Global investors are closely monitoring developments regarding the situation in Iran. According to recent reports, the Israeli Defense Forces announced on the 26th local time that they had launched a series of large-scale strikes on infrastructure in Isfahan, Iran. On the same day, Hezbollah in Lebanon claimed to have attacked the Israeli Ministry of Defense headquarters using multiple missiles. However, it was revealed that US President Trump hopes to quickly end the war. Affected by these developments, US stock futures and Asia-Pacific markets collectively plunged in the afternoon, while oil prices surged and gold and silver declined.
In the A-share market, stocks experienced a volatile correction. The three major indices closed down over 1% after giving up early gains throughout the day, with the STAR 50 Index falling more than 2%. At the close, the Shanghai Composite Index was down 1.09%, the Shenzhen Component Index fell 1.41%, and the ChiNext Index declined by 1.34%. The total trading volume on the Shanghai and Shenzhen exchanges fell below 2 trillion yuan, shrinking by 236.2 billion yuan compared to the previous trading day.
Notably, Wall Street institutions are raising their expectations for a US economic recession, partly due to the Iran conflict and inflation risks. Market analysis suggests that while the Middle East situation was the trigger for the global market sell-off, it is no longer the only factor to blame. The market logic has undergone a subtle shift: Previously, the reaction was to hear explosions and buy gold and crude oil. Now, the reaction is to hear explosions, worry about surging oil prices causing secondary inflation, fear that the Federal Reserve will maintain high interest rates for longer, and subsequently sell off risk assets like stocks.
Sector-wise, the oil and gas sector moved higher again in the afternoon, with Lanyan Holdings hitting the limit-up. The lithium battery industry chain strengthened across the board, with segments like lithium mining, electrolytes, and solid-state batteries performing well; companies like Rongjie Shares and Shida Shenghua reached the limit-up. The power sector saw a volatile rebound, with stocks like Huadian Liaoneng, Jinkong Power, and Guangxi Energy hitting the limit-up. Innovative drug concept stocks rose early in the session, with Sitaili and Meinuohua reaching the limit-up. The commercial aerospace sector was active again, with Shenjian Shares and Zhongchao Holdings sealing their limit-up boards.
On the downside, insurance stocks declined, with China Life falling nearly 5%, and Xinhua Insurance, China Pacific Insurance, and People's Insurance Company of China all down over 3%. Wind power and photovoltaic equipment sectors continued to adjust, with Zhonghuan Hailu and Guosheng Technology falling by the limit-down or over 10%. The precious metals sector trended lower, with Xiaocheng Technology and Sichuan Gold falling nearly 5%. The defense sector pulled back, with Northern Long Dragon and Inner Mongolia First Machinery Group down over 5%. Optical fiber and optical module concepts weakened, with Faersheng touching the limit-down. The power grid equipment concept continued to adjust, with Shunna Shares hitting the limit-down. The computing power leasing concept declined, with Dianguang Technology falling by the limit-down.
Looking ahead, China Securities Co., Ltd. stated that, given global risk appetite disturbances and domestic market liquidity constraints, A-shares might continue to experience volatile trends in the short term. However, a prolonged US-Iran conflict could create strategic opportunities for China. Leveraging its dual-pillar energy foundation of "coal + new energy," China could not only ensure its own energy security but also potentially become a global leader in energy transition.
**Hot Sectors**
1. **Battery Industry Chain Rises Across the Board** The lithium battery industry chain strengthened across the board, with segments like lithium mining, electrolytes, and solid-state batteries performing well. Companies like Rongjie Shares and Shida Shenghua reached the limit-up. *Commentary: According to the latest data from the China Automotive Power Battery Industry Innovation Alliance, from January to February 2026, China's cumulative exports of power and energy storage batteries reached 48.0 GWh, a year-on-year increase of 24.6%, with energy storage battery sales surging 108.9% year-on-year.*
2. **Chemical Sector Continues Rebound** The chemical sector continued its rebound, with Xinghua Chemicals and Bohai Chemicals hitting the limit-up. *Commentary: Globally, chemical giant BASF announced on Wednesday that it would increase prices for more products due to rising costs caused by the US-Israel-Iran conflict. BASF stated it would raise prices for its basic amines product portfolio in Europe by up to 30%, with some products potentially seeing even higher increases.*
3. **Innovative Drug Concept Stocks Maintain Strength** Pharmaceutical stocks rose during the session, with Meinuohua securing its third consecutive limit-up board, and Wanbangde and Haisun Pharmaceutical also hitting the limit-up. *Commentary: Guoxin Securities emphasized that the clinical development of domestic innovative drugs is progressing smoothly, with several excellent clinical data releases at recent academic conferences. They recommend focusing on major conferences like ASCO in the second quarter.*
4. **Commercial Aerospace Concept Active** The commercial aerospace concept saw localized gains, with Shenjian Shares, Zhongchao Holdings, Western Materials, and Zaisheng Technology hitting the limit-up. *Commentary: Reports indicate that SpaceX plans to submit its initial public offering prospectus to regulators later this week or next week. The company may aim to raise over $75 billion in the IPO, higher than the previously reported estimate of $50 billion, with a latest valuation of $1.25 trillion.*
**Institutional Views**
**China Securities Co., Ltd.: Middle East Situation Has Profound Impact; China Faces Strategic Opportunity** The US-Iran conflict has entered a stalemate phase, causing sharp fluctuations in crude oil prices. China's diversified crude oil imports, energy structure transition, and strategic petroleum reserves will act as buffers. However, due to global risk appetite disturbances and domestic liquidity constraints, A-shares might remain volatile in the short term. A prolonged conflict could have three main impacts: 1) Higher average oil prices, leading to global inflationary pressures and disrupting the Fed's rate-cutting pace; 2) Accelerated loosening of the petrodollar system, potentially making China a global capital safe haven and benefiting RMB assets; 3) It could create a strategic opportunity for China. Leveraging its "coal + new energy" energy base, China could ensure its energy security and potentially lead the global energy transition. Key sectors to watch include coal, coal chemicals, power equipment, utilities, petroleum and petrochemicals, and the AI industry chain. Themes to focus on include lithium batteries, nuclear power, energy storage, and wind power.
**Gold Securities: Gold Poised for New Long-Term Bull Market** Gold Securities pointed out that historical experience shows gold typically performs well in stagflation environments, but the market previously focused heavily on inflation while neglecting the "stagnation" pressure. The US economy is already showing signs of weak growth, and high oil prices could accelerate a recession. If economic stagnation and capital market declines resonate, a liquidity expectations gap could trigger a gold rebound. Long-term, the consensus that US comprehensive national strength is declining from its peak suggests gold may be starting a new major bull market.
**Haitong Securities: High Oil Prices Stimulate Overseas NEV Demand; Optimistic About Independent Brands' Expansion** A Haitong Securities research report stated that in the current oil price cycle, the economic advantages of HEVs, PHEVs, and BEVs are expanding, which could drive their penetration rate in high oil-price regions, presenting export opportunities for independent brands. According to data from the China Association of Automobile Manufacturers, China's passenger vehicle exports from January to February 2026 increased 53.3% year-on-year, while new energy vehicle exports surged approximately 110% year-on-year. With high global oil prices in March acting as a catalyst, full-year NEV export expectations may be revised upwards. The report recommends core independent brands with strong export potential.
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