The A-share market experienced volatile movements this week. A pullback occurred due to a decline in market risk appetite. Influenced by weakening sentiment and reduced risk tolerance, major broad-market indices mostly declined. Among the primary indices, the ChiNext Index performed the best with a gain of 1.3%, while the CSI 500 Index was the worst performer, declining by 5.8%.
The current valuation of the Wind All-A Index is at the 91.2 percentile compared to its history since 2010. Sector-wise, oil and petrochemicals, coal, and utilities showed relatively better performance.
Key events took place this week. On the policy and meetings front, an anti-monopoly work conference was held, the central bank convened an enlarged meeting, and China and the US held economic and trade consultations in Paris. Following the conclusion of the National People's Congress and the Chinese People's Political Consultative Conference sessions, local governments have been holding meetings to convey the spirit of the sessions and arrange implementation work. Frequent keywords included "accelerating the cultivation and development of new quality productive forces," "livelihoods," and "views on political achievements." The State Administration for Market Regulation held its 2026 anti-monopoly work conference. The central bank stated its firm commitment to maintaining stable operation of financial markets including stocks, bonds, and foreign exchange. China and the US conducted economic and trade talks in Paris, France.
Regarding economic data, several domestic macro indicators were released. Industrial added value for enterprises above a designated size increased by 6.3% year-on-year for the January-February period, accelerating by 1.1 percentage points from the growth rate in December of the previous year. Total retail sales of consumer goods grew by 2.8% year-on-year for January-February, an increase of 1.9 percentage points from the growth rate in December last year. Foreign trade import and export achieved high-speed growth in the first two months of this year, with the total value of goods trade increasing by 18.3% year-on-year.
Internationally, the US Federal Reserve held its March FOMC meeting. As expected, the Fed paused interest rate cuts on March 19, Eastern US Time, keeping the target range for the federal funds rate unchanged at 3.50%-3.75%. The next Federal Reserve monetary policy meeting is scheduled for April 29, 2026. This decision to pause rate cuts was in line with market expectations. The Fed raised its forecast for 2026 PCE inflation by 0.3 percentage points and noted that "the absolute level of new employment is too low, implying risks."
The market is consolidating its strength while waiting for a breakthrough. A turning point for the market may still require patience. External factors are currently exerting some pressure on A-shares. On one hand, persistent tensions in the Strait of Hormuz are causing turbulence in global energy markets and raising inflation expectations. On the other hand, a more hawkish tilt from the Fed is also putting pressure on global capital markets in terms of liquidity. However, there remain some positive factors, such as supportive statements from the central bank, encouraging economic data for January-February indicating a strong start, and the relatively smaller direct impact of Middle East tensions on the domestic economy. Overall, the market is expected to be primarily range-bound.
In terms of structure, the recommendation is to focus on thematic hotspots. Short-term attention should be paid to the Middle East situation, while medium to long-term strategies should grasp two main themes: growth and pro-cyclical sectors. Affected by conflict in the Middle East, safe-haven assets and resource commodities may perform in the short term. For the medium to long term, focus on growth and pro-cyclical themes. Growth sectors will benefit from sustained high industry enthusiasm and an increase in investor risk appetite during the spring rally; areas to watch include humanoid robots and AI. Pro-cyclical sectors primarily benefit from strong commodity prices and policy support; focus on resource commodities where price increases are expected to persist and sectors related to offline services.
This week, themes such as "price increases" and clean energy continued to show strong performance. It is believed that concerns over current geopolitical risks have not yet subsided. Simultaneously, ongoing trends like the energy transition and increased AI investment sustain the narrative logic for related sectors. Investors can continue to monitor short-term opportunities in themes like the price-increase chain and clean energy. For the medium term, it is necessary to observe whether crude oil prices remain elevated for an extended period, as this could potentially trigger concerns about "stagflation-like" conditions in the US, possibly leading to amplified volatility across major asset classes.
Risk analysis includes potential for overseas risk disturbances to exceed expectations, possible failure of historical patterns, and a significant decline in market sentiment.