A-Share Midday Review | Energy Supply Concerns Continue to Ferment! Shanghai Index Closes Down 0.22% at Midday; Chemical and Resource Sectors Rally

Global markets came under pressure after oil prices surged past $100 per barrel. Concerns over energy supply sparked by the Iran conflict continue to ferment, with inflation fears spreading to the stock, bond, and currency markets.

On March 13, the market opened higher but then retreated, with the three major indices turning red again. By midday, the Shanghai Composite Index fell 0.22%, the Shenzhen Component Index declined 0.17%, and the ChiNext Index dropped 0.03%. The combined half-day trading volume in Shanghai and Shenzhen was 1.51 trillion yuan, down 88.4 billion from the previous trading day.

Notably, despite sharp declines in overseas markets, the three major A-share indices briefly turned positive during trading. What are the advantages of the resilience shown by the A-shares?

According to Wang Zonghao, Head of China Equity Strategy Research at UBS, the A-share market has shown some downside protection amid recent geopolitical events, mainly due to China’s relatively low dependence on oil. Investors prefer A-shares over H-shares and American Depositary Receipts (ADRs), and high trading volume is expected to support the market. He pointed out that holding Chinese stocks, especially A-shares, can provide diversification benefits that are not fully reflected in current valuations. He expects certain factors—such as high trading volume, supportive policies released during the Two Sessions, and the continued slowdown in household deposit growth—to underpin the A-share market.

Looking at the market sectors, resource stocks such as chemicals, coal, steel, and cement continued to strengthen, with companies like Chitianhua, Zhengzhou Coal & Electric, and Shaoguan Hongxing hitting daily limit-ups. Wind power and offshore wind concepts also surged, with Tongyu Heavy Industry and Tianshun Wind Energy hitting the limit. Lithium resources, lithium hexafluorophosphate, electrolytes, and other lithium battery materials collectively performed strongly, with Tibet Urban Investment and Putailai hitting the limit-up. Real estate and infrastructure sectors also gained, with Beijing Capital Development hitting the daily limit. Banks and state-owned enterprises continued to rally to stabilize the market, with China Power Construction hitting the limit-up. The consumer, pharmaceutical, and automotive industries also rebounded collectively.

On the downside, lobster concept stocks, cloud services, and computing power leasing stocks suffered heavy declines. Meili Cloud hit the limit-down, and stocks like UCloud suffered drops of over 8%. Small metals, gold, and silver concepts continued to decline, with Jiang tungsten Equipment approaching the limit-down. Stablecoins experienced a one-day surge and then retreated. Satellite internet, commercial space, and space computing concepts continued to decline. Gas turbines, transformers, and power grid equipment stocks also retreated. Optical fiber, optical modules, PCB, and other hardware concepts saw continued declines, with FiberHome Technologies hitting the limit-down. Sora, multimodal, AI intelligent agents, and AI application concepts weakened further. Military industry stocks such as military informatization, military electronics, and aero engines remained weak. AI-powered electricity, humanoid robots, consumer electronics, photovoltaics, and semiconductors all declined across the board.

Popular sectors:

1. Lithium Battery Materials Show Resilience

Lithium resources, lithium hexafluorophosphate, electrolytes, and other lithium battery materials performed strongly, with Tibet Urban Investment and Putailai hitting the limit-up.

Commentary: According to Guojin Securities, lithium battery production in March rebounded significantly, with month-on-month growth of 11%–22% and year-on-year growth of 37%–56%. By March 2026, the pre-production of batteries, cathodes, anodes, separators, and electrolytes is expected to increase cumulatively by 36%–57%, with electrolytes and separators growing over 50% year-on-year.

2. Chemical Sector Continues Strong

The chemical sector maintained its strength, with Luxin Technology and Jinneng Technology hitting the limit-up for two consecutive days. Other stocks like Jincheng Jidai, Hongbaoli, and Lushun Chemical also hit the daily limit.

Commentary: The conflict in the Middle East has disrupted global supplies of ammonia, urea, sulfur, and phosphates. Additionally, about 20% of global liquefied natural gas (LNG) supply has been affected, and European and other regional fertilizer producers heavily rely on these natural gas resources. Since the US and Israel began bombing Iran, European benchmark natural gas prices have risen about 60%.

3. Wind Power Sector Repeatedly Active

Wind power stocks repeatedly surged, with Tongyu Heavy Industry hitting the limit-up, and Tianshun Wind Energy and Yuanmeng Co. also hitting the limit.

Commentary: The government’s work report this year proposed large-scale intelligent computing clusters and computing power collaboration as new infrastructure projects. Additionally, the “Data Center Green and Low-Carbon Development Special Action Plan” requires that new data centers in key nodes use over 80% green electricity.

4. Computing Power Leasing Sector Retreats

The computing power leasing sector declined sharply, with Meili Cloud hitting the limit-down and other stocks like UCloud falling significantly.

Institutional Views:

CICC: Long-term Middle East Conflict May Cause Global Financial Market Turmoil

The Middle East conflict is a typical supply shock, directly impacting oil supply and pushing up prices. For the US, which already faces supply constraints, slow inflation decline, and rising government debt, the conflict increases the risk of stagflation. If the conflict is short-lived, the impact may be moderate. However, prolonged escalation could intensify US macroeconomic pressures and trigger financial turmoil, with spillover effects potentially significantly impacting the global economy and markets.

Galaxy Securities: Long-term Middle East Conflict Could Alter Asset Pricing Logic

Galaxy Securities believes that traditional valuation logic considers US Treasuries, the US dollar, and US stocks as “safe assets.” But if the conflict persists, rising energy costs, weakened US fiscal constraints, and damaged strategic credibility could shake this system. Gold, energy assets, non-dollar currencies, and markets with supply chain resilience and geopolitical stability (like China) may gain new premiums.

CITIC Securities: Wind Power’s Valuation as “Green Oil Drilling” May Be Reshaped

CITIC Securities’ research reports that the green fuel industry is crucial for national energy security, positioning as an alternative to oil and gas. The sector’s growth is shifting from optional decarbonization to a core national strategy. The valuation premium for oil substitution and energy security will drive a fundamental restructuring of the wind power industry’s valuation logic, with a systemic upward shift in valuation centers, a comprehensive change in valuation systems, and a long-term growth ceiling being fully unlocked.

Huaxi Securities: Continue Tracking Price Increase Chains, Three Key Areas to Watch

By 2026, the main structural focus may shift from technology to price-increasing chains. Key areas include: 1) import-driven inflation, with energy (oil, gas, coal chemicals, upstream chemical raw materials, shipping) prices likely to rise due to geopolitical tensions; 2) endogenous inflation driven by “anti-involution” efforts, including traditional industries like chemicals, steel, coal, construction materials, and pig farming; 3) technological price increases, focusing on upstream AI computing infrastructure (servers, chips), storage chips, optical communication, PCB upstream materials (fiber optics, glass fiber), and power energy.

This article is reprinted from “Tencent Stock Selection,” with editing by Zhihong Finance: Wang Qiujia.