Top 10 Institutions' Market Outlook: Middle East Situation Has Far-Reaching Impact, China Faces Strategic Opportunities, A-Shares Continue on Their Own Path

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This week, the Shanghai Composite Index fell 0.70%, the Shenzhen Component Index rose 0.76%, and the ChiNext Index increased 2.51%. What’s next for the A-share market? Top ten institutions’ insights >>

CITIC Construction Investment Strategy Weekly Reflection: The Far-Reaching Impact of Middle East Tensions Brings Strategic Opportunities to China

The US-Iran conflict has entered a stalemate phase, causing sharp fluctuations in crude oil prices. China’s diversified oil imports, energy structure transformation, and strategic petroleum reserves will also play a buffering role. However, under global risk appetite disturbances and domestic market liquidity constraints, A-shares may remain volatile in the short term. If the US-Iran conflict prolongs, three main impacts could occur: 1) Oil prices rise, global inflation heats up, and Fed rate cuts are disrupted; 2) The dollar-oil system loosens, China may become a global safe haven, and RMB assets could benefit; 3) It may create strategic opportunities for China, leveraging a “coal + new energy” dual-energy foundation to ensure energy security and potentially lead global energy transition. Key sectors: coal, coal chemicals, power equipment, utilities, oil & petrochemicals, AI industry chain. Focus themes: lithium batteries, nuclear power, energy storage, wind power.

Shenwan Hongyuan Weekly Strategy Review & Outlook: A-shares Progress Along Their Own Path

A-shares are advancing along their own trajectory, transitioning from the “first phase of upward movement” to a “consolidation zone.” The US-Iran conflict mainly confirms this phase shift. Currently, valuations in telecom, electronics, power equipment, defense, computing, and basic chemicals are at historic highs, and overall A-share valuations are also elevated. This makes discovering new structural opportunities more challenging, and the market generally seeks to transition into a range-bound consolidation. Such a phase could last 1-2 quarters. If industry trends remain neutral, 2026 might be the start of Bull Market 2.0; if there are quarterly industry disruptions, the launch could be delayed until Q4 2026.

Huajin Securities: Short-term Resilience of A-shares Remains Strong—What Are This Year’s Main Industry Themes?

Some tech growth and cyclical industries may be the main themes this year. (1) Coal, petrochemicals, and chemicals have led gains since the start of the year through the Two Sessions, potentially becoming the main themes. (2) Certain tech and cyclical industries may continue upward trends: AI demand could drive hardware, computing power, and electricity needs upward by 2026, supporting related sectors like electronics, communications, and power equipment. The US-Iran conflict, AI demand, and strategic reserves may push metals and chemicals prices higher, sustaining cyclical industry growth. (3) Tech growth and cyclical sectors might receive policy support in 2026. (4) Rising geopolitical risks could benefit some cyclical industries: for example, the 2022 Russia-Ukraine conflict boosted global energy demand and coal industry prosperity. If the US-Iran conflict persists, the Strait of Hormuz blockade could impact global energy supply, benefiting petrochemicals, power, and coal industries. (5) Pharmaceuticals, power equipment, construction, coal, and non-ferrous metals may be undervalued or have low valuations in 2025.

Everbright Securities: Warming Concerns Over Overseas “Stagflation”—Which Sectors Could Benefit?

Amid rising worries about overseas stagflation, market logic may shift from “pro-cyclical growth” to “inflation resistance, stable growth, high certainty.” Core allocations should prioritize “inflation beneficiaries + demand rigidity” upstream resources (crude oil, coal, non-ferrous metals, agricultural products), essential consumer staples (food & beverages, biotech, retail), and “independent prosperity + policy support” sectors like semiconductors, aerospace, high-end manufacturing, AI computing, as well as government-driven infrastructure (traditional and emerging). These serve as flexible options, avoiding midstream manufacturing and discretionary consumption sectors facing cost and demand pressures, thus better coping with stagflation.

Looking ahead, we believe external shocks may gradually weaken, and market performance could improve. Despite high uncertainty in the Middle East, the sentiment impact on the domestic market may have peaked, and attention to Middle East tensions could decline, returning to its own rhythm. The current “Two Sessions” policy tone is stable, laying a solid foundation for stock market growth. Additionally, the next month will see intensive data releases and policy validations. Based on previous annual report forecasts, economic and corporate earnings data are expected to support the market.

Overall, opportunities in the equity market remain greater than risks, and performance is worth期待。

Zhongtai Strategy: How to Allocate if Geopolitical Conflicts Prolong?

The current US-Iran conflict may last longer than expected, with higher difficulty in reaching a ceasefire. The conflict has entered a complex multilateral phase, with the power to end the war likely not in the US. On March 10, Iran stated it would not negotiate with the US. Even if Trump wishes to withdraw quickly, negotiations face high hurdles. Even under the most optimistic scenario—US announces a ceasefire, Iran opens the Strait of Hormuz without conditions—the conflict’s legacy will still constrain US Middle East strategy long-term.

Prolonged conflict also comes at high costs. US strategic resources will be depleted in a war of attrition, and rising oil prices will negatively impact US corporate profits, consumer prices, and economic growth, with nonlinear effects over time. Last week, we discussed how the previous Russia-Ukraine conflict pushed oil prices higher, boosting US inflation. Recently, long-term US Treasury yields have risen sharply, already pricing in inflation expectations from rising oil prices.

Considering core interests and bargaining structures, we believe this conflict may last longer than market expects. In a “war of attrition,” both sides compete on cost and endurance, with Iran holding the initiative to end the war, not the US.

If the conflict exceeds expectations, crude oil prices could rise further, with increased volatility and high-level oscillations.

This would lead to a systemic tightening of global risk asset valuations. Elevated oil prices would sustain inflation expectations and policy rate paths, continuing downward pressure on tech stock valuations.

CICC Securities: What Investment Opportunities Might the 14th Five-Year Plan Bring?

What sectors should be重点关注? First, space exploration; second, computing power; third, resolving structural industry conflicts (steel, petrochemicals, shipping); fourth, new infrastructure sectors (computing, low-altitude, satellites).

Galaxy Strategy: How Does the “14th Five-Year Plan” Demonstrate A-shares’ Resilience?

Since late February, US-Iran tensions have repeatedly disturbed market sentiment, causing oil price swings and inflation expectations to rise. The Fed’s rate cut expectations have been dashed, and risk assets have been under pressure. Compared to the global equity markets, which are generally adjusting, A-shares have shown strong resilience. The 2026 government work report emphasizes domestic demand-led growth, cultivating new drivers, and achieving high-level technological independence. The “14th Five-Year Plan” focuses on high-quality development, modern industry systems, and strategic technological self-reliance, maintaining the strategic importance of expanding domestic demand. From a long-term perspective, this clarifies the investment logic of seeking “quality” in “new” growth. Supported by market resilience and a “self-reliant” mindset, the market will gradually shift from “emotion-driven” to “fundamentals-driven,” with earnings becoming the core anchor for the next phase.

Dongwu Securities: Four Strategies to Hedge Rising Oil Prices

Overall, oil prices are prone to rise, with four allocation strategies: (1) High inflation weakens non-US assets, making Chinese assets relatively safer and potentially independent; value style outperforms growth, China outperforms the US and other emerging markets. (2) Focus on oil price transmission, with chemical and agricultural sectors outperforming and aligning with oil prices; sustained upside depends on overseas demand, especially in energy storage, AI, and machinery. (3) Substitution effects can ease energy price surges—focus on coal and renewable energy construction, including energy security, AI, energy storage, wind, solar, lithium batteries, and power grids. (4) Energy dependence shocks impact industries in Japan and Korea, temporarily boosting storage prices, mid-term affecting AI applications, and long-term potentially shifting China’s chip market share globally.

Guoxin Securities: How Much Room Is Left for Strategic Resources?

Structurally, focus on strategic resources and domestic demand-related assets, especially old economy assets. AI and technology remain mid-term themes. Under complex external conditions, the Two Sessions report emphasizes coordinated development and security, with policies to counter internal competition, plus global liquidity easing, geopolitical factors, and emerging demand supporting commodity prices. Strategic resources are expected to benefit continuously. Domestic consumption and real estate are showing signs of improvement, with policy support and catalysts creating potential for phased recovery in undervalued real estate and liquor sectors. The mid-term AI and tech theme remains unchanged. The Two Sessions propose deepening “AI+” applications, beyond hardware, focusing also on upstream energy and electricity sectors.

Zheshang Securities: Geopolitical Tensions Continue to Disrupt Markets—Maintain Resolve and Optimize Structure

Looking ahead, as the US repeatedly states “military action is imminent,” global financial risk appetite has rebounded, with volatility easing compared to last week. However, Iran remains firm, and conflicts persist. Combining these factors, we believe the current peak of geopolitical tensions has passed, but disruptions continue. With external shocks waning, and based on intrinsic trends in A- and H-shares, we expect continued range-bound or narrow fluctuations. A-shares, having adjusted sufficiently and with improving structure, may stabilize after mid-March. Some growth stocks, having recently shown MACD bearish divergence and large gains since last year, may face earnings pressure during earnings season, stabilizing after April. Among H-shares, Hang Seng Tech, which declined rapidly earlier, may need further consolidation and confirmation. From a quarterly perspective, we remain optimistic about a “systematic slow bull” opportunity.

In terms of allocation, based on the “peak of conflict residual effects, continued range-bound fluctuations” view, we recommend:

Timing: Maintain strategic resolve until the market fully stabilizes, avoiding excessive pessimism or blind optimism. Optimize industry structure under early-stage flexibility, balancing offense and defense. Industry-wise, continue to favor “new and old energy” combos—new energy (electricity) and old energy (power)—as offensive tools; hold relatively low-positioned securities with dividends; and enhance defensive positions by adding agriculture, transportation, and logistics sectors to existing banks and petrochemicals, creating “anti-fragile” effects. Some Chinese state-owned stocks with low valuations and dividend attributes are safe havens during geopolitical escalations, while infrastructure, shipping, shipbuilding, and port stocks benefit directly.