Institution: The foundation of this round of A-share market remains solid

Caitong Securities believes that during the holidays, the situation between Iran and the U.S. did not show any obvious escalation trend. Major global equities markets saw a modest rebound. Stocks in the U.S., Japan, South Korea, and others all rose to varying degrees. On Tuesday, the A-share market surged higher in the early session, but risk appetite in the market remained relatively weak. Long positions had limited momentum, causing trading volume to continue to shrink, and the market index level also shifted to a sideways trading pattern. On the trading screen, the chemical sector performed relatively better, supported by rising prices of pesticide active ingredients and improved profitability for products such as glyphosate. The PCB sector also strengthened on price increases for related products, while the consumer and precious metals sectors lagged. Looking ahead, compared with markets such as those in Japan, South Korea, and the U.S., the A-share market is more resilient. As long as the Shanghai Composite Index does not break the previous low, it should still be viewed as a sideways rebound trend. However, before the fighting is completely over, global risk appetite is likely to decline rather than rise easily. At the same time, any potential energy crisis brought about by the situation and the performance risks stemming from the A-share earnings season will suppress the entry pace of incremental capital. During the broader market’s rebound, there may be some back-and-forth. Therefore, in the short term, market trading activity may remain lackluster, and the index level may maintain a sideways pattern. Until the large-cap market shows clear signs of improvement, capital is likely to take a more pragmatic approach to style. In the medium term, the market is likely to be dominated by wide-range sideways trading, with the magnitude of volatility possibly increasing. It is recommended to manage positions reasonably and wait for market-driven turning-point signals to emerge. The foundation of this A-share rally remains firm. We expect that the Middle East conflict will only affect short-term sentiment and market operating rhythm in the A-share market and will not change the market direction. We still remain confident in the long-term favorable trend for the market and there is no need to worry excessively.

Dongwu Securities believes that on Tuesday, the Shanghai Composite Index tested the lows and rebounded in the early session, then fell back in a period of consolidation, and traded in a narrow range after the afternoon. The Shenzhen Component Index and the ChiNext Index rose and then retreated in the early session, rebounded after searching the lows in the afternoon, and saw some decline again near the close. On the trading screen, sports, chemicals, agriculture, ships, and other sectors led the gains, while small adjustments were seen in construction machinery, steel, insurance, and others. The Shanghai Composite Index hovered and moved slightly in the vicinity of 3900 points. From the perspective of several major indices, this still falls under a period of consolidation after a surge over the past year. But many individual stocks have already fallen below the low point from last April. This kind of divergence may become the norm in the future: capital will concentrate in certain companies that benefit from policy and earnings expectations, while weak-performing sectors will gradually be marginalized.

(Editor: Zhang Xiaobo)

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