Geopolitical conflicts intensify, commodities surge, institutions analyze A-share allocation strategies

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Recently, the conflict between the U.S. and Iran has driven a sharp rise in commodities. Affected by external disturbances, the A-share market has also shown a pattern of oscillating and adjusting in tandem. Analysts believe that with external disruptions increasing, the A-share market may experience near-term volatility but should be positive over the medium to long term. Liquidity is resilient, and they recommend focusing on safe assets and well-regarded segmented sectors.

According to a report by Xinhua News Agency, on the 4th, U.S. President Trump posted on social media, demanding that Iran reach an agreement within 48 hours or open the Strait of Hormuz. Previously, on March 26, Trump announced that he would postpone the “destruction” operation targeting Iran’s energy facilities by 10 days, extending the deadline to 8:00 p.m. Eastern Time on April 6.

Iran responded quickly. On the 4th, Abdulahi, commander of the Central Headquarters of Iran’s Islamic Armed Forces Khatam al-Anbiya, responded to the “48-hour” ultimatum issued by U.S. President Trump, emphasizing that Iran’s military would firmly defend national rights and protect national assets, and make the aggressors pay a price.

Oil prices surge sharply

This week (March 30—April 3, including market-closed days), global stock markets showed clear regional divergence. Major indexes in Europe and the U.S. rebounded across the board, while leading markets in Asia-Pacific overall fell slightly.

In the U.S. stock market, this week, the Dow Jones Industrial Average rose cumulatively by 2.96%, the S&P 500 Index rose cumulatively by 3.36%, and the Nasdaq Index rose cumulatively by 4.44%.

In the Asia-Pacific market, this week, the Shanghai Composite Index fell cumulatively by 0.86%, Japan’s Nikkei 225 Index fell cumulatively by 0.47%, and South Korea’s KOSPI Composite Index fell cumulatively by 1.13%.

In the European market, this week, the UK FTSE 100 Index rose cumulatively by 4.70%, France’s CAC 40 Index rose cumulatively by 3.38%, Germany’s DAX Index rose cumulatively by 3.89%, and Italy’s MIB Index rose cumulatively by 5.18%.

In commodities, precious metals closed higher on a weekly basis, while international crude oil surged significantly. In precious metals, this week, London gold spot rose cumulatively by 3.98%, and COMEX gold futures rose cumulatively by 4.68%; London silver spot rose cumulatively by 4.72%, and COMEX silver futures rose cumulatively by 4.83%.

In international crude oil, this week, NYMEX WTI crude oil futures’ main contract rose cumulatively by 12.46%, and ICE Brent crude futures’ main contract rose cumulatively by 3.72%.

Cinda Futures believes that an escalation of geopolitical conflict has driven crude oil prices sharply higher. Trump-related remarks have not eased tensions; instead, they have further intensified contradictions, pushing oil prices stronger still. At present, the geopolitical standoff has entered a stalemated, deadlocked phase. April 6 is the core pivotal date; if the U.S. side takes aggressive actions, it could trigger extreme market moves. At this stage, the trading screen is dominated by news and market sentiment. Long positions have not taken large-scale exit actions, but the willingness to chase gains at high levels is insufficient. Short-side momentum is relatively weak, and a coordinated push has not yet formed. The operating advice is mainly to wait and watch.

Facing uncertainty

Anchor safe assets and focus on high-quality sectors

Regarding the current market environment, Liaojingchi, chief strategist analyst at China Merchants Securities, says that since March, the U.S.-Iran conflict has caused clear disruptions to global capital markets, and the volatility of risk assets has risen. Combined with the start of the April earnings season, market uncertainties continue to increase. In today’s uncertain market, safe assets with strong alignment between performance and valuation, as well as segmented areas with marginal catalysts, will become key focus areas for capital deployment. High-quality domestic safe assets are expected to undergo a value reappraisal.

Yang Chao, chief strategist analyst at China Galaxy Securities, says that from the external environment, geopolitical tensions continue to escalate, and prospects for ceasefire talks are unclear. Trump has set April 6 as the final deadline, and the intensity and scope of Iran’s retaliation have further expanded. Against the backdrop of still-high uncertainty and unclear market direction in the conflict, global equity markets are expected to remain in a high-volatility environment, and A-shares may show a pattern of oscillating rotation. From the internal environment, the core logic of policy support, capital entering the market, and the re-pricing of Chinese assets has not changed, and external conflict has not shaken A-shares’ medium-to-long-term trend. In April, listed companies’ earnings enter a concentrated disclosure period, and trading leads will gradually shift toward validation by fundamentals. Sectors with high earnings certainty and improving industry conditions are expected to become core directions for capital focus.

From the perspective of capital flows, Zhang Qiyao, chief strategist analyst at Industrial Bank Securities, says that since last year, funds with an absolute return attribute have become an important driving force for the market’s upward movement. Due to the rise in market volatility and the impact of returns turning negative over the year, the market once worried that such funds would reduce positions, thereby triggering negative feedback.

“However, based on the actual trading screen, there has been no negative feedback in A-share liquidity,” Zhang Qiyao says. Although some absolute-return funds previously reduced positions slightly, after market adjustments, their willingness to add positions has further strengthened. At the same time, various types of capital—insurance funds, ETFs, private placements, two-margin and credit products (two融), and fixed-income plus (固收+)—entered the market in parallel, forming a pattern of resonance among incremental capital. This diversification of incremental capital strengthens liquidity resilience, and it has also become an important support for A-shares outperforming the global market since March.

In terms of allocation, Liaojingchi says that three major allocation directions can be considered: first, sectors benefiting from energy and resources, including coal, power, oil and petrochemicals, and new energy; second, fields with independent strength driven by sector-specific prosperity—such as innovative drugs with industry-driven momentum, and agricultural, liquor, and home appliance sectors that benefit from consumption dividends; third, risk-hedging categories—focus on infrastructure-related assets associated with the China-character “C entral state-owned” sector (中字头).

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