Analyzing A-Shares! Brokerages Intensively Hold Spring Strategy Conferences

Global capital markets are currently caught in a dual interplay of geopolitical tensions and AI industry transformation. On one hand, the US-Israel-Iran military conflicts are elevating risk premiums and disrupting global supply chains. On the other hand, disruptive innovations brought by AI are reshaping market perceptions. Against this macro backdrop, the future of A-shares has become a key topic at securities firms’ spring strategy meetings.

On March 19, at CITIC Securities’ 2026 Spring Capital Market Forum, Chief A-share Strategist Qiu Xiang stated that geopolitical turbulence coincides with the index reaching a critical threshold. Spring is a period for rebuilding confidence and making decisive index judgments. In the context of rising global energy costs and weakening financial conditions, low valuation and pricing power are the two most important factors. In terms of allocation, there is a firm focus on China’s manufacturing advantages and re-estimating valuation based on pricing power.

Geopolitical conflicts do not alter the medium-term positive trend of A-shares

Regarding the recent escalation of Middle East tensions, many securities firms believe that short-term risk appetite for A-shares will be affected, but their resilience remains evident, and the overall upward trend in the medium term remains unchanged.

“From a medium to long-term perspective, the reconfiguration of the international order and China’s industrial innovation trends resonate as the core drivers of this round of A-share gains and asset revaluation,” said Li Qiusuo, Chief Domestic Strategy Analyst at China International Capital Corporation. He pointed out that the short-term shocks caused by Middle East conflicts have not shaken the medium-term logic. If geopolitical changes accelerate the restructuring of the international monetary order, it could even strengthen the case for Chinese asset revaluation. Additionally, under the ongoing macro paradigm shift and continuous reform of capital market systems, the underlying environment for A-shares is improving structurally. The evolution of market mechanisms and investor structures makes it more conducive to forming a “steady progress” pattern, and the medium to long-term outlook for A-shares remains cautiously optimistic.

“Changes in the relative strength of countries subtly influence asset pricing,” said Shenwan Hongyuan’s strategy team. They believe China is no longer a passive recipient of imported inflation and has demonstrated stronger proactive responses and external adaptation capabilities in geopolitical games, making it better able to buffer the impact of sudden shocks.

Guangfa Securities’ Chief Strategist Liu Chenming pointed out from a liquidity perspective that before the deterioration of Middle East tensions, global non-US markets, including A-shares, continued to hit record highs, reflecting abundant non-US liquidity. The probability of non-US assets maintaining a bullish environment remains high.

Huatai Securities’ Fangzheng Tao team, after reviewing historical impacts of geopolitical tensions on A-shares, noted that sudden military conflicts directly increase risk premiums and affect supply chains and costs. If conflicts do not escalate further, markets typically stabilize and rebound within 1-2 weeks, with an average maximum drawdown recovery time of about 20 days. However, they also emphasized that the trajectory of US-Israel-Iran military conflicts is difficult to predict, and advised mainly to prepare for contingencies and avoid unilateral bets.

“The energy and commodity cost shocks caused by the Middle East conflict give us a window to observe and verify whether China’s manufacturing advantages can truly reflect structural pricing power,” Qiu Xiang said. He noted that the Middle East conflict is a catalyst for style shifts this year. Against the backdrop of rising global costs and weakening financial conditions, valuation and pricing power are the two most critical factors.

“HALO” and the revaluation of Chinese manufacturing resonate

Alongside geopolitical risks, the AI industry is accelerating. Currently, market perceptions of AI technology are shifting from optimistic enthusiasm to rational scrutiny, with increasing divergence. According to Li Qiusuo, the creative destruction brought by AI has limited impact on overall stock market value but will lead to noticeable internal structural adjustments. Some stocks may experience increased volatility, and sectors with lower AI substitutability are expected to benefit temporarily.

Market performance shows that “HALO” (heavy assets, low淘汰率) trades are gaining traction, with sectors like oil and petrochemicals, coal, basic chemicals, non-ferrous metals, and utilities performing well.

Li Qiusuo believes that investment logic is shifting from growth chasing to emphasizing certainty and scarcity. He emphasizes that, while covering traditional defensive assets, core growth stocks can also be included to balance defense and growth resilience. In other words, outside the typical HALO sectors of heavy assets, low淘汰率, and stable cash flows, infrastructure and upstream strategic resources supporting AI technological innovation—areas like AI “suppliers”—will also be key investment themes.

From an industry trend perspective, Qiu Xiang believes that the global “code expansion, physical scarcity” trading trend is still vigorous. However, the focus of China and the US differs. “HALO is not something that can be simply overlaid onto A-shares.”

He argues that in China, the core trading logic is for resource and manufacturing companies with existing market share and competitive advantages to proactively control future capital expenditure, transforming existing advantages into increased pricing power and profit margin recovery. This process aims to re-expand free cash flow after a high-capital expenditure cycle with low returns. Essentially, it involves industries and companies with capacity that is difficult to replicate globally, where significant market share advantages are gradually translated into external price pass-through under government capacity controls, thereby increasing profit margins and cash flows—examples include chemicals, non-ferrous metals, electrical equipment, and new energy.

“Overseas investors are desperately seeking HALO assets, but in China, better substitutes may already exist. ‘Productivity equals wealth’ is becoming a reality,” said Mu Yiling, Chief Strategist and Executive Deputy Director at Guojin Securities. He pointed out that the valuation premium of overseas giants mainly comes from intangible assets like software and services, which are also the areas most feared to be disrupted by AI. China’s manufacturing, with its more tangible physical attributes, benefits from this shift.

Fundamentals of companies will determine the future trend

Regarding the pace of the market’s future development, different securities firms have varying views. CITIC Securities believes that at the index level, valuation repair space is limited, and profit margin recovery will be key for the next phase of the A-share bull market.

Huatai Securities thinks that after the strong post-Lunar New Year and Two Sessions period, the market’s upward breakout may require stronger fundamental validation from March’s economic data, annual reports, and Q1 earnings. External uncertainties may lead to a period of volatility, but some stocks could see upside after short-term adjustments.

Kaiyuan Securities’ Chief Strategist Wei Jixing also believes that 2026 will see a “slow bull” driven by “profit structure + capital structure.” Reconstructing the “new rhythm bull market” from a DDM perspective emphasizes the marginal change in profit growth as a valuation guide, while the evolving capital ecosystem is reshaping market structure—diminished real estate investment attributes, combined with residents indirectly “moving” funds into the market—bringing sustained incremental capital.

Shenwan Hongyuan’s team maintains their previous “two-stage rally” mid-term outlook, believing that the next wave of gains may start in late 2026 and extend into the first half of 2027, driven by nonlinear changes in fundamentals and accelerated inflow of incremental funds.

In industry allocation, based on various views, “upstream resources + advanced manufacturing + AI technology” are the three main themes. Among them, non-ferrous metals and chemicals are the common recommendations across multiple institutions.

CITIC Securities suggests focusing on China’s manufacturing advantages and valuation-based allocation in sectors like chemicals, non-ferrous metals, electrical equipment, and new energy. Price increases remain the core trading signal, while increasing exposure to low valuation factors (insurance, securities, electricity) is also advised.

Layout: Wang Yunpeng

Proofreading: Xu Xin