Risk aversion heats up: these types of trades are gaining popularity worldwide. How will A-shares choose their direction next week?

The past week (March 2–6) can be summarized in eight words for A-share investors: Concern over current events, volatility.

Externally, the escalation and recurrence of Middle East geopolitical conflicts, even a small wave in the Strait of Hormuz, can influence the sentiment of global investors, including those in A-shares. Internally, the National Two Sessions have become the market’s most focused domestic event. The policy signals released during the sessions hold significant reference value for the future direction of A-share investments.

Therefore, amid complex and intertwined factors, this week’s A-share market showed a pattern of “slight index decline, stock differentiation, and accelerated sector rotation,” which actually presents a good opportunity for investors to adjust their portfolios and position in policy-beneficiary sectors.

Let’s first review the specific market performance this week.

The Shanghai Composite Index and Shenzhen Component Index oscillated downward during the week, with the CSI 300 Index also retracing, showing an overall trend of “oscillating decline with late-stage recovery.”

The Shanghai Index opened at 4,151.8 points and closed at 4,124.19 points, down 0.93% for the week. The highest reached 4,197.23 points, and the lowest dipped to 4,055.41 points, with a fluctuation range of 141.82 points. The Shenzhen Component opened at 14,327.65 points and closed at 14,172.63 points, down 2.12%, with a range from 13,969.34 to 14,526.06 points. The CSI 300 fell 1.35%, closing at 4,660.44 points, with a weekly high of 4,744.60 and a low of 4,575.82, underperforming the Shanghai Index overall.

In terms of trading volume, market activity was high at the start and declined later, with a clear cooling in the latter half of the week. Notably, on March 3 (Tuesday), the total transaction value peaked at 31.57 trillion yuan. By March 6 (Friday), the volume shrank to the weekly low, with total transactions in the Shanghai, Shenzhen, and Beijing markets only reaching 2.219 trillion yuan.

Regarding stock gains and losses, only 1,237 stocks rose, while 4,206 declined. However, on Friday (March 6), market performance showed a clear rebound, with short-term sentiment improving, characterized by “shrinking volume and stabilization, with stocks warming up.” Overall, due to the ongoing uncertainty in Middle East tensions, even the Friday recovery was accompanied by gradually shrinking trading volume, indicating that investor caution remains high.

Looking at the magnitude of gains and losses, only 185 stocks gained more than 10% this week, while over 500 stocks fell more than 10%, notably with significant corrections in previously hot tech stocks. Sectors like oil & gas and military industry rose. Especially on March 2, the oil & petrochemical sector in A-shares experienced a “limit-up wave,” with China National Petroleum, Sinopec, and CNOOC all closing at the daily limit, drawing market attention.

Reviewing this week’s market performance reveals that as geopolitical conflicts continue to evolve, even short-term recoveries are more likely to be overshadowed by risk aversion. Therefore, predicting the next phase of the market becomes more challenging. However, it’s clear that external shocks often trigger a style shift in the market. This time seems no different, but it’s still premature to say that the main market trend has changed.

This week, “HALO” trading suddenly gained worldwide popularity. HALO is an acronym for “Heavy Assets” and “Low Obsolescence.” The concept was first proposed by Josh Brown, CEO of Ritholtz Wealth Management, and later incorporated into investment reports by Morgan Stanley and Goldman Sachs, becoming popular on Wall Street. Its core idea is to invest in companies with tangible assets that are less likely to be disrupted or replaced by AI technology.

Goldman Sachs, in its February 24 report “The HALO Effect: Heavy Assets and Low Obsolescence in AI,” mentioned that such companies possess substantial physical capital, which can form barriers through costs, regulation, construction cycles, or engineering complexity, and hold long-term economic value. Typical HALO companies include those in power grids, pipelines, utilities, transportation infrastructure, key machinery, and long-cycle industrial capacity.

Guolian Fund believes there are three main drivers: first, risk aversion driven by AI disruption fears. The market worries that asset-light, software, service, and labor-intensive companies may be replaced by AI, raising doubts about profit sustainability. Second, AI development boosts demand for physical assets, consuming energy, raw materials, and requiring extensive infrastructure, all of which align with HALO characteristics. Third, under escalating geopolitical tensions and supply chain restructuring, HALO assets have gained additional value premiums, with markets re-recognizing the value of tangible assets, shifting away from the long-held view that “light assets outperform heavy assets.”

The oil & gas sector exemplifies HALO. However, this week’s trend shows that HALO trading is not a cure-all. The chart below shows China National Petroleum’s weekly candlestick:

It’s clear that on Monday and Tuesday, as the Middle East conflict news intensified, China National Petroleum hit two consecutive limit-ups. But from Wednesday to Friday, the stock experienced oscillations. Especially on Friday, amid market sentiment recovery, risk-averse funds reduced their allocation to defensive sectors like oil & gas, shifting instead to previously undervalued tech giants and policy-beneficiary sectors, leading to a 3.07% decline that day.

The performance of China National Petroleum reflects the current market’s contradictions and dilemmas—balancing the desire to hedge geopolitical risks with defensive assets like HALO, while also not wanting to miss long-term opportunities in tech and growth sectors. External geopolitical disturbances and domestic policy signals from the Two Sessions both influence investor sentiment.

Drawing lessons from history, China International Capital Corporation (CICC) offers insights that are useful for understanding future market trends:

Reviewing the performance of major asset classes after 14 significant Middle East geopolitical conflicts since 2000 shows:

• In the short term, initial shocks tend to manifest as emotional impacts and risk premium jumps, with increased volatility and reallocation of funds.
• In the medium term, as uncertainties are digested, risk appetite tends to recover, and market focus shifts back to fundamentals and policy themes.
• Sector-wise, most industries experience short-term corrections driven by sentiment, with oil & petrochemical, defense, and non-ferrous metals sectors relatively resilient; long-term impacts are limited.

In this round of Middle East conflict escalation, historical patterns suggest that while risk premiums may spike temporarily, A-shares tend to show relative resilience. Future attention should be paid to the scope and duration of the conflict, the progress of the Strait of Hormuz blockade, oil price movements, and inflation impacts.

From a medium- to long-term perspective, the reconfiguration of the international order and China’s industrial innovation trends are the core drivers of the current A-share rally and asset revaluation. The short-term shocks caused by the Middle East conflict have not shaken these medium-term fundamentals.

In summary, respecting the market is more important than trying to predict it. Finally, let’s briefly review the key domestic and international news that may influence next week’s market, as well as upcoming major events:

Domestic:

1. China Securities Regulatory Commission (CSRC) issues “Several Regulations on Short-term Trading Supervision” On the evening of March 6, to implement the short-term trading supervision system stipulated by the Securities Law and facilitate long-term capital entry, the CSRC issued the “Several Regulations on Short-term Trading Supervision,” effective from April 7, 2026.

The principles include: first, regulation according to law; second, respecting practical experience—systematically reviewing judicial practices, regulatory practices, enforcement, and self-discipline management; third, consistency domestically and internationally, treating both domestic and foreign investors equally, and actively responding to foreign investment concerns.

The CSRC noted that it had solicited public opinions and held multiple consultations and surveys before issuing the regulations. The feedback has been fully incorporated or clarified. The regulations have received positive support, viewed as stabilizing market expectations and improving trading convenience.

2. Multiple brokerages interpret Wu Qing’s speech at the Fourth Session of the 14th National People’s Congress On March 6, Wu Qing, Chair of the CSRC, delivered an important speech at the economic-themed press conference of the Fourth Session of the 14th NPC, signaling a series of significant policies for the long-term development of the capital market, attracting high market attention.

Several brokerages provided interpretations. Lu Zhe, Chief Economist of Dongwu Securities, believes that the two major incremental policies—deepening the GEM reform and optimizing refinancing mechanisms—are key upgrades supporting the development of new productive forces, addressing current institutional gaps and improving service systems, thus strengthening the foundation for the capital market to serve the real economy and support emerging industries and traditional industry transformation.

Long Hongliang, Chief Economist of Wanlian Securities, states that reforms in A-shares have achieved solid results, with the market shifting from mainly financing to a balanced focus on investment and financing. These reforms will provide critical support for China to become a major player in emerging industries globally and better support new consumption development.

International:

U.S. stock indexes closed lower on March 6. The Dow Jones Industrial Average fell 453.19 points to 47,501.55, down 0.95%; the S&P 500 declined 90.69 points to 6,740.02, down 1.33%; the Nasdaq Composite dropped 361.31 points to 22,387.68, down 1.59%.

International oil prices rose on March 6. WTI crude for April delivery increased $9.89 to $90.90 per barrel, a 12.21% rise; Brent crude for May delivery rose $7.28 to $92.69 per barrel, up 8.52%.

Meanwhile, U.S. Labor Department data released on March 6 showed that non-farm payrolls decreased by 92,000 in February, and the unemployment rate rose from 4.3% to 4.4%. January’s non-farm employment was revised from +130,000 to +126,000, and December’s figure was revised from +48,000 to a decline of 17,000.

San Francisco Fed President Mary Daly stated that recent employment data suggest expectations of a stable labor market may be overly optimistic. With inflation data exceeding expectations and oil prices rising, the Federal Reserve faces risks to both employment and inflation targets and must monitor both closely.

Next Week’s Major Events Preview:

• March 9 (Monday): Domestic refined oil price adjustment window opens.
• March 10 (Tuesday): U.S. hosts a roundtable on robot manufacturers.
• March 11–13: 3rd China Embodied Intelligence Robot Industry Conference & Exhibition.
• OPEC releases monthly oil market report.
• March 12–15: China Home Electronics & Consumer Electronics Expo in Shanghai.
• March 12–14: 2026 Shanghai Commercial Space Conference & Exhibition.
• March 12–14: GAIC Global Artificial Intelligence Conference in Hangzhou.
• March 13 (Friday): IEA releases monthly oil market report.

Next Week’s New Stock Offerings:

One new stock is scheduled for issuance from March 9–13: Zuxing New Materials, planned to be listed on the Beijing Stock Exchange on March 9, with an offering price of 6.98 yuan per share, issuing 23 million shares, accounting for 19.17% of the total post-issue share capital.

Mirei Technology (Stock code 920036) will also be listed on the Beijing Stock Exchange on March 9.