CITIC Securities suggests maintaining focus on China's advantaged manufacturing sectors for allocation. While the possibility of TACO remains, market patience has been largely exhausted. The conflict is expected to conclude by the end of the month, but risks of the Strait of Hormuz being "weaponized" and intermittent supply chain disruptions are increasing. Among the five fundamental themes (dividends, overseas expansion, AI, PPI, and domestic demand consumption), only PPI, domestic AI, and consumption remain under-priced. Post-conflict, the transmission from oil to PPI to corporate profits will be the most critical fundamental factor, while domestic AI represents a relatively independent industrial shift. Trading in domestic demand consumption is likely to lag behind PPI-related trades. However, the "PPI to corporate profits" trade will only commence after the conflict subsides and oil prices peak. As the market cools, allocations should gradually narrow, continuing to concentrate on China's advantaged manufacturing.
GF Securities anticipates the market will require further time to consolidate and bottom out. Short-term comparisons to the V-shaped recovery following last April's "reciprocal tariffs" reveal differences: current conflict uncertainties persist, trading volumes during the recent decline were not significantly elevated, and regulatory stabilization funds have yet to signal large-scale intervention. Thus, a period of volatile bottoming is expected to fully digest sentiment and facilitate trading turnover.
The premise for A-shares to decisively trend in April hinges on global markets avoiding a full risk-off scenario, meaning risk appetite cannot deteriorate excessively. A key consideration is whether high oil prices will trigger a U.S. recession, prompting further global earnings downgrades. Currently, concerns appear unfounded historically, as the sequence of conflict-high oil prices-high inflation-rate hikes has not always led to a U.S. recession. If a definitive U.S. recession is avoided this year, global assets—after recent corrections to liquidity expectations—are unlikely to face a comprehensive collapse, leaving room for structural opportunities in A-shares during April.
China Merchants Securities highlights that with unresolved conflicts, opportunities arise from adversity. External risks for A-shares in April remain substantial, with potential for unexpected escalation in U.S.-Israel-Iran tensions. Further oil price increases could amplify global stagflation worries. Should the U.S. launch a ground offensive by mid-to-late April, unexpected casualties or oil price spikes triggering global equity corrections might force a shift toward de-escalation, potentially leading to a typical "dilemma reversal" market rally.
Domestically, following the conclusion of the Two Sessions and the release of the 15th Five-Year Plan outline, key investment projects are set to accelerate, driving a recovery in domestic investment growth. Should external shocks heighten economic uncertainty, expectations for additional pro-growth policies at the late-April Politburo meeting could emerge. Overall, late April is viewed as a critical window for marginal improvements in both domestic and external environments. Post-shock, market focus will shift to sectors with strong Q1 earnings growth, particularly resources like non-ferrous metals and oil & petrochemicals, as well as new energy, optical communication, and semiconductor supply chains.
Industrial Securities advises focusing on potential "market bottom" confirmation and bottom-fishing opportunities amid possible escalation. Markets should not overinterpret recent statements and oil price surges as indicators of a prolonged, expanded conflict; "short-term escalation, mid-term de-escalation" remains the baseline. For April, attention should be on opportunities arising from potential conflict-driven market bottoms and the subsequent recovery as negotiations progress and markets normalize.
Identifying quality assets "wrongly sold off" due to sentiment and shifting holdings toward sectors with clear growth prospects is crucial not only for April's earnings season but also for adapting to this year's changing pricing environment. Sectors impacted by external shocks include AI (semiconductors, domestic computing, PCB, downstream applications), advanced manufacturing (new energy, defense), cyclicals (metals, chemicals, steel, fiberglass), service & new consumption (retail, accessories, pet economy), and non-bank financials.
Sinolink Securities emphasizes that resolving energy conflicts defines true resilient assets. Current market structures are unstable; if conflict escalates, so-called resilient assets may correct; if tensions ease, they may not be optimal. Since energy is the primary shock source, addressing energy contradictions is key. A rise in energy's GDP share is likely.
Recommendations based on combined scenario expectations and optimistic market outlooks include: 1) resonance between traditional and new energy in global restocking cycles (oil, tankers, coal, lithium batteries, wind/solar, storage); 2) commodities like copper, aluminum, and gold as dollar illusions fade and demand recovers; 3) revaluation of Chinese manufacturing (machinery, chemicals), with export surprises and capital inflows potentially driving domestic demand recovery in sectors like tourism, condiments, beverages, pharmaceuticals, and medical aesthetics.
CSC Financial notes the market awaits bottom-fishing opportunities as Iran tensions remain volatile. Markets fluctuate with negotiation signals while U.S.-Israel military actions shift toward ground operations. The next 2-3 weeks are high-risk for escalation, keeping investors观望. Internally, positive economic data reinforces recovery trends. With March data and earnings season approaching, focus will shift to verifying economic recovery and profit improvement.
Patient allocation along three themes is advised: energy security & inflation, high-growth certainty, and policy-driven/seasonal strength sectors. Key industries include oil & gas, coal, coal chemicals, power equipment, utilities, chemicals, AI supply chains, innovative drugs, infrastructure, and service consumption.
Everbright Securities asserts volatility does not undermine resilience; catalysts are awaited. While China faces oil price swings and risk aversion, high energy self-sufficiency provides buffer, and exports often benefit from external uncertainty due to stable supply chains. Mid-term, Chinese assets' inherent stability may attract sustained inflows.
Potential April turning points may come from: 1) better-than-expected corporate earnings; 2) long-term capital inflows; 3) external risk mitigation (less predictable). Structurally, oversold sectors, commodity price beneficiaries, and earnings outperformers are favored.
BOC Securities advises patience in short-term holdings while preserving strength for mid-to-long-term allocation. A-shares' comparative advantages in fundamentals and liquidity will emerge versus global peers. Front-loaded fiscal efforts will aid recovery, while long-term capital and "stabilization fund" schemes provide support. Beware of U.S. bond yield pressures. Long-term, a weaker dollar credit system may aid A-shares' valuation reset, with the Middle East conflict potentially marking a transition to higher asset price volatility in a Kondratief winter.
A weaker dollar trend could favorably reshape A-shares valuations. Short-term, innovative drugs are top picks for their offensive/defensive attributes.
China Galaxy Securities identifies oil as the key "spear and shield" for markets. Amid high uncertainty, global equities may stay volatile, with A-shares exhibiting rotational fluctuations. Oil price movements remain critical. If tensions ease and oil prices fall, loosening expectations could benefit growth stocks. Domestically, policy support, capital inflows, and China asset revaluation logic remain intact; external conflicts haven't shaken A-shares' long-term bull foundation. April's earnings season will shift focus to fundamental verification, with high-certainty, improving sectors in spotlight.
Allocation opportunities include: 1) energy and alternative demand driven by conflict (coal, coal chemicals, new energy, shipping, oil & gas); metals' valuation repair; 2) defensive assets like finance, utilities, transport; 3) tech innovation, self-sufficiency trends (power equipment, storage, semiconductors, computing, comms); consumption sectors like agriculture, F&B, appliances. Long-term, tech industrial drives and cyclical price trends are favored.
Caitong Securities eyes potential late-April bottoming window. Clarity may emerge by month-end (regardless of outcomes). Policies and risk prevention expectations around the Politburo meeting, plus potential Trump visit optimism, coupled with typical March-April adjustments, suggest a bottoming window late April. The early-May Fed meeting may also serve as a "bad news is good news" window (clarifying inflation/hike concerns).
Amid liquidity and risk appetite pressures, a "HALO PLUS" strategy is advised: defensive high-cash-flow assets plus offensive low-crowding growth. Defensive HALO includes low-TMT-correlation, high-cash-flow sectors like chemicals, traditional Chinese medicine, shipping, and power grids. Offensive "PLUS" targets low-crowding, rate-insensitive growth areas like new energy (space PV), defense (commercial space), and engineering machinery within China's advantaged manufacturing.
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