When Will the Current Healthy Correction in the A-Share Market End? Top 10 Brokers' Strategies Here

AI问：How does the Middle East conflict affect the process of healthy adjustment in A-shares?

Cailian Press, March 22 (Editor: Lachen) The latest strategies from the top ten securities firms are now available, as follows:

CITIC Securities: Key controversies regarding the impact of the Middle East conflict—answers will gradually emerge after April

Regarding the core controversies about the impact of the Middle East conflict, answers will be gradually revealed after April. The solutions to the key market issues mentioned earlier will be implemented step by step in April. Until then, the market will remain in a narrative game phase, reflecting liquidity withdrawal characteristics. Currently, U.S. Treasury yields are rising rapidly, with the 10-year yield soaring from 3.97% at the end of February to 4.39% now, the highest since August last year. From the current global market landscape, after risk aversion diminishes, countries are strengthening energy resource security and accelerating electrification—becoming new development trends. China’s competitive manufacturing advantage is just beginning to shift toward pricing power and profit margins. From a trading logic perspective, rising prices and PPI rebound are ongoing signals. The only current concern is that upstream prices are difficult to pass downstream. At present, upstream and midstream sectors have started raising prices, but downstream remains cautious and is digesting inventories. Only over time, as commodity volatility decreases, downstream procurement will normalize. Whether prices can be maintained, profit margins expanded, and market share advantages translated into pricing power remains to be seen. Investors should remain patient and calmly handle stock fluctuations. April and May are critical decision periods. In the first three months of this year, sector rotation and gains/losses driven mainly by narratives occurred. Even if trading did not lock in profits, it’s no big deal. In fact, the median return of active equity funds has already returned to 0.7% this year.

Firmly focus on re-estimating the pricing power of China’s advantageous manufacturing sectors. The current core holdings are still industries with a share advantage in China, high costs of overseas capacity reconfiguration, and supply flexibility easily influenced by policies—based on new energy, chemicals, electrical equipment, and non-ferrous metals. Recent liquidity shocks have brought valuations of many varieties back to attractive levels, similar to the export varieties after April 7 last year, creating significant expectations and undervaluation. Based on these core holdings, it is recommended to continue increasing exposure to undervalued factors, especially in insurance, securities, and power sectors. From a short-term prosperity signal perspective, price increases remain the sharpest weapon. The probability that PPI trading becomes the main theme for the year is rising, with April and May being decisive periods. Several clues and structural opportunities to prioritize include: 1) Chemical products with alternative raw materials/process routes under oil shocks (these Chinese varieties typically have higher coal content than overseas competitors), where rising crude oil prices will create high spreads; 2) Varieties with significant Middle East/Western European capacity share, where supply disruptions may lead to additional supply-demand gaps and trigger price hikes; 3) Substitutes affected by costs that lead to price increases, driven by demand growth; 4) Varieties already in an upward price channel, where rising costs provide opportunities for pass-through amid tight supply and demand.

Huaxi Securities: Allocate to banks and wait for more “stabilizing the market” policies

Huaxi Securities believes that most global stock markets declined this week, with A-shares and European stocks leading the fall. On one hand, the geopolitical situation between the US and Iran remains uncertain, with significant unpredictability in oil prices and inflation trends, increasing the risk of stagflation. On the other hand, the Fed’s March meeting kept interest rates unchanged but issued a hawkish statement, with the possibility of future rate hikes, raising concerns about dollar tightening. Under risk aversion, the A-share market retreated overall, with trading volume shrinking, reflecting cooling investor sentiment amid rapid sector rotation. Structurally, defensive sectors like food and beverages, banks, as well as high prosperity sectors such as storage and AI computing power, are relatively favored.

Market outlook: Allocate to banks and wait for more “stabilizing the market” policies. The ongoing US-Iran conflict and the shift in overseas rate cut expectations are intertwined, keeping global markets under risk aversion in the short term. Compared to this, China’s policy environment is more certain. Regulators have explicitly signaled “stabilizing the capital market,” and subsequent policies such as “stabilization funds,” support for structural tools, long-term funds entering the market, and counter-cyclical regulatory policies are worth期待. Meanwhile, imported inflation has limited impact on domestic monetary policy, and a loose liquidity environment will continue. Fiscal efforts will also help restore居民 expectations.

HuaAn Securities: When will the current healthy correction end?

Overseas tariffs risks are accumulating, and the US-Iran conflict remains unresolved. Inflation fears have led to a hawkish shift by the Fed. Domestic incremental policies are unlikely to be introduced due to strong economic data. The market is expected to continue weak oscillation. In terms of allocation, short-term dividend assets like banks, utilities, and sectors with price increase catalysts such as chemicals, machinery, and storage are expected to perform well. Growth stocks remain the core medium-term theme but are still in a correction phase. Since the correction is likely to usher in a second phase of profit-driven bull market, we call this a healthy correction.

The US-Iran conflict shows no signs of easing, and Trump’s postponement of his China visit indicates ongoing external disturbances in the short term. Inflation concerns from rising oil prices, combined with the hawkish stance at the March FOMC meeting, have increased the likelihood of future rate hikes. Therefore, external shocks persist. During this first healthy correction in the growth cycle, although the duration is not long, leading stocks and the telecom sector tend to experience a “dip → rebound → dip” three-stage rhythm with wide fluctuations. We believe the recent strong performance of growth stocks and telecoms is a rebound in the middle of this cycle. There may still be a “final dip” in key growth stocks and telecoms, laying the foundation for a new upward trend.

Dongfang Securities: China still faces downward risk assessment and a process of risk preference shifting from both ends toward the middle

In the short term, global risk assessment is rising, risk-free rates are increasing, risk appetite is declining, and profit expectations are being revised downward. Global capital markets face significant tests. However, domestically, there is little need for excessive worry. Recent years have seen diminishing negative impacts from geopolitical risks on China’s equity markets. The process of risk assessment moving downward and risk preference shifting from both ends toward the middle continues.

Energy security and technological manufacturing are converging, with a focus on photovoltaic equipment. The main theme remains global energy security; from a style rotation perspective, sectors like power equipment and machinery are favored. Further, evaluating the intersection of these themes in terms of profitability and valuation, photovoltaic equipment is relatively undervalued.

China Galaxy Securities: The duration and evolution path of geopolitical conflicts still carry high uncertainty

“Two changes” and “two constants”: The first change is the geopolitical shift under the tension in the Strait of Hormuz. The US-Iran conflict continues to escalate, with no signs of substantive easing. As confrontation intensifies, military strikes are expanding to regional energy infrastructure, with spillover risks persisting. The second change is the phase of global liquidity tightening. Under rising oil prices and inflation expectations, expectations of rate cuts diminish, and global liquidity environment marginally tightens, pressuring risk assets. The constants are: 1) policy expectations remain unchanged—central banks emphasize maintaining stable financial markets; 2) the long-term liquidity pattern remains stable and improving, with increased long-term capital inflows and improved supply of medium- and long-term funds in A-shares.

A-share market outlook: The duration and evolution of the geopolitical conflict remain highly uncertain. Short-term volatility in global risk assets is expected to persist. Under the “China-centric” logic, downside in A-shares is limited; the market will likely digest external pressures through oscillation and sector rotation. Structurally, focus on inflation-related factors, with oil prices influencing market structure. Allocation suggestions include: 1) US-Iran escalation driving energy and alternative demand—focus on coal chemicals, coal, shipping ports, oil and gas; 2) recent sharp corrections in non-ferrous metals—look for valuation and cost-effectiveness; 3) shift toward defensive assets like financials, utilities, transportation; 4) technology innovation sectors—power equipment, new energy, energy storage, semiconductors, communications. Additionally, consumer sectors are undervalued, with some segments showing potential for recovery, such as agriculture, food and beverages, household appliances.

Industrial Securities: When will the counterattack sound?

In summary, recent market adjustments mainly stem from two concerns: 1) economic “stagflation” risk; 2) escalation and loss of control in conflicts. These may not be the final outcome of this conflict cycle. In the short term, escalation might create opportunities for de-escalation, meaning the market’s rally often begins when sentiment is most pessimistic. In the medium to long term, “stagflation” could be the most pessimistic scenario for the economy, but it’s not necessarily the baseline. The current market’s pessimistic expectations provide a foundation for medium- and long-term recovery.

In terms of allocation, based on the upward revision of 2026 earnings forecasts since the beginning of the year, focus on sectors expected to perform well in the first quarter: AI hardware (consumer electronics, components, computing, communications, electronics chemicals), software (gaming, digital media, IT services); advanced manufacturing and export chains: new energy (batteries, photovoltaics, wind power), military industry (marine equipment), machinery (rail transit, specialized equipment, construction machinery), commercial vehicles, home appliance parts, medical services; cyclical price-increasing chains: non-ferrous metals, coal, steel, chemicals (rubber), building materials (glass fiber), shipping ports, gas; consumer & finance: agriculture, retail, jewelry, securities.

Zhongtai Securities: How to interpret this week’s sharp decline in precious metals?

Recently, the inverse correlation between gold and oil prices has increased significantly. Oil prices rose sharply this week, while precious metals declined. Generally, rising oil prices tend to boost gold via two channels: 1) geopolitical tensions increasing safe-haven demand; 2) energy price hikes boosting inflation expectations, enhancing gold’s inflation hedge appeal. Thus, oil and gold often show some positive correlation, especially when inflation expectations rise, increasing demand for gold.

However, recent market behavior indicates a phase shift in gold’s pricing logic. After a year of rising prices, gold’s asset attribute has gradually shifted from “safe-haven asset” to “traded risk asset.” On one hand, expectations of global liquidity easing, central bank gold purchases, and geopolitical risks have driven large gains. On the other hand, continuous inflows have made trading structures crowded, making prices more sensitive to marginal liquidity. In this context, gold is no longer driven solely by fundamentals but increasingly influenced by capital flows and trading structures.

In the short term, it is recommended to reduce participation in conflict-related sectors like shipping, ports, and coal chemicals. In the medium to long term, focus on two main themes: 1) new energy and global manufacturing reshaping—under energy security and AI-driven power demand growth, the external demand for PV, energy storage, and power equipment is expected to rise; 2) geopolitical turbulence driving a “security-first” reshaping of global manufacturing, with demand for non-ferrous metals, engineering machinery, and high-end equipment likely to shift upward, offering long-term allocation value.

Guangfa Securities: Which industries can maintain independent high prosperity beyond US-Iran conflict and high oil prices?

Looking ahead: aside from conflicts and high oil prices, which industries might sustain high prosperity? Currently, sectors like optical communications and overseas AI chains have deepened visibility into 2027, remaining key prosperity directions and main holdings. However, their relation to Middle East conflicts (oil prices → US interest rates → US AI → domestic supply chain) involves short-term volatility. Drawing from internet industry experience, identify industries that can maintain independent high prosperity, relatively insulated from geopolitical and oil price impacts, providing advantages regardless of how US-Iran developments unfold. To control portfolio volatility and hedge risks, continue allocating to two fundamentally upward-trending, oil-price-insensitive sectors: energy storage (inverters/lithium batteries) and domestic AIDC chains (especially ByteDance-related).

Hujin Securities: How does high oil prices impact the stock market?

Currently, A-shares remain resilient due to policy support, fundamentals, and liquidity, with a short-term oscillation trend. (1) The recent oil price rise’s impact on inflation may be weaker than in 2007 and 2022: a) US energy component’s CPI weight has decreased significantly; b) US economy and employment are slowing; c) short-term imported inflation in China is limited. (2) The oil price increase may negatively affect US stocks but likely less than in 2008 and 2022: a) US inflation may rise due to oil, but less than in 2007 and 2022, reducing Fed rate hike expectations; b) the impact on US fundamentals is limited. (3) A-shares may remain relatively resilient in the short term supported by policies, fundamentals, and liquidity: a) policies remain proactive; b) economic and profit recovery continues: with peak construction season and cost advantages, investment, consumption, and exports may rebound; c) rising PPI could further boost corporate profits; d) domestic liquidity may stay relatively loose: overseas liquidity expectations have eased, inflation pressures are small, and the central bank may increase funding, with foreign and institutional long-term inflows possibly slowing short-term but long-term funds still entering.

Industry allocation: short-term balanced allocation among high-quality tech, some cyclical, and undervalued dividend sectors. (1) Short-term outperformance likely in petrochemicals and high-quality tech: a) historical review shows energy-related sectors outperform during oil surges; b) tech growth sectors may be suppressed temporarily but with good performance in sub-sectors; c) sectors like petrochemicals, power, new energy, and tech hardware may benefit from oil price increases and rising AI demand. (2) Balanced allocation: focus on sectors with upward policy and industry trends—power (AI, energy storage), communications (AI hardware), electronics (semiconductors, AI hardware), non-ferrous metals, chemicals, military (aerospace), healthcare; and undervalued sectors like coal, power, and banks.

Guojin Securities: The narrative of global physical asset rise is not over

This week, major global assets declined broadly, seemingly due to demand slowdown fears, but the core issue is the escalation of US-Iran conflict reversing the previous “weak dollar” narrative. Before the conflict: dollar weakened, capital flowed out of dollar assets, US stocks underperformed global markets, and commodities with higher per-ton value outperformed, highly sensitive to dollar index (measured by beta). Countries/regions with high beta to the dollar index saw higher gains early this year before the conflict. US tech stocks, especially core tech, were overtaken by infrastructure and small/mid-cap stocks, and US financials lost some dominance. After the conflict, the dollar index rebounded sharply, capital returned to the US, reflected in: US stocks showing resilience, but markets sensitive to dollar strength declined more; commodities with higher per-ton value, like copper and aluminum, fell less than gold; combined with recent US AI industry catalysts, Nasdaq began to outperform Russell 2000 again. In China, the computing chain related to US tech also performed relatively better. The underlying reason for market fluctuations is not just economic stagflation or recession fears but the reallocation of dollar liquidity in financial assets, driven by deeper factors.

The narrative of global physical asset rise is ongoing. Clearing the dollar fog reveals the real picture: 1) Energy security becomes crucial amid global turmoil; this year, primary energy outperforms secondary energy—favoring crude oil, shipping, coal, copper, aluminum, gold, and rubber; 2) China’s manufacturing remains the global ballast, with slow but steady real asset flows awaiting revaluation—power equipment, new energy, machinery, chemicals; 3) As negative factors reverse, seek structural opportunities in consumption—tourism, scenic spots, fermented flavor products, beer and spirits, pharmaceuticals, medical aesthetics.