Huatai Securities A-Share Strategy: Waiting for the Right-Side Signal Amidst Geopolitical Fluctuations

People’s Finance News, April 7 — Huatai Securities’ A-share strategy notes that last week saw repeated swings in the Middle East situation, causing the market to continue trading in a sideways range. In addition, ahead of the Qingming holiday, funds adopted a risk-avoidance stance, and the tracked A-share sentiment index remained in the “panic” zone.

Structurally, due to relatively high crowdedness, funds locked in profits in power, new energy, and coal that benefited from geopolitics and high oil prices. Meanwhile, low-correlation sectors such as communications and innovative pharmaceuticals performed strongly. The earnings season, with results exceeding expectations, has also become a new trading catalyst.

At present, the odds for a left-side layout may be gradually increasing, but it is not advisable to place one-sided bets until the geopolitical situation becomes clear. It is recommended to continue waiting for right-side signals. In addition, even with better-than-expected Nonfarm Payrolls data, investors should remain alert to the risk chain of rising oil prices → upward inflation pressure → tighter liquidity.

In terms of portfolio allocation, it is recommended to control position size and leave room, and in the short term maintain a certain level of defensive and low-correlation asset allocation, such as red envelope-related assets, AI computing power, and innovative pharmaceuticals. Over the medium term, focus on buying dips opportunistically, centered on two key themes: the power supply chain and improving business conditions.