The trading volume of A-shares has fallen below 2 trillion yuan. After a decline in volume and a pullback, when will it stabilize?

After rebounding for two consecutive trading days, A-shares pulled back with reduced volume on Thursday.

On March 26, all three major A-share indices closed down more than 1%. The Shanghai Composite Index fell 1.09% to 3889.08 points; the Shenzhen Component Index dropped 1.41% to 13606.44 points; and the ChiNext Index decreased 1.34% to 3272.49 points.

Regarding the market’s adjustment, analysts believe it is mainly due to repeated overseas geopolitical disturbances, the need for the market to digest technical pressures, and investors taking early risk-averse actions.

“The main logic behind the market’s overall poor performance recently still lies in overseas disturbances, whether it is the inflation and liquidity pressures caused by high oil prices, or some degree of transmission effects from volatility in overseas equity markets, all of which are due to localized geopolitical conflicts. The expectations for easing on Thursday (March 26) failed to materialize, with funds worried about repeated situations, thus naturally increasing risk-averse sentiment,” a strategist from a brokerage firm analyzed to The Paper.

Zhang Gang, an analyst at Zhongyuan Securities, also believes that the core suppression factor in the current market comes from overseas. If localized geopolitical conflicts escalate further, it could trigger sustained rises in oil prices and exacerbate global stagflation pressures. If U.S. inflation continues to exceed expectations, the Federal Reserve may delay interest rate cuts or even raise rates again, which would suppress global liquidity and risk appetite.

From a technical perspective, Guojin Securities stated that as the technical indicators for A-shares reached resistance levels, the market needs to digest the pressures from the rebound over the past two trading days. The Shanghai Composite Index previously surged to around the 3930-point resistance level, and after a rapid rebound, the market itself has the demand to digest profit-taking and consolidate positions. Some funds often choose to cash out at this position, triggering stop-losses in technical trading.

It is worth mentioning that regarding Thursday’s market adjustment, several analysts pointed out the factor of “early risk aversion” in unison.

Guojin Securities noted that the reason for the risk aversion being moved up from Friday to Thursday is crucial under the “learning effect.” Looking back at the past two weeks, several escalations in the overseas situation occurred over the weekend, leading to funds fearing unexpected developments over the weekend and opting for early risk aversion on Friday. On March 26, this risk aversion sentiment was further advanced to Thursday.

“In the past few weekends, the overseas news flow has generally not been good, and there is a high degree of uncertainty regarding external events. The adjustment in the market on Thursday is partly due to the approach of the weekend,” said the chief investment advisor of a Shanghai brokerage firm.

After the plunge caused by multiple resonating factors, what will be the performance of A-shares next?

In response, the aforementioned brokerage strategist stated: “It is still recommended to watch more and act less, closely monitor the latest developments in overseas geopolitical disturbances. If the situation eases, it will boost the performance of equity assets. At the same time, attention should also be paid to the actual navigation conditions in the Strait of Hormuz and the performance of oil and other assets.”

In the latest news, according to Xinhua News Agency, U.S. President Trump stated on social media on the 26th that the airstrike on Iran’s energy facilities has been delayed again by 10 days, until 8 PM Eastern Time on April 6.

Additionally, several analysts mentioned the volume issues during the A-share adjustment process on Thursday (March 26).

Guojin Securities pointed out that the reduced volume during Thursday’s decline is an easily overlooked signal. A drop on reduced volume indicates that panic selling has mostly cleared out in the previous two rounds of adjustments, and the current selling pressure is more strategic than systemic.

“A positive sign on Thursday is the reduced volume, which was very low. This trading volume indicates that although there are no buyers, the selling pressure is also not heavy,” said the chief investment advisor from the above-mentioned brokerage firm.

Wind data shows that after a gap of 22 trading days, the turnover of A-shares has again fallen below 2 trillion yuan. On March 26, the market turnover was 1.96 trillion yuan.

In terms of operations, Guojin Securities stated that the market may need to repeatedly confirm support moving forward. After Thursday’s plunge, it is highly likely that the market will enter a stage of consolidation. This process may last several days, aimed at digesting earlier profit-taking and stabilizing the position structure.

“Among them, the 3889-point level is critical. This position is near the previous low and is also the convergence point of multiple moving averages. If it can hold this level, the rebound structure remains intact; if it breaks effectively, the time and space for adjustment may both extend,” Guojin Securities further pointed out.

Zhang Gang expects that the Shanghai Composite Index is likely to maintain a range-bound movement in the future, suggesting that investors closely monitor macroeconomic data, changes in overseas liquidity, and policy trends. In the short term, attention can be given to investment opportunities in industries such as batteries, energy metals, chemicals, and robotics.