How will the A-shares perform after the holiday? The market outlook is not pessimistic; stay tuned for the attack signal.

During holidays, it’s a good time to revisit and reorganize your investment logic.

According to the latest strategy viewpoints from multiple securities research institutes, although investors are currently holding a wait-and-see attitude, there are no pessimistic signals in terms of fund flows; the trend of residents’ funds entering the market is unlikely to change. Before the “shoe drops” on the outcome of geopolitical conflicts, the market is expected to maintain a sideways trend. It may be a steadier strategy right now to patiently wait for the signal that the counterattack is about to begin.

No weakening in the willingness to add to positions

In March this year, the conflict between the U.S. and Iran drove global capital markets, and A shares saw their largest pullback since the so-called “reciprocal tariffs” in 2025. However, with increased volatility in index movements and continuous contraction in trading volume, Zhang Qiyao, Chief Strategist at Industrial Securities (601377), emphasized that he had not observed negative feedback in A-share capital flows. Some absolute-return funds may have reduced positions slightly in the earlier period, but after the adjustment, the willingness to add positions is stronger.

He pointed out that since the current market rally began, capital entering the market has shown a convergence of various types of funds, such as risk-capital funds, ETFs, private funds, margin financing (two financing), and fixed-income plus (fixed income+). With the diversification of incremental funds and expectations that the “state team” will provide support, the resilience of capital flows is stronger—this is also one of the key reasons A shares have been relatively better than other global markets since March.

Among these, fixed-income plus, pension funds, and insurance funds are all funds with quasi–absolute return objectives, with equity “center of gravity” around 15%. Under the pressure that market volatility has increased and annual returns face the risk of turning negative, some funds reduce positions slightly to protect returns. However, newly deployed operational funds from insurance and pension funds continue to grow at a high rate, and their demand for allocation to equity assets remains strong; adding positions on dips and building positions may be the more preferred choice.

Chen Gang, Chief Strategist Analyst at Soochow Securities, also noted that currently, various types of micro-level funds have not clearly flowed out. On the one hand, financing funds have not fled significantly due to higher risk. As of April 3, the financing balance was 2.58 trillion yuan, which, compared with the early-March peak, only fell by 25.8k yuan, while the financing guarantee ratio is still clearly higher than the level in the first half of 2025. On the other hand, although the total net value of stock-type ETFs has dropped significantly, it mainly comes from the decline in market capitalization. As of April 3, total ETF outstanding shares were 2.1 trillion shares, down only 76.08B shares from the early-March peak.

He believes that at present, investors’ more wait-and-see stance is causing trading volume to contract. If risks ease somewhat, residents may accelerate their entry into the market. As of April 3, A-share trading volume was 1.67 trillion yuan, which is not below the low point of December 2025, and is also significantly higher than the level in the first half of 2025. Meanwhile, the number of newly opened accounts in March was 4.6 million, second only to October 2024 and January 2026. Residents’ enthusiasm for entering the market is high, and has not been dampened by market adjustments caused by geopolitical risks.

Expect the sideways trend to continue; suggestions: wait

“Maintain your composure and wait for the counterattack to begin.” Liao Jingchi, Chief Strategist at Zhitong Securities (601878), analyzed that given the complexity of geopolitical turmoil in the Middle East, as well as the conflict’s substantive “spiral-style escalation,” the global capital market is still expected to face pressure, and A shares may continue to show a pattern of consolidation and volatility. In the short term, the Shanghai Composite Index is expected to operate in a way of “range-bound volatility, a second attempt to find a bottom, support at the lower end, and pressure at the upper end.” The “right foot” of the second bottoming could gradually take shape in mid-to-late April, and there is also a possibility of forming a rebound at the level of weekly trend.

Based on his judgment that “geopolitical escalation drives global volatility, and A shares find a second bottom through consolidation,” he suggests keeping caution in the near term and treating the broader market with range-bound volatility. When the index approaches the “upper end” of the new volatility range, give up greed and conduct a reasonable “high sell.” When the index moves to the “lower end” of the new volatility range, overcome fear and do a moderate “low buy.” If the situation in the Middle East becomes clearer after mid-April, and the bottom structure in A shares’ medium-term outlook is formed, it would then be possible to actively increase allocations and expand flexibility.

The latest allocation recommendations provided by the Finance Engineering Research Team at China Merchants Securities are also “wait.” Overall, before geopolitical risks have been fully cleared, the probability that the market maintains a sideways market is higher; and considering the impact of high oil prices on global economic growth, A-share earnings are likely to face pressure. However, current domestic economic data is not bad—leading indicators such as credit are showing a rebound trend—and after valuation is adjusted down, it may again release valuation upside potential, meaning A shares have strong resilience.

On the style front, regardless of whether the future unfolds into a relatively optimistic market or a more cautious one marked by “a downturn in medium-term demand and the CPI-PPI scissors spread narrowing passively,” based on historical statistics, it is not recommended to overweight aggressive products such as growth styles in the short term. It is suggested that defensive styles with stronger defensive attributes remain the main allocation to reduce volatility, and it is not too late to switch to an offensive posture after risks are further cleared.

(Editor: Zhang Yan)

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