Main A-share indices fluctuate and adjust, with the lithium battery materials sector strengthening.

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◎Reporter Wang Youruo

On March 26, the A-share market experienced a volatile adjustment, with major indices falling over 1%. By the close, the Shanghai Composite Index was at 3889.08 points, down 1.09%; the Shenzhen Component Index was at 13606.44 points, down 1.41%; the ChiNext Index was at 3272.49 points, down 1.34%; and the Sci-Tech Innovation Index was at 1637.57 points, down 1.83%. The transaction volume in the Shanghai, Shenzhen, and Beijing markets was 19,569.68 billion yuan, falling below 20 trillion yuan for the first time since March, marking the lowest single-day transaction volume this year.

In yesterday’s market, there were more declines than gains among individual stocks, with market hotspots rapidly rotating. The power sector was active against the trend, with Hunan Development achieving three consecutive boards. Huadian Energy hit the limit up, closing at 6.77 yuan/share, and the stock has risen 148.9% since March. Previously leading stock Huadian Liaoneng briefly hit the limit up during the session but closed with a gain of 6.47%.

The lithium battery materials sector strengthened repeatedly, with electrolytes, membranes, and lithium mines showing active performance. Rongjie Co. achieved three consecutive boards, while Shida Shenghua, Lida New Materials, and Dadongnan also hit the limit up.

Huatai Securities’ power equipment and new energy team published a report stating that every global energy crisis is an opportunity for energy transition. This current Middle Eastern geopolitical conflict has brought energy price shocks while highlighting the importance of energy security. Huatai Securities believes that energy security mainly relies on localization and diversification, and energy transition will lead to enhanced local electrification and reduced dependence on imports, making new energy a choice for countries’ development once again. Therefore, they are optimistic about the two main investment lines of lithium batteries and energy storage.

The CPO concept rose and then fell on March 26. The popular stock Yuanjie Technology rose over 5% at one point, with a peak price of 1212.49 yuan/share, setting a new historical high, and its total market value broke the 100 billion yuan mark during the session. However, by the close, the stock fluctuated and turned negative, slightly down by 0.09%, with a cumulative increase of about 77% since the beginning of the year. Additionally, Mingpu Optoelectronics hit the limit up, Zhili Fang rose nearly 9%, and Tianfu Communication, Changguang Huaxin, and other stocks were active.

On the downside, sectors such as insurance, photovoltaic equipment, communication services, software development, precious metals, and diversified finance saw significant adjustments.

Looking ahead, China Merchants Securities analysis believes that the current A-shares are in the latter half of this round of decline from a technical and sentiment indicator perspective, leaving limited room for further sharp declines, although external shocks may still trigger phase fluctuations. After the adjustment ends, investors are advised to focus on three core allocation directions: first, resource stocks benefiting from geopolitical disturbance premiums and domestic replenishment demand; second, AI infrastructure, where computing power, data centers, and power support are expected to benefit from policy drivers and industry trend resonance; third, the new energy sector, which has a dual logic of long-term policy support and demand growth in the context of strengthened energy transition goals.

Shenwan Hongyuan Securities released a strategy report on March 26, stating that under the Middle Eastern geopolitical conflict, China’s advantages in energy and supply chain security are becoming apparent: from a total volume perspective, China’s higher energy self-sufficiency rate is a “ballast stone” in response to geopolitical conflicts; the diversification of external energy supply provides resilience for China’s energy supply; China’s advanced manufacturing advantages also contribute positively to energy autonomy.

Further analysis in Shenwan Hongyuan’s report states: from a micro level, the balance of A-share investment and financing functions has significantly improved; the governance of A-share listed companies and shareholder returns have seen significant enhancements; the attractiveness of long-term capital in the A-share market has increased, leading to greater allocation to A-shares. Overall, the fundamental landscape for the healthy development of the A-share market has not changed. Looking ahead, the probability of a cyclical improvement in A-share fundamentals by 2026 remains relatively high. It is expected that A-share profitability will effectively recover, with cumulative profits showing a year-on-year increase every quarter, providing a fundamental basis for a mid-term upward trend in A-shares.

“The advantages of the Chinese economy are becoming prominent, and the long-term positive trend of the Chinese capital market has not changed. Rapid changes in liquidity are not the norm for the A-share market, and some short-term issues have been overinterpreted as mid-term concerns. The current market may be under the most pressure, and investors are advised to remain confident and patient,” stated Shenwan Hongyuan’s report.

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Editor: Zhao Siyuan