A-shares' "Good Start in April," is the turning point here?

Ask AI · After a large-volume surge in A-shares, which indicators should be watched to assess the continuation of the rebound?

Boosted by easing news of the US-Iran conflict, A-shares cleared up on April’s first day — trading volume surged above 2 trillion yuan, nearly 4,500 stocks closed higher, with sectors like pharmaceuticals, communications, and non-ferrous metals leading the gains.

According to interviewees, the A-share rebound has some continuity, but the key is whether trading volume can be sustained; a trend reversal has not yet formed. It is necessary to wait until mid to late April when the quarterly earnings reports become clearer, domestic policy directions are further clarified, and the Middle East geopolitical situation stabilizes temporarily before confirming a market turning point. Until then, the market is likely to remain in a state of unclear main themes, sector rotation, and fuzzy directions. It is recommended to keep positions at 50-60%, balancing offense and defense.

4,495 stocks rose

The index opened high in the morning and briefly plunged, but then quickly rebounded, maintaining high-level oscillations throughout the day with a good overall performance. The Shanghai Composite rose 1.46% to close at 3,948.55 points, the ChiNext Index up 1.96% to 3,247.52 points, and the Shenzhen Component up 1.7%. The CSI 300, SSE 50, and CSI 50 gained about 2%, while the STAR Market 50 rose 3.33%.

Trading volume increased slightly by 19 billion yuan from yesterday, with a daily turnover of 2.03 trillion yuan. Yesterday, A-shares opened high and then declined, with leverage funds cooling down. As of March 31, the margin financing and securities lending balance in Shanghai, Shenzhen, and Beijing markets dropped to 2.61 trillion yuan.

Market profitability was good, with a total of 4,495 stocks closing higher, including 65 limit-ups; 887 stocks declined, with 14 limit-downs. Eight stocks had daily turnover exceeding 10 billion yuan, mainly in tech sectors, with Sunshine Power dropping nearly 11% to 134.45 yuan per share, nearly an 18% decline over the past week; semiconductor stock Demingli fell over 2%; but Tianfu Communication rose nearly 11%, Cambrian increased nearly 7%, and Xinyi Sheng gained over 4%.

In sectors, innovative drugs, weight-loss drugs, CRO, chemical pharmaceuticals, semiconductors, CPO, optoelectronic devices, and precious metals surged significantly, while power, oil and natural gas, blade batteries, and coal saw slight declines.

Among 31 first-level Shenwan industries, utilities, coal, and oil & petrochemicals declined slightly, while others closed higher. Banks, defense military, power equipment, and food & beverages rose less than 1%.

Pharmaceuticals, biology, communications, media, electronics, beauty & personal care, machinery, non-ferrous metals, computers, social services, and building materials sectors all gained over 2%.

The pharmaceutical and biotech sector exploded, with 15 stocks hitting the daily limit; Linuo Medicine, Guangsheng Tang, Edi Pharmaceuticals, Ruizhi Medicine hit the limit-up, and Huayu Pharmaceutical-W, Yifang Bio-U, Chengda Pharmaceuticals, Haitai Xinguang, Yipin Hong surged sharply. Yibai Pharmaceutical, Bide Medical, Peking University Medicine, Rundu Shares, Ji’an Medical, Kelai Ying, AngliKang, Wanze Shares, Wanbangde, Jinyang Pharmaceutical all hit the limit-up.

“The main theme today is very clear; funds are following policy guidance, focusing on technological innovation and new productive forces, while also paying attention to some defensive stocks,” said Zheng Yanxin, fund manager of Quanjing Fund. He pointed out that: 1) the main line is technological growth, with pharmaceuticals, communications, computers, and electronics leading the gains, highly aligned with policy; 2) the communications and electronics sector benefits from trends like computing power and domestic semiconductor replacement, with the implementation of the IoT innovation development plan by the Ministry of Industry and Information Technology, maintaining industry prosperity; 3) non-ferrous metals, under geopolitical conflicts and inflation expectations, see revaluation of strategic resources like gold and copper, which can serve as auxiliary allocation directions.

Behind the volume surge

Why did A-shares open high and continue rising today? What are the supporting factors?

Sui Dong, researcher at PaiPaiWang Wealth, analyzed to reporters that the surge was mainly driven by three factors: first, the end of quarter-end disturbances, with incremental funds gradually entering, pushing total market turnover back above 2 trillion yuan, providing crucial liquidity support; second, signals of easing in geopolitical tensions, boosting global risk appetite and creating a favorable external environment for the rebound; third, quarterly earnings forecasts have been gradually disclosed, with high-growth expectations starting to boost market sentiment.

“Signs of easing in US-Iran tensions have reduced global risk aversion, with funds gradually flowing back into risk assets, further lifting market sentiment,” said Bi Mengran, researcher at GeShang Fund. She noted that today’s moderate volume increase indicates steady fund deployment, leaving room for further continuation. The flow of funds is targeted, with major capital focusing on high-growth sectors like pharmaceuticals, communications, and electronics, reinforcing the rebound logic. However, the volume has not significantly broken through, reflecting lingering caution among investors, with some funds remaining on the sidelines and incremental inflows proceeding cautiously.

Zheng Yanxin told reporters that the strong rebound in A-shares today was not accidental but the result of multiple positive factors resonating: first, strong policy signals, with the central bank explicitly advocating “continuing moderate easing monetary policy”; second, macro data showing signs of recovery, with the March manufacturing PMI at 50.5, remaining in expansion for two consecutive months, especially with the improved prosperity of high-tech manufacturing; third, market repair needs, as growth sectors like tech experienced continuous adjustments, with valuations and positions falling to reasonable levels, supporting a rebound. Additionally, recent signals from the U.S. president about a potential ceasefire have improved global market pessimism.

Li Shiyu, fund manager at Xiao Yu Investment, believes external factors mainly influenced this correction, with the US-Iran situation evolving from a “lightning war” expectation to a “prolonged conflict,” but now both sides are signaling easing, with hopes to return to negotiations.

Mo Xiaocheng, general manager of Huan Rui Tianze, interprets from an earnings perspective: today’s sharp rebound is mainly due to funds shaking off war-induced emotional pessimism and regaining confidence in corporate profits and economic prospects. As the reporting season for A-shares and Hong Kong stocks approaches, many excellent companies, especially leading innovative drug firms, have delivered satisfying results, refocusing investor attention on the pharma sector.

Focus on key variables

Can the rebound continue?

“This rebound has some continuity, but it’s more likely to follow a ‘oscillating repair with a slow upward shift’ path rather than a one-sided surge,” Sui Dong said. The next focus is on trading volume; if it can stay around 20 trillion yuan, it indicates ongoing inflows, and the index may test key resistance levels. However, technical pressure points like gaps may trigger short-term oscillations.

“Currently, A-shares are still in a structural rebound; a trend reversal has not yet formed,” said Bi Mengran. She warned of potential risks: geopolitical uncertainties remain, US-Iran tensions may flare up again despite easing, affecting global risk appetite; if volume cannot continue to expand, upward space will be limited, and sector rotation may accelerate due to stock game characteristics; some sectors have already surged significantly, risking profit-taking and phase corrections.

“A single day of high opening and closing with limited volume does not confirm a bull market,” Zheng Yanxin said. He emphasized that volume expansion is an important validation of rebound effectiveness, indicating some new funds are entering. But compared to the index gains, the volume increase is insufficient to confirm a full trend reversal, and there are concerns about “volume-price divergence.” The continuation of the rebound depends on whether volume can sustain growth. If subsequent volume continues to gently expand, the probability of further rebound is higher; if volume shrinks, the market may revert to oscillation.

Wang Zhongyuan pointed out that funds are shifting from high-valued tech to undervalued pharmaceuticals, consumer stocks, and defensive sectors like insurance, which is normal sector rotation during bottoming, not a trend reversal. The real turning point will only come after mid to late April when quarterly earnings are clearer, domestic policies are more defined, and the Middle East geopolitical situation stabilizes temporarily. Until then, the market is likely to remain in a “transitional” phase: unclear main themes, sector rotation, and fuzzy directions.

Regarding the overall Q2 trend of A-shares, Wang Zhongyuan maintains a view of oscillation and differentiation, with three key variables:

1. Policy guidance. Continued counter-cyclical policies and relatively loose monetary environment support the market, but the transmission effect needs observation. Key policy signals from Politburo meetings influence sentiment significantly.
2. Earnings verification. From late April to June, the earnings reports and interim forecasts will be densely released, testing the quality of profit growth. If tech and new energy sectors continue to verify earnings, the index may be supported; if not, the market will need time to digest the pressure.
3. Middle East geopolitical risks. This is the largest external tail risk currently. If Iran or Israel escalate further, oil prices will fluctuate, affecting global inflation expectations and liquidity outlooks.

How to position your portfolio

After a volatile decline in March and a strong start in April, combined with earnings disclosure periods, how should investors manage their holdings and sector allocations?

Li Shiyu analyzed that today’s leaders are pharmaceuticals, communications, and non-ferrous metals, all with strong earnings. As April progresses and annual and quarterly reports are densely disclosed, focus on sectors and companies with earnings surprises, which may produce the next “big bull.”

Wang Zhongyuan, founder of Ziru Xing Investment, told reporters that today’s market is not a “super-bounce,” nor does it mark a new attack phase, but rather a sentiment recovery from the market’s reaction to Trump’s TACO trade and Middle East tensions. The tech sector faces short-term dual pressures: first, the dense quarterly disclosures in late April, requiring valuation validation; second, the large gains in computing power and AI applications, with profit-taking still ongoing.

Bi Mengran suggested focusing on high-prosperity sectors, adopting a “balanced allocation + controlled positions” strategy, capturing investment opportunities from earnings verification, and managing stop-loss and positions prudently to maintain stability.

Zheng Yanxin recommended maintaining rational optimism, avoiding chasing highs, emphasizing structural stocks, and keeping moderate positions. While monitoring volume trends, diversify into tech growth themes, and consider adding non-ferrous metals and high-dividend stocks as auxiliaries.

Wang Zhongyuan advised maintaining 50-60% positions, balancing offense and defense. When the direction is unclear, controlling drawdowns is more important than chasing volatility. For Q2, focus on two types of opportunities: 1) stocks with sufficient correction, reasonable valuations, and exceeding expectations in the first quarter; 2) structural themes benefiting from policies or events, such as pharma innovation and China-specific valuation strategies. Risks include geopolitical deterioration causing systemic shocks and overseas liquidity shifts affecting foreign capital flows.

Reporter Zhu Denghua

Text Editor Chen Cai