intensifying. The convergence of these multiple events amplifies top-down macroeconomic impacts. Currently, the implied volatility in A-shares is relatively low, making the market sensitive to unexpected developments and susceptible to amplified fluctuations. In terms of market style, focus may shift back to corporate earnings. Considering the macro environment, an appropriate allocation to dividend-yielding assets could be considered.
On March 3, data from the National Bureau of Statistics showed that the Manufacturing Purchasing Managers' Index (PMI) stood at 49.0% in February, down 0.3 percentage points from the previous month, influenced by factors including the Spring Festival holiday. The Non-Manufacturing Business Activity Index was 49.5%, up 0.1 percentage points. The Composite PMI Output Index was 49.5%, down 0.3 percentage points. Historically, PMI data for the month containing the Spring Festival often shows volatility. This year, the extended holiday period falling entirely in mid-to-late February particularly affected business operations, leading to an overall decline in manufacturing activity. Specifically, the production index and new orders index were 49.6% and 48.6% respectively, down 1.0 and 0.6 percentage points from January, indicating a slowdown in manufacturing production and market demand. However, growth momentum in high-tech manufacturing continues to be evident and remains significantly higher than the overall manufacturing level, pointing to favorable development trends in related sectors.
On March 3, the People's Bank of China (PBOC) disclosed liquidity operations data for February 2026 via its official website. The data indicated a net injection of 300 billion yuan through the Medium-term Lending Facility (MLF), marking the 13th consecutive month of increased rollovers. There was a net injection of 50 billion yuan via open market government bond transactions. The 7-day reverse repos saw a net withdrawal of 120.5 billion yuan, while reverse repos of other tenors resulted in a net injection of 600 billion yuan. The Standing Lending Facility (SLF) saw zero net injection, and other structural monetary policy tools recorded a net withdrawal of 7.6 billion yuan. Against the backdrop of accelerated government bond issuance in February and post-holiday cash withdrawals, the central bank utilized a combination of tools to inject medium to long-term liquidity into the banking system, demonstrating the flexibility and precision of its monetary policy operations. The continued incremental MLF operations since early 2025 signal a clear intent to stabilize liquidity. The consistent net injections via government bond transactions, a newly regularized tool, complement the MLF in providing a balanced mix of short and long-term liquidity supply. Attention should now turn to the scale of MLF maturities in March and the pace of coordinated fiscal policy efforts following the "Two Sessions."
On March 3, the Ministry of Industry and Information Technology (MIIT) and five other departments jointly issued the "Guiding Opinions on Promoting the Comprehensive Utilization of Photovoltaic Modules." The document proposes a series of policy measures across six areas: advancing green design and manufacturing in the PV industry, promoting the orderly decommissioning of PV modules, facilitating green and efficient dismantling and recycling, fostering synergistic development across the entire comprehensive utilization industry chain, optimizing the environment for industrial innovation, and strengthening organizational support. The guidelines aim to promote the healthy and orderly development of the PV module comprehensive utilization industry. These opinions address the impending large-scale wave of module retirements expected as China leads the world in installed PV capacity. They represent a key policy document for building a green, circular development system within the PV industry. The quantitative target of achieving a cumulative comprehensive utilization volume of 250,000 metric tons by 2027 provides clear direction for industrial development. The policy emphasizes designing products for easy disassembly and reuse from the outset, reflecting a whole-life-cycle management approach. It also identifies key regions for capacity layout, such as Northwest, East, and North China, where PV power stations are concentrated, which should help reduce transportation costs and foster industrial clusters.
On March 4, the three major A-share indices closed lower. The Shanghai Composite Index finished at 4082.47 points, down 0.98%. The Shenzhen Component Index closed at 13917.75 points, down 0.75%. The ChiNext Index ended at 3164.37 points, down 1.41%. The STAR 100 Index closed at 1547.26 points, down 0.56%. Among Shenwan's primary industry sectors, Defense Military, Agriculture, Forestry, Animal Husbandry & Fishery, and Power Equipment were among the top gainers, rising 1.33%, 1.29%, and 0.32% respectively. Transportation, Petroleum & Petrochemicals, and Non-Bank Financials were among the top decliners, falling 2.90%, 2.53%, and 2.16% respectively. Overall, 1,655 stocks advanced while 3,502 declined.
The total market turnover was 2388.192 billion yuan, down from the previous trading session. The balance of margin lending and short selling concluded at 2651.311 billion yuan yesterday, also down from the prior day.
Comments