Geopolitical tensions between the U.S. and Iran have rattled global markets, leading to significant divergence among China's major A-share indices during the morning session. The Shanghai Composite Index rose more than 1% intraday, while the ChiNext Index fell over 2% at one point. Small and mid-cap stocks showed relative strength, with the micro-cap index gaining over 2%. By the midday close, the Shanghai Composite was up 0.95%, the Shenzhen Component Index rose 0.26%, and the ChiNext Index declined 0.79%. Combined turnover for the Shanghai and Shenzhen markets reached 1.32 trillion yuan during the morning, shrinking by 143.2 billion yuan from the previous session.
Sector performance saw rapid rotation. Green power and other segments of the new energy industry chain extended their strength, with stocks like Huadian Liaoneng, Huaguangneng, and Tuori Xinneng hitting the daily limit. Grid equipment concepts remained active, with Beijing Corona and Zhongli Group also reaching the limit-up. The port and shipping sector saw volatile gains, with China Merchants Energy Shipping hitting the limit-up. CRO and weight-loss drug concepts advanced, with Fuxiang Pharmaceutical and Menova Pharmaceutical rising by the limit. Environmental protection stocks performed well, with Xuelang Environment hitting the limit-up. The chemical fiber sector strengthened, with Zhongfu Shenying and Hengtian Hailong rising by the limit or over 10%. Computing power leasing concepts rebounded from earlier losses, with Liang Technology and Zhenshitong rising by the limit or over 10%. Defense stocks collectively gained, with Great Wall Military Industry hitting the limit-up. Optical module and PCB hardware concepts related to computing power also recovered, with Nanya New Materials rising nearly 10%.
On the downside, the broader market displayed a generally positive trend, with only a few sectors declining. Oil and gas stocks underwent adjustments, with Zhouji Oil & Gas falling over 5%. Most photovoltaic equipment stocks weakened, with Shichuang Energy and Maiwei Shares dropping more than 6%. Humanoid robot concepts pulled back, with Wolong Electric Drive falling over 7%. Additionally, chemical and coal sectors underperformed.
Recent geopolitical instability has raised concerns among many investors. In such an uncertain market environment, what should investors do? Bao Xiaohui, Chairman of Changli Asset, suggests that retail investors should maintain emotional stability and avoid making decisions driven by panic. Overall strategy should prioritize steadiness, with controlled position sizes and avoidance of frequent trading. Some may even consider stepping away from the screen temporarily to prevent short-term fluctuations from clouding judgment. The recent sharp decline essentially represents a market shakeout, digesting speculative positions and negative factors. Once panic selling subsides, the market is likely to stabilize and gradually recover.
China Asset Management outlines two signals for judging whether A-shares have bottomed: first, if trading volume shrinks below 1.7 trillion yuan, indicating exhaustion of selling pressure; second, if broad-based ETFs see significant capital inflows, suggesting institutional support. Ping An Securities notes that short-term U.S.-Iran tensions remain the primary anchor for global asset pricing. Until the situation clarifies, equity market volatility may persist, with a defensive bias toward high-dividend and low-valuation stocks.
**Hot Sectors** 1. Green Power Concepts Extend Strength Green power and related new energy industry chains continued their strong performance, with Huadian Liaoneng, Huaguangneng, and Tuori Xinneng among the gainers hitting the daily limit. Grid equipment concepts remained active, with Beijing Corona and Zhongli Group also rising by the limit. Commentary: On the news front, on March 23, the State Power Investment Corporation held its first press briefing for 2026. The company plans to invest 200 billion yuan this year, a year-on-year increase of 17%. First-quarter investment is expected to reach 23 billion yuan, up 35% year-on-year.
2. Defense Sector Rises Defense stocks gained, with Great Wall Military Industry, Hunan Tianyan, and Jianshe Industry hitting the limit-up. Commentary:消息面上，the 15th Five-Year Plan outlines overall arrangements for high-quality advancement of national defense and military modernization. The development of new-domain combat capabilities will accelerate the upgrade of advanced weaponry, ushering in a new phase of growth for military equipment.
3. CRO and Weight-Loss Drug Concepts Advance CRO and weight-loss drug concepts rose, with Fuxiang Pharmaceutical and Menova Pharmaceutical hitting the limit-up. Kexing Pharmaceutical, Taien Kang, and Yangguang Nuobe followed with gains.
4. Shipping Sector Sees Volatile Gains The shipping sector experienced volatile upward movement, with China Merchants Energy Shipping hitting the limit-up. COSCO Shipping Energy, China Merchants Energy Shipping, and Guohang Ocean Shipping followed with gains. Commentary: CITIC Securities believes structural opportunities in oil shipping valuations and assets may continue. Supply chain restructuring driven by geopolitical conflicts remains a core cyclical driver. Against the backdrop of dominant geopolitical factors, events such as those involving Iran reinforce cyclical momentum in the oil shipping industry. Leading oil shippers are expected to achieve record profits in 2026.
**Institutional Views** Guotai Haitong: Geopolitical impact on A-shares is short-term but not profound Guotai Haitong Securities stated that while recent geopolitical instability has caused concern among investors, its impact on A-shares is temporary rather than long-lasting. China's market and asset logic possess unique advantages. Globally, A-shares have consistently been among the markets with smaller declines. The long-term trajectory of A-shares ultimately depends on domestic core fundamentals. The saying "confidence is more precious than gold" holds true—especially at a time when even gold has temporarily lost its safe-haven appeal. An increasing number of assets may be quietly approaching inflection points. The timing of a market turnaround remains to be seen.
Western Securities: High volatility offers entry opportunities for next-phase leaders Western Securities noted that the Kondratiev winter phase has accelerated following the U.S.-Iran conflict, reflected in rapidly expanding market volatility. However, high volatility反而 presents entry opportunities for the next phase's leading trends. The greater the volatility, the more investors should calmly assess the broader trend. The firm recommends increasing exposure to PPI-linked sectors such as oil and chemicals in the first half of the year, while also focusing on Chinese manufacturing with overtaking potential (e.g.,光伏, wind power, energy storage, and engineering machinery). In the second half, a shift toward CPI-linked sectors like baijiu, as well as Hang Seng Tech and gold—beneficiaries of a potential dollar index reversal—is advised.
Ping An Securities: Equity market volatility may persist until situation clarifies Ping An Securities pointed out that short-term U.S.-Iran tensions continue to serve as the main pricing anchor for global assets. Until the situation becomes clearer, equity market volatility may persist, with a defensive style偏向 high-dividend and low-valuation stocks. Over the medium to long term, Chinese assets' safety attributes are expected to remain advantageous. Investors should focus on policy-supported sectors with clear growth prospects: first, cyclical sectors benefiting from commodity price increases and strategic security needs (e.g., energy, chemicals); second, advanced manufacturing with low capacity cycles and景气度 likely to benefit from global inventory restocking (e.g., power equipment, machinery).
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