Late April may mark a critical turning point as the market further focuses on earnings certainty

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◎Reporter Wang Youruo

Before the Qingming holiday, the A-share market showed a mixed, diverging pattern as pre-holiday risk-aversion sentiment and the recurrent geopolitical conflict in the Middle East intersected. In the face of the frequent back-and-forth of the Middle East geopolitical conflict, a week’s institutional strategy outlook report judged that late April could become a key time window for marginal improvement in both domestic and international conditions. Meanwhile, as market sensitivity to marginal changes in the Middle East geopolitical conflict gradually weakens, the bottom of the A-share market has most likely been identified in the short term. Going forward, as listed companies’ annual reports and first-quarter reports are disclosed intensively, active capital is expected to gradually shift toward fundamental valuation, uncovering opportunities with certainty in terms of industry prosperity and earnings within external uncertainties.

Late April could become a key time window

In its April A-share outlook report, China Merchants Securities said that external risks currently facing the A-share market have not been materially eased, and late April will become a key time window for marginal improvement in both domestic and international conditions.

Guangfa Securities also expects that by around late April, an agreement between the parties to the conflict may be reached through negotiations. In April, investors should focus more on opportunities to lay out positions at the market bottom, and on the chance for a restoration rally to begin as the conflict eases and the market gradually returns to normal—shifting to a “me-first” approach.

Looking ahead to April, Everbright Securities believes that the market’s potential turning point may come from the following three directions. First is listed companies’ earnings exceeding expectations. In April, listed companies’ 2025 annual reports and their 2026 first-quarter reports will be released one after another. Based on the current situation, overall company performance is expected to improve slightly, with standout strengths in the 科创 (STAR) and cyclical categories. Second is the entry of medium- to long-term funds into the market. The earlier market pullback is expected to trigger again the entry of medium- to long-term funds. Finally is the easing of external risk factors.

In China Securities Jianyin’s view, the next 2 to 3 weeks may still be a high-risk period characterized by rapid changes in the Middle East geopolitical conflict. The market is waiting for a bottom-picking opportunity, and short-term capital has a strong tendency to stand by. At the same time, however, investors should re-focus on A-share internal fundamentals, as a series of data are jointly supporting the trend of a sustained improvement in the economy. As March economic data are released and the A-share earnings reporting season approaches, market attention will gradually shift to substantive verification of the strength of economic recovery and improvements in corporate profits.

Uncover certain opportunities in medium-term prosperity and earnings

On specific allocation, institutions believe that in April, the key is to grasp a balance in the allocation structure: avoid sectors whose valuations are at a high level and whose earnings realization cycle is relatively long, and in uncertainty, uncover certain opportunities in medium-term prosperity and earnings.

CITIC?——? Securities stated that even if the Middle East geopolitical conflict is eased later, the Strait of Hormuz—this core variable—will still be difficult to return to normal. Against this backdrop, it is recommended that investors pay attention to four main themes: first, the theme of energy resources and refining-and-chemical integration; domestic oil and natural gas producers and coal chemical companies will directly benefit from rising energy prices and heightened demand for energy security. Second, the theme of raw material substitution—coal chemical companies may gain a strategic window. Third, the theme of energy transition—new energy equipment manufacturing will see stronger development opportunities, and demand for wind and solar equipment, energy storage batteries, and other industries will keep growing. Fourth, the theme of independent control—high-end chemical new materials, pharmaceutical intermediates, and electronic chemicals, which have a high degree of dependence on imports, will benefit as progress in independent control accelerates.

In its view, China Merchants Securities believes that in mid-to-late April, market focus will shift to the areas with high growth in first-quarter report performance. Based on current data, resource sectors such as nonferrous metals and petroleum and petrochemicals, as well as new energy, optical communication, and the semiconductor industry chain, are expected to become the industries with the most prominent earnings growth rates.

BOCI Securities advises focusing on the innovative drug sector, arguing that it has both offense and defense attributes. On the defensive side, demand for innovative drugs is rigid; the industry logic is independent of macro cycles; the chip structure is stable; and there is ample upside imagination in the long term. On the offensive side, the sector’s fundamentals are solid: China’s innovative drug overseas BD business remains in a high-growth period, and when the market’s risk appetite is repaired, the concept of innovative drugs has a clearly positive upside elasticity.

Open Source Securities’ view is even more optimistic. The firm believes that although the Middle East geopolitical conflict has not ended, the stage when market sentiment was at its lowest may be behind us, and technology growth is still the direction worth focusing on most. In the short term, tech categories that saw the largest pullback previously are often the ones that benefit the most. In the long term, what is truly worth attention is still growth sectors whose earnings growth is accelerating and improving. If oil prices continue to fall and the market’s risk appetite is further repaired, then growth will remain one of the directions with the greatest repair elasticity.

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