【West Street Observation】Short-term Impact Does Not Change A-shares' Long-term Positive Outlook

Questioning AI · Why Does A-Share Resilience Stand Out Under Geopolitical Risks?

Geopolitical risks have surged, causing continuous adjustments in global stock markets. The A-share market has also been affected, with the Shanghai Composite Index barely holding above 3,800 points on March 23.

Despite this, compared to other capital markets, the overall adjustment of A-shares has been relatively limited, and the ChiNext Index even hit a new high for the year recently against the trend. Short-term volatility triggered by geopolitical conflicts is more like a stress test of market value. After the disturbance, the long-term upward trend of A-shares remains intact.

The stability of the capital market depends on whether the investment value has fundamentally changed. The recent adjustment in the A-share market is a result of global capital market linkage caused by sudden geopolitical risks, and its intrinsic investment value has not undergone substantial change.

On the policy front, relevant regulatory authorities have repeatedly stated their commitment to maintaining market stability. On January 15, the China Securities Regulatory Commission (CSRC) held a 2026 system work conference, emphasizing the importance of stability and consolidating the positive momentum. On March 13, the CSRC said it would further enhance the market’s internal stability. On March 18, the People’s Bank of China (PBOC) stated it would fully leverage its macroprudential management and financial stability functions to firmly maintain the smooth operation of stock, bond, and foreign exchange markets.

Frequent statements from regulators to maintain market stability reassure investors and serve as policy guarantees for the stable operation of the capital market.

However, market stability does not mean the absence of any fluctuations, and a unilateral upward trend does not conform to market laws. Short-term volatility following unexpected “black swan” events is normal. The key is whether the market can return to value after the fluctuations.

The stock market is a barometer of the economy. The resilience of the capital market largely depends on economic growth expectations. Ming Ming, Chief Economist at CITIC Securities, recently stated that China’s economy is expected to continue recovering amid volatility by 2026. Ming Ming predicts that China’s real GDP growth rate in 2026 may stay around 4.9%, with the annual growth possibly following a “V-shaped” pattern. Positive economic expectations are an important foundation for the long-term upward trend of A-shares.

Meanwhile, the characteristics of high-quality development in the capital market are becoming more evident, with emerging industries showing strong momentum. Under the guidance of a series of policy incentives, listed companies are highly active in mergers and acquisitions, and transactions involving new productive forces continue to increase. This also provides new momentum for the long-term growth of A-shares.

Compared to Japan and South Korea’s stock markets, the current correction of A-shares is significantly smaller. This is partly due to the reasonable valuation of core assets in the A-share market. Represented by banks, securities firms, and large state-owned enterprises, the overall performance stability of core assets is high, and their stock prices have remained within reasonable value ranges. As a result, the downside for core assets in the face of short-term negative shocks is very limited.

Recently, the ChiNext Index has performed strongly against the trend, which is also related to its sector composition. The active rotation of sectors such as electronics, communications, new energy, and AI reflects the resilience of new productive forces in the capital market.

Looking at the A-share market performance over the past year, it has long moved away from extreme volatility, becoming increasingly stable. Sector rotation has prevented excessive capital bubble accumulation and has buffered against irrational market declines caused by unexpected events.

In recent years, ongoing reforms in the capital market have significantly enhanced the investment value and resilience of A-shares, which is an undeniable fact. Short-term negative shocks only impact market sentiment temporarily and cannot change the long-term positive trend of A-shares.

Beijing Business Daily Commentator Dong Liang