Currently, the A-share market is at a critical turning point. From the market perspective, the Shanghai Composite Index has been fluctuating downward since early March around the 4200-point mark, closing at 3957.05 points on March 20, with a monthly decline of 4.94%; the Shenzhen Component Index and the ChiNext Index fell by 4.34% and 9.72%, respectively; the ChiNext Index recorded a 1.26% increase driven by the new energy sector. Meanwhile, market trading sentiment has become cautious, with the average daily trading volume dropping to 2.19 trillion yuan in the week of March 20, a decrease of 456.5 billion yuan compared to the first week of this month, indicating a strong atmosphere of capital wait-and-see.
In the context of a short-term lack of clear main lines, profound changes in external geopolitical situations are bringing new pricing logic to the A-share market. On March 19, the conflict between the U.S. and Iran significantly escalated, with both sides directly attacking each other's oil and gas facilities. Iran launched large-scale missile attacks on oil and energy facilities associated with the U.S. in the region in response to previous attacks on its own oil and gas facilities. Subsequently, areas related to the U.S. at Qatar's largest liquefied natural gas facility and a refinery in the suburbs of Riyadh, Saudi Arabia, became targets of attack.
This series of events means that core energy production and export facilities in the Middle East have suffered physical damage— even if future conflicts ease, the repair and recovery of related facilities will take a considerable amount of time. As a result, global crude oil supply faces substantial contraction, and the upward movement of oil prices has shifted from being driven by sentiment to being supported by supply and demand fundamentals.
International oil prices reacted quickly, with Brent crude oil futures prices briefly breaking through $112 per barrel. Citibank predicts that if the Strait of Hormuz remains closed, global oil production could decrease by 11 to 16 million barrels per day over the next four to six weeks, potentially pushing Brent prices into the $110 to $120 range.
The certainty of the upward movement of oil prices has significantly increased, and the market should not only view it as a negative signal for global inflation pressure but also pay attention to its reshaping of structural opportunities in the A-share market. The recent pattern of &#34;missing main lines&#34; in the market is expected to be broken, and an investment clue centered around the energy chain and related beneficiary sectors is gradually becoming clear.
First, the chemical industry is at the forefront of the transmission chain. The situation in the Middle East not only drives up oil prices but also directly disrupts the global supply of chemical products. Some international chemical giants have announced price increases for various products in Europe, with increases of up to 30%. The Strait of Hormuz, as a key passage for global urea and sulfur exports, accounts for nearly one-third of urea and 44% of sulfur transportation. Current shipping disruptions have led to the shutdown of fertilizer plants in the Middle East and a shortage of raw materials. Natural gas, as the main raw material for nitrogen fertilizers, has seen price increases that raise the cost of gas-based urea; tight sulfur supply provides support for phosphate fertilizer prices.
Currently, it is the spring plowing season in the Northern Hemisphere, and fertilizer demand is being concentrated, with supply chain disruptions driving international fertilizer prices upward. Domestic chemical products, benefiting from cost advantages, have room for industry recovery.
Second, the substitution logic of coal chemical industry is becoming more prominent. Against the backdrop of rising crude oil prices, the cost advantage of chemical routes using coal as raw material is further amplified, with product prices following the petrochemical chain upward while the cost side remains relatively stable, improving profit margins. Based on the domestic resource structure of &#34;rich in coal, poor in oil, and scarce in gas,&#34; the strategic position of coal chemical industry in the energy security system is also enhanced.
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Third, the logic of substitution for new energy continues to be strengthened. Historical experience shows that significant increases in traditional energy prices often accelerate the global energy transition process in the medium to long term. Since the conflict began, gasoline prices have risen significantly in many parts of Europe and the United States, which has started to affect residents' travel and car purchasing decisions, with some markets seeing an increase in electric vehicle inquiries and sales. Domestic refined oil prices also face significant upward adjustment expectations. Against the backdrop of normalized fluctuations in fossil energy supply, the economic viability of clean energy sources such as wind power, photovoltaics, and energy storage has become more apparent, and the rising oil price center adds new driving forces for the long-term growth of the new energy sector.
In addition, the prosperity of the oil and gas transportation and oil service sectors continues to improve. High oil prices help improve the profitability of oil and gas companies, and combined with energy supply security policy guidance, there is potential for upward revisions in related capital expenditures. At the same time, rising inflation expectations also provide support for precious metals and some industrial metals.
Looking back at the recent market adjustments, the main reason for the cautious stance of funds is the high valuations of previous hot sectors, which have led to divergences, while the annual report disclosure period has increased the pressure for performance verification. Shrinking trading volume and a shift of funds towards defensive sectors are typical behaviors when the market is waiting for directional signals. The current qualitative change in the external situation just provides this signal, which is expected to guide funds from dispersed hedging to concentrated layout.
In this context, investors' strategies can shift from &#34;passive defense&#34; to &#34;active focus.&#34; The short-term market's wide fluctuations may continue, but as new main lines gradually become clear, the disorderly rotation is expected to improve.
In terms of allocation direction, it can revolve around the core variable of &#34;rising oil price center&#34;: focus on leading companies in the chemical industry with cost transmission capabilities, especially in sub-sectors benefiting from rising product prices; the performance elasticity and allocation value of the coal chemical sector are worth continuous attention; pay attention to core new energy targets benefiting from the energy substitution logic; at the same time, appropriately focus on oil and gas transportation, oil services, and non-ferrous metal sectors with inflation logic. In addition, against the backdrop of global supply chain disruptions, those manufacturing leaders that achieve global market share expansion through technological and scale advantages also have expectations for improved profitability.
Looking ahead, as the market gradually completes the perspective shift from &#34;worrying about external risks&#34; to &#34;utilizing external logic,&#34; when the performance elasticity of the energy chain and benefiting sectors is verified in subsequent financial reports, the A-shares are expected to emerge from the current chaotic period of reduced volume adjustments and form a clear and sustainable main line trend. The moment of breakthrough is approaching

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The A-share market is at a critical turning point, with the Shanghai Composite Index falling from 4,200 points to 3,957.05 points, a decline of 4.94% for the month. Market trading sentiment is cautious, with the average daily trading volume dropping to 2.19 trillion yuan. Changes in the external geopolitical situation, particularly the escalation of the US-Iran conflict, have led to a contraction in global oil supply and rising oil prices. Citibank predicts that if the Strait of Hormuz is closed, global oil production could decrease by 11 to 16 million barrels per day, with oil prices rising to the range of 110 to 120 USD. Investment clues in the market are gradually becoming clearer, and opportunities around the energy chain and related beneficiary sectors are emerging

From chaos to focus, the A-shares are approaching a breaking point!