Market sentiment was somewhat subdued this weekend. On one hand, external markets were weak, with US stocks and Chinese concept stocks collectively plummeting, and risk aversion clearly rising; on the other hand, the situation in the Middle East not only failed to ease but escalated further, with oil prices continuing to climb. This combination essentially resulted in a "double whammy" for A-shares.
Many people's state of mind these past two days can be summed up in one sentence: the market rally hasn't even finished, but people are already collapsing. Structurally speaking, the A-share market is indeed in a rather difficult phase right now, with core pressures coming from three aspects:
First, geopolitical conflicts are recurring, making expectations extremely unstable. Second, expectations for a Fed rate cut have been disrupted, and there's even trading in a rate hike. Third, with earnings season underway, earnings surprises could erupt at any time.
These three factors combined essentially mean that uncertainty is rising across the board.
I remember three weeks ago, when the fighting in the Middle East first started, market sentiment was quite relaxed, and people were even joking about "paying for the military again." But looking back now, that joke isn't funny at all—the account drawdowns are real money.
It will be more intuitive if we present the data.
Throughout March, so far: the median decline is approximately -10%, the overall A-share market's equal weighted decline is around -8.5%, and the average stock price decline is close to -9%.
In other words, for most people, this pullback of around 10% is actually a "normal value".
If you bought stocks in sectors that had seen significant gains in the early stages, such as non-ferrous metals, gold, rare metals, or small-cap stocks that were already at high levels, then a 20% pullback is not uncommon.
What truly drives people crazy are those sectors that haven't seen much growth, such as consumer goods, securities firms, and liquor—they don't rise when they should, and then they're dumped without hesitation.
This is the most painful part.
Looking at the index levels, the Shanghai Composite Index has now fallen below 4000 points and also below its six-month moving average. Here are a few key levels to watch:
3930 points is the first technical support level. 3800 points is the next important level. Further down is the annual moving average, around 3730 points.
Will it hit these positions?
No one can give a definite answer right now; we can only wait and see.
However, I still maintain my original judgment on one point: in terms of the overall trend, this is still "an adjustment in a slow bull market structure", rather than a trend reversal.
Many people fall into a misconception: when prices fall, they think a bear market has arrived; when prices rise, they think a bull market has taken off. In reality, the market is never such a simple binary logic.
A truly mature trader is one who accepts volatility, rather than making emotional judgments.
In the short term, my advice can be summed up in four words: defend first, then attack.
Don't rush to recoup your losses, and don't try to aggressively pursue profits at this stage. The most important thing is to maintain a steady pace and protect your principal.
The A-share market is often a cycle; you'll find it's neither as good as you imagined, nor as bad. The key is whether you can stay at the table.
Next, let's talk about the most crucial variables over the weekend.
Let's look at the Middle East first.
The situation these past two days can be described in one sentence: more complicated than expected.
Donald Trump threatened that if Iran did not fully open the Strait of Hormuz within 48 hours, the United States would strike its power generation facilities. Iran's response was equally tough—that if its energy infrastructure was attacked, it would launch an "indiscriminate counterattack" across the entire Gulf region.
On the surface, this appears to be an escalation of confrontation, but from another perspective, both sides are actually sending signals of negotiation.
The United States is already discussing a path to peace talks, and Iran has also expressed its openness to ending the conflict.
The logic behind this is simple: neither side can afford to waste time.
Therefore, the most likely scenario going forward is not a unilateral escalation, but rather a "fight while negotiating" situation. The next one to two weeks will likely be a period in which both sides continuously test each other's bottom lines and reveal their bargaining chips.
My personal assessment is that by the end of March, the impact of this round of Middle East conflict on global markets is likely to reach a temporary peak.
This is why a fairly typical combination appeared on Friday:
US stocks fell, gold retreated, but oil prices continued to rise.
This indicates that the market is repricing the combination of "inflation + risk".
For A-shares, under these circumstances, a lower opening on Monday is highly probable. The key is whether there will be support after the lower opening.
Let's look at the domestic policy situation.
A relatively important signal over the weekend was Pan Gongsheng's statement that he would continue to maintain ample liquidity.
The meaning of this sentence is actually quite clear:
First, there will be no tightening; second, there is room to continue releasing liquidity; and third, the attitude is one of market support.
Recent actions, including policy meetings and institutional arrangements, are essentially aimed at stabilizing expectations.
The problem is that the market now values "what to do" more than "what to say".
When sentiment is weak, verbal positive news often has limited effect; investors are more eager to see real money entering the market.
Another reality is that the current index level is not far from its previous high.
In other words, against the backdrop of significant fluctuations in global markets, A-shares have not yet fallen to a point where "strong market intervention is necessary."
This means that it will be difficult to expect a major market bottom in the short term.
Let's talk about industry direction.
The most imaginative news of the weekend came from Elon Musk.
He proposed building the world's largest chip manufacturing plant, aiming to produce 1 terawatt of computing power annually, and explicitly stated that approximately 80% of the computing power would be used in the space sector.
The significance of this event lies in the fact that the concept of "space computing power" is beginning to move from imagination to reality.
In the A-share market, two sectors may benefit:
One is new energy, especially photovoltaics, energy storage, and power systems; the other is hard technology, including optical modules and computing infrastructure.
Essentially, this is still the "US stock market mapping logic"—funds are more willing to believe in the certainty overseas and then reflect it back to A-shares.
Let's look at another hot topic: robots.
Unitree Robotics' IPO application has been accepted, which basically means that the humanoid robot sector is about to usher in a landmark event.
In the short term, this sector remains in a correction phase and has not yet shown clear signs of stabilization. However, from a medium-term perspective, its catalysts are continuous: IPOs, product iterations, industry conferences, etc.
Therefore, if you have funds that are more on the left side of the investment, you can consider making investments in batches rather than investing heavily all at once.
Finally, let me briefly mention US stocks.
The biggest change at present is that market expectations for the Federal Reserve policy have reversed.
The shift from "expectations of interest rate cuts" to "possible interest rate hikes" has been made.
The underlying reason is actually the inflationary pressure brought about by rising oil prices.
If this logic continues to strengthen, it will put downward pressure on global asset prices.
To summarize:
In the short term, the market is likely to remain weak and volatile. It opened lower at the beginning of the week, and the subsequent market action will likely be followed by a weak rebound around Tuesday. Therefore, a defensive approach is preferred, and controlling position size is more important than pursuing high returns.
It's true that the market is tough. But it's precisely during these times that a person's sense of rhythm and patience are put to the test.
You don't have to make money, but try not to suffer huge losses. As long as you're still in the market, opportunities will come back sooner or later.
Don't rush, take it slow, and get through this.
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